Why So Many Companies Get Branding Wrong

By Steve McKee

Power Branding Book by Steve McKeeThis article is adapted from Steve McKee’s book, Power Branding.

Of all the assets any company owns, its brand is the single most valuable.

A bold statement? Sure. But think about it: A brand is the only corporate asset that, managed properly, will never depreciate. Never depreciate. Those are magic words. Patents expire, software ages, buildings crumble, roofs leak, machines break, and trucks wear out. But a well-managed brand can increase in value year after year.

Despite this unique characteristic, branding has long been misunderstood. It seems soft and fuzzy. It’s often incorrectly defined. And (at least historically) it hasn’t been a hard, measurable internal metric like sales, market share, stock price, or price/earnings ratio that can be tracked on a spreadsheet or reported to the board. But neglecting a brand is both naive and shortsighted for any company.

In some ways branding is a victim of semantics; call it “reputation” and nobody in management would ever argue that it’s anything less than critical. All companies are careful to avoid doing anything that would harm their reputations, intuitively understanding Will Rogers’s quip: “It takes a lifetime to build a good reputation, but you can lose it in a minute.” But management teams commonly underachieve in the application of reputation management best practices—in a word, branding.

Too many business leaders believe branding is a discipline that lives in the marketing department. But it’s much broader than that; branding includes everything a company does, from the logo on its letterhead, to the way it handles customer complaints, to whether its uniformed personnel keep their shirts tucked in. It’s easy to limit your perspective of branding to the verbal and visual expressions your company puts into the marketplace, but there isn’t anything that anybody within your organization does (or fails to do) that doesn’t affect at some level how your brand is perceived. Company leaders who ignore this do so at their peril.

Let me illustrate with a couple of examples. Not long ago I purchased a fountain drink at a convenience store that featured a pithy slogan on the cup: We always treat you like royalty. I’m sure the people who came up with that line had the best of intentions, but the clerks charged with carrying it out didn’t get the message. The unkempt counter and sticky floor made that clear.

Similarly, a few years ago in the midst of the Great Recession, a full-page newspaper ad from Citibank caught my eye. Considering the mess-of-its-own-making from which the bank was suffering, the ad featured an unusual headline: “Providing Stability. Securing the Future.” Clearly, I thought, someone in the marketing department is not paying attention. Citi was not only being buffeted by the storm, it was one of the causes of it. A company whose actions had led to so much financial upheaval laying claim to stability seemed detached at best, disingenuous at worst. (Ironically, the ad also featured the bank’s longstanding slogan “Citi never sleeps,” which, given the mess the company was in, I surmised was truer than ever.)

Contrast that with an encounter a colleague recently had when she purchased a new pair of shoes from a local running store. Not only did she enjoy shopping there, a few days later she received a call from a pleasant customer-service representative who wanted to ensure everything was still ok. That impressed her. Shortly thereafter, the store, unprompted, delivered a gym bag to her as a thank-you for her business. Needless to say, she now considers herself “in the club” and is telling everyone she knows about it. And there wasn’t an ad or website in the mix.

Branding is anything but lightweight, but too few companies intentionally manage their brands as the valuable assets they are. Effective branding improves the visibility of and respect for a product, service, or company. It attracts attention and drives sales. It also enhances margins, as customers are willing to pay more for products and services from companies they know and trust. Branding can also improve the internal dynamics of an organization and influence both recruiting and employee turnover. And research demonstrates that branding even affects financial metrics.

It’s easy to think about branding just in terms of the latest-and-greatest social media platform, viral video, or smartphone app. Doing so means missing the fundamental, timeless principles of the discipline that go well beyond the trendy and transient. It’s not like mathematics, engineering, or accounting, in which there are rules to be followed or regulations to be adhered to, but there are a significant number of commonsense, sometimes-counterintuitive truths based on how real humans interact in the real world that can make a significant impact on any business.

Originally published on Bloomberg Businessweek

Steve McKee

Co-founder and author, Steve specializes in addressing the most meaningful problems. Call Steve when you want to change the world. He’ll have a thought (and some research) on that.

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