What is the ROI of Branding?

Building Brands Ep 28 - Tim Bouchard - What is the ROI of branding?

A solo-cast with Tim Bouchard, Owner & CEO of Luminus, addressing the mystery that surrounds understanding the value and ROI of branding and strategy. By nature, a strategic engagement is meant to affect future outcomes, so this episode dives into what some of those intangible and even tangible measurable outcomes are along with how to track some of them in order to understand the long-term ROI of branding.

Episode Links
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Episode Transcript
Tim
Welcome Building Brands listeners. For our 28th episode, we’re diving into another solo cast with yours truly. In this episode, I’m going to address the mystery that surrounds understanding the value and ROI of branding and strategy. By nature, a strategic engagement is meant to affect future outcomes. So we’ll dive into what some of those intangible and even tangible measurable outcomes are, and how to track some of them to understanding the long term ROI of what branding can do for you. Enjoy the episode.

Tim
If you’re an owner or marketer in the building materials, manufacturing, distribution, or contracting spaces, looking to set up your brand for success now, and in the future, this is the podcast for you. on this show, we talk about brand and market strategies used in the real world that grow companies and truly connect with consumer audiences. So sit back, listen in, and let’s get to it.

Tim
All right, welcome to solo cast number four, in this episode, we’re going to dive into the ROI of brand strategy. And really, why I wanted to bring up this topic is one of the most commonly asked questions that we encounter when we’re talking to potential clients looking for strategic or creative help from our team of experts here at Luminus is, as always, the mystery, the mysterious question of we’re talking about brand strategy and the things that you should be doing before you get into the tangible thing like the website or the campaign. What is the ROI on brand strategy? You’re asking us to give you money to go through exercises to come to these conclusions? What can I expect as the client for what I get out of that in return, right money in value out. And it’s a really hard concept even to work through in a quick sales process. So perhaps going over it in this sort of conversation format will help shed a little bit more light, even on people that are already involved in these processes are performing them internally on their teams. It’s a valid question.

Tim
Branding is both an investment in time, it is not a very quick process. Even if it gets distilled down into a couple of days as part of a workshop, it’s still a lot of time in those days, you’re dedicating those days, you’re not just popping in for a meeting in a three day brand process. It can be drawn out over months, there might be research involved or surveys, or there might be time between meetings where we’re waiting for leadership teams to be able to become available or board meetings that something like this might be brought up to so it could either be a week long process or two or three month long process. But either way, it is an investment in time. And that time is spent on exercises, conversation, research, and documentation, which is much different than the typical project you would have for something like a website design, or digital marketing campaign or brochure design, where you get a thing at the end of the thing will do something for you and your processes. It also branding the brand strategy is an investment in money too, right? You’re engaging in a consultation experience based off of using someone else’s process and documentation and end result to take into what you’re doing in the future. So it is something that has costs associated with it as well, which is of course why you end up in the ROI conversation. So before diving in, it should be understood what branding and strategy can yield in return. That’s really the heart of the episode that we’re having right now. I’ll answer that very question in the solo cast.

Tim
But first, let’s kind of set up the foundation and recap what branding is. And I’ve even got a little bit of an anecdotal exercise which will frame what the approach in impression of what Brandon can bring to a company versus something like short term advertising tactics, and then we’ll kind of get into what I really want to and is the actual metric and notable things that can be attributed to brand strategy ROI. Branding has so many definitions tossed around, we’ve talked about this on a few of the other episodes as well. So let’s just kind of identify those a little bit of a history of the off course, definitions of brand. Most people in its simplistic form, understand that the logo is part of branding, but it’s commonly mis-defined as the brand, which is true and that a logo is the essence of a visual mark of a brand. But it is just a small piece of the full branding pie. When we’re talking about branding, it’s much more of a holistic and inclusive asset to accompany that includes things that revolve around the logo, and we’ll talk about that as well.

Tim
Alternatively, you might hear advertising companies like billboard companies, radio companies, TV outlets, proclaiming the advertising through them will allowed you to quote unquote, build your brand. That is, in essence, the opposite way of looking what branding is. Branding itself is an internal exercise that projects outward. What they’re sort of talking about in misconstruing is advertising, which is a communications tactic that brings the brand out into the public and builds exposure for the brand. But it doesn’t necessarily contribute to branding itself. So sometimes that gets kind of lumped in as a confusion for branding.

Tim
I’ve mentioned this before on the podcast, but at Luminus we define branding as “the sum of all interactions between an organization and its audience.” So what what are those things the interactions that are bred through things like vision, mission values, the visual design style, the written tone of copy the core messaging for, for why the company is who it is, and why it’s different in the market, the personality of the company, rituals, interactions for uniquely offered experiences in the sales process, the buying process, customer service experiences, packaging is an experience that lumps into that I like to throw this into it could even mean smells. So if any of your Auntie Anne’s or Cinnabon fans, you kind of know what I’m talking about when you’re walking around an airport or a mall. You know, what brand smell that is so anything that in engages an audience with a company can be attributed to what the brand strategy is, and intentionally doing things that draw people into the world of the brand. It’s really imperative that branding or brand strategy is viewed in this context before anyone should move forward with a strategic branding process. for so many reasons. Even for this episode, understanding the conversation, we’re about to dive a little bit deeper into having that outlook of what a brand is, helps cross the gap into what a brand can do for you, which leads to how you would view the ROI of a process, like branding and brand strategy.

Tim
Really, the other part of this too is if you ever engage in a brand strategy process where you’re doing exercises, you’re defining things, and you’re paving the path to move forward, you really want full buy in from the people that you’re bringing in from the company side, leadership, team ownership, whatever it might be, you really want them to have inspired conversations, better participation you want, you may even want to access to customers or employees to help get raw feedback. And it really will give a clear direction to the things that are coming out of that process. So that’s another thing to have a full understanding of what the intent is of a branding strategy process. And then having everyone’s buy in that there is value into it and how they’re going to contribute into making that successful process.

Tim
Before we dig into the metric side of what could be used to measure the ROI of branding, I want to kind of give you guys this imagination exercise to give you a quick comparison to brand driven sales versus advertising driven sales. I have written an article similar to this topic on the Luminus blog within the last year. So I’ll link that in the show transcript (The Value of Branding ROI vs. Advertising ROI) if anyone’s interested. It’s just another way to look at this conversation. But for right now, I just want to borrow this one part from that where I use two little anecdotes to illustrate the premise of this brand versus advertising comparison. So I’m going to use a market that is not building materials related, but it is something that we’re all used to I’m going to use the coffee market, because most of us like coffee, if you don’t, you’ll still probably be able to relate to this. So we’ll roll with it. And I think you’ll you’ll get where we’re going with this.

Tim
So think about the last time you went to get a coffee and What went through your mind before choosing where to go. Now with the caveat that I know we’re in a pandemic. So let’s think about 2000 to 2019 when the world was somewhat normal, place yourself in that world and follow along with me in this scenario, you’re choosing where you want to get your coffee, and you have a certain experience that you want to try and cultivate when you do that. What are you going to do when you go buy this coffee? Are you going to stay there to drink it? What’s the vibe of the store that you’re going to to get this coffee? How much money do you have? Do they have the types of coffee drinks that you like? Is it just a straight up drip coffee? Or is it some fancy latte or macchiato or one of these other things there that are out there? Are you comfortable? While you’re there getting the coffee? Will it be busy? Are you going to have to wait in line to get the coffee or drive thru whatever it might be? Will your friends be jealous that you got coffee and where you got it from? How are you perceived when you go there to get the coffee. These are all things that brand influences. And it’s really weird to think about how these decisions are unconscious, but they are all tied to something as simple as getting a cup of coffee from somewhere. So there’s a ton of things to consider in this scenario.

Tim
Now what I want to do is describe two coffee companies without naming names, kind of describing scenarios and think to yourself who they might be in your market. And one company, I believe will connect with everyone. And then the other type of company. Every region has these types of companies. So no matter where you are in the country in America, most likely, you’ll be able to relate to this for our international friends that are listening. It might be a little harder for you to plan to this anecdote, but maybe you’ll be able to follow along anyways.

Tim
So company number one prides itself for its responsibly sourced beans and exemplary treatment of its employees. Their locations offer a true cafe experience with dark woods stylish design, comfortable furniture and meeting spaces for small groups to collaborate. Their beverages are carefully prepared from scratch every single time and handed off at the counter by saying the customers first name. If the drink isn’t prepared correctly, they’ll immediately remake it to your liking, no questions asked. They choose to defy the norm and use a foreign language to describe the drink sizes rather than small, medium and large. Their coffee sizes are Italian sizes. Their coffee mugs and accessories are popularly used by loyal customers to reduce waste as well as maintain brand Association from their friends.

Tim
I believe you know who this company is, you’re saying it out loud right now or you’re saying it in your head. You know who they are through brand awareness even if you don’t prefer their product. This company rarely utilizes traditional advertising tactics, yet their brand grows in value and their customers remain loyal as they age, travel from city to city or find themselves having to wait in long lines for their product. It doesn’t matter like the brand is known whether you like them or not, they are out there they have brand equity in the market. So I believe you have a name for that company in your head. Just hold on to that.

Tim
Coffee company number two prides itself on being the quote unquote stop on the way to work for a quick cup of coffee at a low price. They regularly place coupons in the Sunday newspaper and monthly mailers. They offer combinations that discount the price of a coffee if it’s purchased with another product like a food item. Some of their drinks are pre portioned and machine made as a way to speed up efficiencies. As part of their growth model. they’ve partnered with gas stations to have counters inside gas stations or placements within larger establishments. The drive through at their locations is typically backed up to the street during the morning rush on weekdays.

Tim
You probably might even have more than one company in your mind that might be fitting this mold, you’re also probably struggling to think which one it is that I’m talking about. And that may make you consider a few different options that you’ve encountered in your own market. Not to say that each doesn’t have its own brand loyalists developed over time who they love the routine of going through the drive thru or they just very specifically need this cup of coffee. That’s convenient to save some money because it’s not too expensive. Companies like this that focus on advertising first coupons, combo deals, cost comparisons cost competition, they can have brand equity still the the approach just might be more sporadic and unpredictable over time, since most of their sales growth opportunities come through a campaign activity or promotional activities, usually even tied to discounts.

Tim
So as we compare the two types of companies, we can start to see like different tactics to build a brand and where the value lies for company number one. Their end goal for branding is long term customer loyalty and preference. They want to be the name on people’s minds, they want people to recognize them from down the block when they see their logo and building design from down the street. their long term customer loyalty and preference is their branding ROI. We’ll talk about the metric of this shortly.

Tim
But there are metrics built around brand loyalty and product preference. For company number two, their goals are a little bit more short term, the approach they’re using is more advertising and promotional driven to drive sales increases while their campaigns are active or their promotional deal is up. It’s measurable, it’s super effective. But results are usually limited to when the activity is being intentionally driven, which is when the advertising campaigns are out or when the promotional activities are out. Most people have a pretty good understanding of ROI and metrics for this type of company that’s advertising driven, especially with the digital marketing sector becoming the bigger piece of the ad spend pie now, you know, this is something that everyone really understands. It’s also why brand strategy and branding get so easily overlooked to jump straight into the shiny, easy understood advertising tactic route. Unfortunately, a large portion of advertising fails because branding and strategic steps aren’t included in the process that lead to down the road ending up having poorly performing campaigns because it was a missed audience opportunity or not a clearly communicated message or a disjointed visual presentation, something like that.

Tim
So what we’re going to focus on is getting into the actual elements of what makes up the ROI of branding which contributes to why company number one In our coffee world, has more long term loyalty and growth associated with their strategy, of course, still paired with some level of advertising. But the advertising is more of a complement to the exponential growth caused by the long term brand strategy.

Tim
So let’s talk about the elements of branding ROI straight up. There’s two ways I want to look at this one is intangible metrics, things that exist as benefits of brand strategy, but have no real clear, measurable element to them. But they still have value. And then also tangible metrics. And the tangible metrics are associated with long term benefits, but do have some data points that can help you allude to where you’ve driven value from a brand strategy process.

Tim
So first, let’s dig into the intangible ones. Those are the most mysterious, but the intangible metrics of branding ROI.

Tim
The first one is clarity and clarity sounds very ubiquitous. It sounds very general. Why? Why are you going down this route? Well, when you’re going into what is essentially a consultative experience in a brand strategy process with a consultant, or an agency, whoever you might be working even internally, it is a very exercise driven, informative conversation based process. What you’re doing in what you’re going to look for is the value of the outcome. attributing this to clarity is internal alignment between ownership, sales, marketing, and operations. It lends itself to the consultative nature of the strategic work because what you’re trying to do is bring those four aspects of a company together, so that no matter what happens after this process, they’re all on the same page. And it makes everything move smoother. Through the research, collaboration and documentation of the reasons these decisions are being made. The roadmap in how to execute the brand strategy moving forward is universally accepted with all the major players within an organization. The alternative, if you don’t do this is to end up sort of having a disorganized scattershot approach by one of these divisions driving the main priority of any brand or marketing or sales tactics that are being put out there. And you may end up heavily favoring the sales side of things and not building up the marketing and brand equity of a company which ownership may not agree with in the long term. Even if they see some short term gains out of it, they’ll get right back into the cycle again, where they’re asking sales or marketing to course correct. And by bringing everyone on the same page, you can kind of move past just making assumptions of what should work and move forward with an actual direction that everyone can buy into. So organizational clarity is a big initial intangible piece that can’t be measured, but is a value that affects everything long term, at least within a few years of doing this process before it gets re addressed and potentially updated.

Tim
Time savings is another sort of intangible metric. It can technically be measured, right? Time is a measurable unit. But what we’re really looking at here are the things that aren’t going to happen because of the documentation and preparation that’s gone in to this process. When you have documentation already establishing things like who your audiences are as a target, what the position of your company is in the market that differentiates itself, benefiting both sales and marketing activities, what the visual style should be, what the tone of the voice of the company should be the conversation when you get into things like ad campaigns, content, or digital work, can skip straight to the objectives, the message and the execution strategy for those projects, rather than going back through, who is the target audience? Where should we be putting these ads? What’s our message going to be wrapped around? What position are we bringing to this work? All those things are already accounted for client side agency side, everyone knows what the basis for this is. It’s more about how are we specifically executing this one piece. The alternative if you don’t do this is reinventing the wheel at the beginning of every creative or marketing initiative, you end up having to do discovery every single time and it starts to sound redundant. It may even start to sound different between different types of projects and tactics. And you won’t end up with alignment between your digital executions, your sales experiences, and your ad campaigns. And that’s really not a place you want to be you can’t build a cohesive experience for your audience that way.

Tim
Another intangible metric is alignment. And this is just bringing together kind of piggybacking off the time savings a point that I just made. When you have a documented approach to the visual styles and the written tone. Any creative or marketing initiatives will end up working together in unison and thus providing each other with higher probability of success, while at the same time it will continually reinforce and Increase the brand recognition and perception of the company, as professional. When you see something on a website, you see the complimentary brochure and a print piece, you see the advertisement that brings you into that space, and they all have the same message, they all look the same. And they’re all professionally done, you’re subliminally building confidence with that target audience, the viewer, the person that’s involved with your sales team and the sales process, whatever it might be, they’re hearing the same things, they’re seeing the same things. And they’re starting to recognize that this is a company that cares about itself and them as a prospective customer. The alternative is you end up with these disjointed and unrecognizable collateral pieces, which may give off the impression that you don’t have everything put together. And if you’re in that position as a company, how are you going to be able to even benefit the customer and provide them a good experience. If internally, you have no alignment with between your departments, between your marketing collateral between your sales experience, everything works together.

Tim
So those three things alignment, time savings and clarity. They’re all long term benefits and expectations of what can be achieved by going through a brand strategy process. The ROI on those is that they affect every activity you have organizationally and through marketing and creative activities moving forward in a very organized and subliminal way that can’t be tracked. But it does benefit each one of those.

Tim
Now moving on to more tangible and measurable things, which I think is for what some of you are saying “how can you measure brand strategy?” this is probably the most interesting part. let me dive into some of that.

Tim
The first one I want to bring up is customer retention and repeat business percentages. The success of branding can be measured by looking at the percentage of attrition that happens regarding repeat business, the lesser the number is for your attrition, the more equity and values built within your clientele is perception of your brand. This is especially valuable this year in 2021. Lots of customers and clients are cost conscious. And they’re re entering buying modes after what 2020 did to all of us with the pandemic, how many of them have stuck with your company, how many of them are coming back to your company, so that not only are your new marketing and sales activities, helping your growth, but you’re not using those to replace customers that have since left, because they were never really attached to your brand, they were more price, or it was more convenient at the time, but they don’t really need like whatever the reason might be. brands can help customers stay Sticky, sticky customers end up being more likely to be repeat customers and repeat customers allow you to grow while you’re doing your sales and marketing growth tactics in combination with that. So you can literally look at as a way to see if brand is becoming more valuable. You can look at what’s our customer attrition, or you could look at the other way, what’s our customer retention rate, if their retention rate goes up, then our brand is strong. If our retention rate goes down, then we may have some some sticky issues. And we should start building stronger relationships with our clients through our brand engagements.

Tim
Brand recognition, the percentage of how many people recognize your company in the market is also something that can be measured. You can use surveys to provide a look into how recognizable your brand is based off of an iconic logo like think of the Nike swoosh but not having the word Nike next to it. I know it’s a big example. But it is one of the best illustrations of this point. Or even if it’s based off of a tagline or a positioning statement. So take Nikes quote unquote, just do it. When you put something like that into a list around other people. You can build little surveys and start to measure what the brand recognition is if you’re hitting people with consistent visuals, consistent messaging over time, you can also use these advertising outlets like YouTube or Facebook or Instagram to run. Did you see this ad? Or do you remember seeing an ad for this type of product you call the company it might have been associated with? Or do you understand who this icons company is? Whatever the survey questions might be, you could see if you’re starting to compare it to past surveys, so multiple ones of these, see if you’re starting to build a higher brand recognition percentage, which is based off of the audience’s you’re trying to reach and also the uniformity of the visuals and messaging that you’re putting out through your campaigns.

Tim
Branded search traffic volume is also a measurable to some degree stat that you can look at. One way to look at this is while the exact measurement of keywords they’re being used to drive traffic to websites is hit or miss with Google Search Console is there they like to conceal some if not all of this data around this type of metric. What you really are going for here is being known as the company for a product or service by the company name is much better Then someone finding you and ranking higher or whatever it might be, which is still valuable, but ranking high just for the product or service type term. What you want to do is you don’t want people searching for hardwood flooring. You want people searching for Acme company because they know that Acme company has the best hardwood flooring. The reason that that’s important is when someone searches for Acme company, they get the Google Map cluster, the Google My Business listing, they get the top branded pages, which is usually the homepage about page and top level product pages in the search results. And the brand owns the majority of the entire first page of search, because they didn’t search for hardwood flooring, which means you end up in a list with other hardwood flooring companies. So what you’re trying to go for here is through marketing and putting the brand in front of people, you want them to remember the name of the company as someone that does x product or x service in the market and have them search for the company instead. And you can look in Google Search Console to some degree to see if there are boosts in branded searches. And while it will conceal some amount of the volume of searches, you can potentially take some metrics away from that. Basically, what you’re doing with branded searches is trying to just strip out the competition and own your own space. And that’s also building brand equity, because when you own the space, you’ve built value in the brand. Also, another thing to consider with search traffic is search traffic itself is is highly converting but branded search traffic is exponentially more likely to convert into a call or email form submission or purchase on a site. Someone that is intentionally seeking out a brand already has intent, what they’re looking for is your confirmation that you’re the right choice. And it’s such a higher converting experience that way.

Tim
Another thing that can be measured is earned promotional placements and impressions. When a brand is incredibly strong, it doesn’t need to necessarily lean heavily into advertising to promote itself, the customer base, the community will do it for you. They’ll do it themselves. You see this with people taking photos, tagging locations, company names, company profiles, sharing those things through social media, whether it’s fun social media, like Instagram, or if it’s LinkedIn, all the same. What they’re doing is they’re boosting your brand out organically not being paid for it just because they are a brand loyalist, and they love the experience that you provide them, whether it’s in what an installed product feels like. Or if it’s the actual purchasing or unboxing of whatever it might be. They want to share it with their friends as either a status symbol, or just it’s so cool, it should be out there and they want it associated with themselves. That’s free advertising. That’s what good brands can promote. On top of that, you can also get news outlets running stories on company initiatives or product launches. They’re also something where that is not talking about putting a paid story into the local business periodical or pushing out something through a news source as a paid story promotion. That’s it’s it’s masked as a story. But really, it’s a paid advertisement. This is your company’s doing great things in the community. And x news channel wants to do an expose a on it because they think it’s a really great community story. Or you have one of the most highest growth percentages in the local business market. They love keeping tabs on the new things that you’re doing. So every time a new product comes out, or new services added, or whatever it might be an expansion, moving offices, they want your story in their newscasts. So these are other ways where you can track number of impressions, number of viewers, especially on social number of tags, mentions, likes, shares, that is a metric that can be tracked and the more that that happens, the more you know that it’s reflecting on your brand being perceived as more valuable and friendly in the market.

Tim
Another thing that can be measured at a high level is advertising spending efficiency, having detailed audience profiles from your brand strategy, clear and motivational messaging from your positioning exercises, along with proper conversion opportunities, the experiences you’re building on websites or within downloadable resource documents or sales processes. They all affect conversion percentages, but they also from a digital standpoint, the better quality your ads are the more targeted you can make them in terms of region, audience profile, age, demographic, and better quality the landing page destination or wherever you’re sending someone is it will drive down ad cost and Make your budget more efficient. So you, in turn should be getting a higher conversion rate percentage. And that is a measurable metric. When you take what has been done in the past from a brand strategy standpoint and apply it to the future, as an advertising campaign or some marketing initiative, you can directly see if compared to old campaigns, you’re now seeing higher conversion percentages.

Tim
The interesting thing about this that I think people have to remember is, this is this is a most of these are long term ROI is on brand strategy. So by doing the brand strategy, you set yourself up for future success with more efficient campaigns, but you have to get to the campaign activity first before you can start to see the metrics that reflect that. So there’s actually many factors that contribute to the ROI of branding, intangible and tangible. The important thing to remember is that each of these metrics are either in tangible or tangible, but all of them offer long term value for a company. Solid branding and brand strategy also makes the work that comes after branding process like advertising and content development more successful, thus improving your following short term success through paid channels and direct marketing activities. That’s where it starts to rub off initially. So all of this wraps together into how the work that’s done upfront one builds the brand equity of the company itself, but also affects internal alignment and direct activities in the future in terms of advertising and creative being more efficient, more motivational with higher conversion percentages. And that is something that over time will improve and show results from past decisions that were made.

Tim
So that’s what I have in terms of the the list of metrics, the the intangible metrics, clarity, time savings, alignment, the tangible metrics that can be taken over time through observational or advertising metrics themselves. customer retention, repeat business percentage, brand recognition, percentage, branded search, traffic volume, earned promotional placements, and impressions, and advertising spend efficiency are all future long term metrics that will be improved, based off of an organized brand strategy approach. So that’s what I have for the metrics of branding ROI.

Tim
As a reminder, I mentioned this in one of our past solo cast episodes, we do have a little brand strategy self assessment tool on our website, it talks about the different types of sections of strategy, it’s at luminous dot agency slash assessment. for five minutes, your time and super quick will provide you with an opportunities report that grades each aspect of your current brand strategy provides feedback on your progress and also includes action items for filling the opportunity gaps that might surface. So that’s at luminus.agency/assessment. Of course, feel free to reach out to me on LinkedIn @TimBouchard, or shoot me an email if you like, you can do that at tim at luminus dot agency. One other note, I’m always still looking for more amazing guests for the podcast, I want to keep creating these episodes for you. So if you know any owners or marketers in the building materials or product spaces, also architects, designers, retail level professionals, please consider suggesting the podcast to them and encourage them to reach out if they feel like they have a really good story that they could share with the audience. I love sharing these conversations with all of you. And obviously meeting the guests that have been on so far has been amazing as well. So do me a salad and pass along the word. Let’s keep this show going and get some more great people on. Thanks for diving into this sort of mysterious topic with me. I hope everyone can kind of walk away with some new thoughts on the value of branding and strategy and how you can measure that ROI. Check out the self assessment tool on our Luminus site and I will catch up with you all in two weeks with our next guest.

Tim
If you’re interested in hearing more stories and strategic insights from industry experts, please subscribe to the building brands podcast on Apple, Spotify or Google. If you’ve enjoyed this episode, please post a review and share with others who may be interested as well. Thanks for listening.