Leveraging Brand as a Strategic Asset
For the majority of the last 20 years, I've helped companies evolve by focusing on brand experience. And if there is one thing I've seen repeatedly, it’s that business leaders can be easy targets for the latest and newest innovative mindsets and methodologies offering the promise of growing and scaling quickly; I discussed one of these in my last post.
But successful companies have figured out and proven that branding isn’t a short-term game. It’s about making long-term investments that contribute to sustainable growth over time. What do I mean by sustainable growth? Over ten years, the Design Value Index Study tracked returns from sixteen publicly traded stocks considered design-centric. The result? Those companies bested, by a whopping 211%, the returns of the S&P 500. If that's not clear enough evidence to focus on the long-term, I don’t think you should bother to read the rest of this post.
And while there is no silver bullet to their success, those companies were measured across several different facets; one element is worth calling out. Each has figured out how to leverage its brand as a strategic asset. What does that mean? Let’s look at today’s business climate to find out.
Across the software industry, it's an all-out arms race. For many tech companies, it’s about achieving profitability, unicorn status (privately-held companies that reach $1B in valuation), maximizing shareholder value, or achieving market/category dominance. To accomplish these things at the speed at which the world and customers are evolving today, strategies and companies are pivoting more frequently than ever before. And for those companies that are at the top of the list, competing to deliver the world's most innovative technologies and solutions — they have the growth pedal mashed to the floor.
However, more often than not, you’ll find these same companies focused instead on investing in, and measuring short-term metrics as they fight to develop the next breakthrough. Daily active users, weekly CSAT scores, quarterly sales goals, or at the longest, monthly or annual recurring revenue metrics reign supreme. But ask where their vision for (or who they want to be) two, five, or ten years out, and many have little to offer. This is unfortunate, as many brands will ultimately never attain the success they desire as their focus is nearsighted.
Companies must view their brand as a strategic asset to succeed in the long term. A recent survey conducted by BCG and Google found that “brand marketing can be just as effective in the B2B realm as in B2C—if not more so. Among respondents, 97% say that brand marketing plays an important role in creating awareness and consideration, and 95% say that brand marketing can help a company differentiate itself from competitors. Yet, for nearly half of the responding companies, brand marketing budgets make up less than 30% of the overall marketing budget.” This means most companies are treating their brand as a carrot on a stick to get impressions, clicks, and “growth.” According to the B2B Effectiveness Ladder, a Maslow's Hierarchy of Needs for Effective B2B brand marketing, people experience a brand on six levels. Not only does this outline the spectrum of effectiveness, but it also allows brands and marketers to self-identify and hopefully improve their efforts.
The levels, starting with the least impactful and working to the most, are as follows.
Response Trigger: Stimulate a response or interaction
Lead Generator: Generate qualified sales leads
Sale Closer: Convert existing demand to sales
Fame maker: Create awareness and talkability
Brand Builder: Create greater affinity for the brand
Strategic Asset: Droves the business forward into the future
Most B2B software companies tap out in the middle at best. Few have reached the Brand Builder stage, and even fewer understand what it means to leverage and market their brand as a Strategic Asset. Why? In the same article, David Tiltman, VP of Content at WARC and a global leader in marketing effectiveness research, says, “B2B marketers are often basically seen as sales enablers. They're there to support the sales function rather than drive strategic growth. Marketing in the B2B space could be a lot more.”
What does he mean? In other words, by focusing more on marketing a brand in the short term and with lower levels of effectiveness, companies miss the opportunity to position their brands for longer-term impact, effectiveness, and growth. Each step in moving up the scale means you’re increasingly making strategic decisions that focus your brand on connecting emotionally with people who may not even be in the market (or, in B2B marketing terms, funnel) today. But when they are, your brand comes to mind.
Sound too squishy? Here’s a real-world example: Despite geopolitical and macroeconomic headwinds, Airbnb had its most profitable quarter ever, even bettering analyst estimates. They attribute part of their success to cutting search and other performance advertising and investing in extensive brand-oriented campaigns in 2019. Airbnb realized it wasn’t competing for clicks but winning mind share. And that’s paying off, as per CEO Brian Chesky, 90%(!) of Airbnb traffic now comes from direct. They figured out that by owning a slice of a traveler’s imagination, they would ensure they were top of mind when the time was right. As a result, they can take those search advertising dollars and invest them where it matters—in building better connections with the people who already know and love them.
Now, only some companies should completely cut search advertising. For example, your company may not be as well-known as Airbnb, and you need to build awareness or grow into new markets. Airbnb has proven that no matter who your business is, you can benefit from viewing and marketing your brand from a more strategic perspective.
Airbnb is now experiencing the benefits and rewards of compounding brand value (just like compounding interest) due to making strategic investments in its brand from the outset. Since its founding, they have chosen to compete on experience rather than clicks. Look at this example from the first rooms they rented—their own.
When Chesky and Gebbia developed the Airbnb website for the first time, they thought from the customers' shoes (designers attending a design conference and renting rooms in Chesky and Gebbia’s home city). Why are they coming to the design conference? What would they need to achieve their objectives? How could we help them to realize their trip goals? The questions helped Chesky and Gebbia provide a pleasant customer experience.
When guests arrived, Chesky and Gebbia presented them with a welcome package that contained a BART pass, city maps, and spare change to pass out to homeless people. They served their guests Pop-Tarts and orange juice for breakfast. Chesky and Gebbia also showed their guests around the city — they took them to their favorite taco place, the Ferry Building, and Stanford’s design school.
The guests loved their stay. They realized they would’ve missed this experience if they’d stayed in a hotel. They were thankful to Chesky and Gebbia and became close friends with them.
— The Airbnb Story
Since its inception, Airbnb has been operating and marketing its company from the most strategic levels. Even during 2014’s well-documented rebrand, they identified the brand not as a vacation-rental service or a travel company but as an association with their brand and “belonging.”
Because they chose to play the long game, their years of continued focus have allowed them to create even more loyal customers who know them by name and would never use anyone else. They can now afford to make even bolder decisions like cutting all search and other performance advertising instead of more brand-focused campaigns and double (or triple) down on experience.
Compare that to VRBO, which was founded 13 years before Airbnb. Or any number of competitors of the time, like Home Away, Craigslist, or even travel-focused sites like Expedia or Travelocity. Many of these companies had ample time and opportunity to take Airbnb’s territory. But none of them invested in the long game at scale like Airbnb.
Side note: It’s interesting to see VRBO begin to lean more into connecting more emotionally, starting with the “Your Together Awaits” campaign that began airing during the pandemic.
In a culture of focusing on scaling and quick wins, companies who invest in brand at the most strategic levels poise themselves for more sustainable growth over the long haul. Who are the companies you admire that have played the long game and leveraged their brand as a strategic asset? How does your company rank in the Effectiveness Ladder? Drop me a note if you’d like to learn more about how you might move up.