We often get asked by executives, “What’s the ROI on brand?” While it may be more complex to answer that question than it is for say, performance marketing, it doesn’t mean brand is less powerful.

At Spectacle, we believe that your brand has the potential to be your strongest asset or your greatest liability. Brand is about much more than marketing - it’s a strategic asset that creates lasting value for your enterprise. Building a strong brand is imperative to thriving no matter the economic cycle. 

Being successful in today’s climate requires more than just a great product or service, it requires the resilience to adapt to changing conditions — to not only play the game better but challenge the rules of the game. The strongest players recognize the need to invest in their brand to accomplish this. Investing in your brand is about far more than a new tagline or a fresh logo. It creates value for your business while you sleep.  

As an example, Rolex watches outperformed gold, real estate, and stocks over the last decade during a period where timekeeping was perhaps more commoditized than ever, and wearables surged. Rolex is just one example of how a strong brand increases value - no matter the macroeconomic climate. 

At Spectacle, we build Purpose-Led, Profit-Enabled brands that work harder for our clients. 

A strong brand adds enterprise value by pulling four key levers:

1. Driving topline growth - acquiring customers and driving repeat business
2. Increasing profitability - lowering acquisition costs, granting the permission to charge more and protect margin 
3. Promoting employee engagement - attracting the best talent and motivating them to be their best 
4. Perceived value - increasing the value that investors place on your business  ‍

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Driving Topline Growth: 

The most obvious way a brand creates value is growth. Brand positioning creates relevance among your target audiences. A strong brand gives you the ability to transcend products, extending into adjacent categories. That’s how Nike became more than a shoe brand to embody the "athletic pursuit" - from basketball to golf to skateboarding. Brands drive value by allowing you to acquire customers across segments, and gain their loyalty. Prophet’s Brand Relevance Index found that the most relevant brands outperformed the S&P 500 average revenue growth by 230% and EBIT growth by 1,040% over the past 10 years.

Once hitting critical mass, brands reach an inflection point - where their business needs to evolve to capture the next wave of growth. But a shift in strategy does not equal a shift in perception. A common goal of refreshing a brand strategy is to expand a company’s frame of reference. 

If you’re struggling to grow through new products or services, your target has to see you as relevant and credible in the space. This correlates to the way you frame your brand’s narrative. 
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Increasing Profitability:‍

Growth is essential, but it always comes at a cost. Brand creates a competitive moat to charge a premium and protect margin. And for years, the stock market rewarded growth over profitability - leading to inflated valuations for companies in high growth sectors like tech and DTC e-commerce.

Strong brands are less reliant on promotions or discounts to acquire customers. When your brand stands for more, customers are willing to pay more for it. Even better, when you are hyper relevant, there is no substitute for your product or service - you’ve rendered the competition irrelevant and created a category of one.  The most relevant brand’s EBIT outperformed the S&P by 1040% over the last 10 years. 

A great example is Netflix. When the company saw subscriber growth slow after reaching high household penetration and increased competition from formidable competitors, it didn’t slash prices - it raised them. Netflix knew they were indispensable to many households but recognized that hyper-relevant content was imperative. So it responded by increasing prices and investing heavily in new content for global markets. This retained their premium perception and kept their brand equity intact.

‍Promoting Employee Engagement:  

Strong brands work just as hard to drive value from the inside, not just with customers. A compelling brand vision unlocks strategic value with employees. With a clear and aspirational vision, employees are inspired by the destination and understand their role in making it a reality. Strong brands are able to attract and retain the best talent - and get the most out of them. Brand is a foundational element of culture - it defines your core beliefs, mission, and values. It makes clear what behaviors are acceptable and which are rewarded. Brand drives employee engagement - and employee engagement drives results by fostering a culture of innovation and problem solving. 

Companies with high levels of employee engagement are 21% more profitable than their peers. When times are tough (and it looks like they may be that way for a while), a brand vision keeps employees focused on the bigger picture and enlist their support to get there. 

In tumultuous times, we turn to the brands that we can trust the most. Building a brand that has meaningful connections with your audience creates loyalty you can draw upon in critical moments. The knee jerk reaction is to cut marketing spend during economic downturns, but the data tells us that’s pennywise and pound foolish. Companies that continue investing in brand during a downturn actually emerge ahead by staying top of mind. Strong brand strategy will allow you to adapt to changes conditions, not get swallowed up in them. 

‍Increasing Perceived Value: 

Perhaps the most powerful lever a brand can pull is the perceived value lever. Whether you’re a startup seeking investment or a publicly traded company seeking higher valuation, brand matters. Simply put, companies are valued at a multiple to a hard number like revenue, earnings, or cash flow. A strategic and forward-looking brand narrative is key to valuation. 

Investors who believe in the future potential of a company place higher valuation multiples on a given company vs. their competitive set. Just look at the P/E (Price / Earnings) ratio of Tesla vs. General Motors. When your brand is strong, good earnings produce great results.

Similarly, we’ve helped a number of startups craft compelling narratives that result in higher valuations with each raise. According to a McKinsey study, the world’s 40 strongest brands yielded almost twice the total return to shareholders (TRS) of an investment in a Morgan Stanley Capital International (MSCI) World index certificate over the course of the 20-year period ending in 2019. This is true for both B2C and B2B companies.

No matter what stage your business is in, your brand has the power to accelerate your growth, protect your margins, and increase your overall valuation. Strong brands survive economic downturns and come out on top — which only bolsters their ability to thrive during positive cycles.

If this resonates with you, we'd love to talk about how we can increase your brand's value. Drop us a line at info@spectaclestrategy.com.