A brand is a promise kept. Branding essentials for the busy CEO Kevin J. Walker Table of Contents Forward Introduction 1 What’s at Stake? 2 The Profitable Way to Think About Your Brand 3 The Eight Characteristics of a Strong Brand Promise 4 Why a Brand is Like an Elephant 5 The Eight Benefits of Branding 6 About Brand Architecture 7 What to Brand 8 When to Brand 9 Branding Across Borders 10 Aligning Values 11 Branding with Heart 12 Using the Brand Lens 13 What’s Your Employer Brand? 14 Finding Your Capo d’Astro Bar There You Have It Referenced material About the author Forward Not long ago, at the end of a speaking engagement, I opened the floor up to questions. The first question asked was, “Where can we get your book?” To be honest, writing a book about branding – about anything, really – had never, ever, crossed my mind. The question surprised me, to say the least, and I got out of the situation by joking that I didn’t have the patience to write a book. But, then, in spite of myself, I got to thinking … I remembered a client who had me on retainer, but who never seemed to be able to set aside time to think about his brand. His brand was clearly under-performing and, with just a little attention, could have been connecting with its market much more effectively. But he always had some crisis going on and put off looking at his brand for another day. It’s frustrating when you know you can help, you want to help, but you’re not permitted to help. And I also remembered my friend Larry Comp, an authority on incentivizing C-suite leaders, who co-wrote a book called “Executive Compensation” and designed it to be an extremely short read so a busy CEO could tackle it in one sitting, for example, on a coast-to-coast flight. The light bulb began to flicker over my head. Kevin J. Walker A brand is a promise kept. Forward Introduction This paper is written for the busy chief executive officers (CEOs) of small-to-mid cap businesses who don’t have a great deal of time to study branding but, nevertheless, have to get it right. The day-to-day responsibility for the health of the organization’s brand assets may lie with the chief marketing officer (CMO). But, when that CMO suggests a plan of action or a change to the brand, the CEO needs the understanding to evaluate the recommendation and give it the go or no-go. That understanding will be found in these pages. This paper will also help the CEO insulate the organization from a brand’s greatest enemy—change. The CEO needs to see what the CMO may not see. The CEO observes the entire business landscape and must recognize when the market is shifting, notice when change is afoot, and anticipate when disruption will come charging over the horizon. This paper will teach the CEO how to think about that change, what it means for the brand, and how best to lead it, forestall it or adapt to it. The CEO will also learn why branding is so important and how it adds value – lots of value – to the enterprise. The paper will impart how best to think about one’s brand assets so as to increase profits. And it will show the CEO how to use the brand as a tool for making important strategic decisions. This paper will not get too far into the weeds. We’re talking about branding essentials here: what every CEO must know, not all they ought to know or all they might like to know. Except to illustrate our points, we’ll leave out all the famous case studies. You can find them anywhere. But, to know any less about branding than what is in this paper, well, the CEO is simply not ready for his or her job. That said, there is a lot more to branding than what’s in this paper alone. There is color and nuance. There are devils within details. We’ll leave all that for a lengthier tome. For now, we’ll just keep it to the essentials. Also, to keep things simple – and quick – in this paper I’ll be talking mostly about corporate or organizational brands. But the same tenets hold true about branding a product, a service, or even personal branding. Finally, it’s important that the CEO understands, at the very least, the basic essentials of branding because when brands falter, when value plummets, who gets the ax? The CEO, that’s who. Kevin J. Walker A brand is a promise kept. Introduction 1: What’s at Stake? As CEO, it’s essential that you clearly grasp the enormous value a strong brand brings to your organization. Here’s something for you to think about: Your brand is your most valuable asset and the only asset that appreciates with time. That bears repeating. Your brand is your most valuable asset and the only asset that appreciates with time. Say it aloud a few times. It is your job, as CEO, to define your organization’s true brand promise, to communicate it to all constituencies, and to empower your employees to deliver on it. Do this, and your brand will grow like wild vines. Fail to do it and your brand will wither and, possibly, even die. An organization’s products and services will evolve over time, but a company’s brand should be constant. Apple’s customers, for instance, buy all sorts of things from them – computers, tablets, phones, music players, now watches. Whenever Apple launches a new product, they support it with remarkable advertising. Most of Apple’s products are wildly popular – but some fail. Most of Apple’s advertising is pretty impressive and people respond well to it. On the other hand, sometimes it misses the mark and people snicker at it. Yet Apple itself is constant. Apple is neither the product nor the advertising. Apple is who offers the product. It is Apple who is doing the advertising. Customers don’t build a relationship with Apple’s products or their advertising. They build a relationship with Apple. And, when that relationship is strong enough, they’ll reward the successes and overlook the occasional failure. In the U.S. market, a mature corporate brand can represent up to 70% of a business’s overall value. Put another way, if the CEO mishandles the organization’s brand, he or she will have squandered up to 70% of its potential market value. Don’t let that be you. Some readers may find it hard to believe that brand value can add so much to the overall market worth of a company. But international brand valuation firm, Brand Kevin J. Walker A brand is a promise kept. 1: What’s at Stake? Figure 1 100 80 78% 75% 72% 63% 59% 60 Intangible Assets 40 Tangible Assets 20 22% 25% 28% 37% 41% 0 USA Spain Australia The Netherlands Canada Study on the S&P 500, IBEX 35, S&P ASX200, AEX and TSX223 – Reproduced by permission of Brand Finance, Plc. http://www.brandfinance.com Finance, Plc, conducts an annual worldwide study that shows intangible assets account for between 60% and 80% of a company’s capitalization, with most of that attributable to brand value. See Figure 1. In the U.S., the study was performed on the Standard & Poor 500, revealing that, on average, brand value represents 68% of the worth of the entire company. This is not shocking, by the way, to chartered financial analysts (CFAs), the professionals most often charged with evaluating companies and their assets. One such CFA is Brian Buss, founding principal of Nevium, a San Diego-based consultancy focusing on intellectual property management. Brian has developed a unique tool that scores a brand against 20 different measurements and then provides an overall score and monetary value. See Figure 2. Evaluating the worth of a brand can be as much art as science, but responsible professionals, like Brian, are constantly improving their techniques to take as much guesswork as possible out of the mix. This is important when calculating licensing agreements, royalty rates, and damages, not to mention the sale price of a company. Now, some people I know and respect might say that it’s actually employees who are a company’s most valuable asset. I’d counter that this is only true if the company has a Kevin J. Walker A brand is a promise kept. 1: What’s at Stake? Figure 2 NEVIUM BRAND EVALUATION METRICS Total Brand Score: 2.6 Brand Market Brand Brand Equity 1.8 Presence 3.0 Performance 2.25 Opportunity 3.5 History 1 Awareness 3 Sales/Growth 4 Marketplace 4 Consistent Use Differentiation Premium Pricing Transeferability/ 2 2 2 Extendibility 5 Loyalty 1 Market Share 3 Profitability 3 Umbrella 1 Relevance Business Fit Licensing Clear Path/ 3 4 0 Freedom to Use 4 History: Brand has signified the Awareness: Brand is well known Sales/Growth: Brand is used Marketplace: The brand is used same products for a long period of in the the marketplace with a significant and/or growing in a growing industry time Differentiation: Unique brand business Transerability/Extendability: Consistent Use: Brand compared to competing products; Premium Pricing: Branded Brand can be used with other message has been used consistent- Brand is the focus of marketing and products command a price premium products and services ly over time sales efforts relative to comparable products Umbrella: Brand is used, or could Loyalty: Customers consistently Market Share: Branded products Profitability: Branded product potentially be used, to support seek out new products associated have captured a significant market sales yield higher gross profits sub-brands with the brand or trademark share, or share greater than and/or operating profit margins Clear Path/Freedom to Use: Relevance: Brand is relevant to comparable brands Licensing: The brand has been, Strong legal protection of all the today’s customers and used Business Fit: Branded products or is currently, licensed by unrelated brand components prominently on website and social are central to the success of the parties for a reasonable royalty media business, and the brand is used consistently by the entire firm well-defined, well-communicated brand promise and the employees all understand that keeping the brand promise is their #1 responsibility, no matter what it says in their job description.