It is tough enough to stand out from the crowd when you sell something tangible – a product. But it is exponentially harder to distinguish your business from its competitors when what you sell is intangible – a service, or advice. That’s the challenge facing professional services firms, such as management consultants, law firms, accounting firms, architects, design firms, leadership development firms, executive recruiters, etc.
Professional Services are Big Business in the U.S.
The professional services sector is very large and growing. Of the U.S. services sectors, IT consulting alone accounts for US$408b, followed by law firms, engineering firms and management consulting firms. These firms are large and aggregately employ millions of associates. And, with the exception of environmental consulting, are all growing.Source: IBISWorld
As the market grows and competitors proliferate, professional services firms face the commoditization of services and downward pressure on fees. The best defense against this is a strong brand that signals why your firm is unique in a meaningful and credible way that your clients, prospects and staff will value. Then, and only then, can you command a fee premium.
Yet many professional services firms come across as complex, fragmented and undifferentiated. This is the result of a variety of factors; mergers, acquisitions, rapid proliferation of new service offerings, and name changes. Consequently it is often difficult for a prospective client or job candidates to tell what a firm actually does, let alone why they should choose it over its competitors.
So what should you do?
Most Professional Services Firms Sound the Same
The words and claims professional service firms use today do not accurately describe the differences and individual firm strengths. Instead, they blur into homogeneity.
Note: Based on the self-descriptions and claimed differentiators from the websites of the top ten firms in each of the eight key professional services sectors listed in the above table.
These firms are failing to meet the challenge of differentiation, opting to blend in rather than stand out. In doing so they are putting themselves at risk of competing solely on price. There is a better way.
Mean Something, If You Want To Matter
A powerful, authentic brand captures and signals the fundamental human meaning in your business – the thing that sets you apart and makes you matter to your marketplace of potential clients and potential recruits. It is therefore a strategic business issue, way upstream from the issues usually associated with brand (e.g., name, logo, visual style). Those are symbolic expressions of the brand, shortcuts to the meaning in the business: they are not the brand itself.
If developed and expressed correctly, a unique and differentiated brand can:
- Shorten the sales cycle and generate quality revenue by enabling the right clients to self-select. By signaling clearly your beliefs, values and unique point of view, the brand enables like-minded clients to see you and select you.
- Shorten the recruiting cycle and attract quality talent by enabling the right recruits to self-select. Likeminded recruits will share your passion and bring new levels of creativity to the mix, making your organization extraordinary.
- Define and protect a unique arena for your firm by establishing a platform that enables you to stand out and be known for something important.
- Unite and align your firm’s practice areas and geographies by creating a galvanizing brand idea that enables them to act as one and benefit from the brand’s equity.
A Strong Brand Brings Powerful External and Internal Benefits
The effort involved in building a strong brand aligns and focuses the business, and can bring significant rewards inside the firm as well as the marketplace.
- Command a fee premium
- Articulate a credible and clear identity
- Create multiple paths to differentiation
- Develop consistent messaging
- Maximize the value of the organization in the event of a sale
- Manage shorter, less costly sales and recruiting cycles
- Enable the “right” clients to self-select
- Align the leadership team
- Build a shared understanding of a multilayered value proposition
- Provide a consistent compass for R&D investment
- Feed and focus marketing
- Respect individual autonomy while building on shared meaning
- Enable the “right” staff to self-select
Brand Can Square the Circle
Professional services brands face a set of distinctive challenges. In the manufacturing and consumer goods arena, the product conveys the brand and you can paint meaning onto the product via advertising and communications. But in professional services firms it is the professionals themselves who convey the brand in their relationships with their clients. They represent the brand in every interaction.
Those professionals cherish their individual autonomy and will not usually be happy to march in lockstep or parrot a corporate script. Yet the firm needs its clients to have a committed relationship to the organization, not just to the individual consultant.
Brand offers a way to square this circle by building a shared sense of the meaning in the business, while at the same time enabling individuals to express that meaning in a way that is authentic to them.
Our extensive experience helping professional services firms to differentiate and market themselves effectively has helped us identify three key factors that set professional services brands apart:
- Relationship is the envelope that wraps the client work. Thus from a branding perspective, professional service firms need to understand and leverage the emotional value of the relationship as a key differentiator.
- Attracting and developing talent is as important as attracting and developing clients. Therefore, creating alignment between the internal and external brand is an imperative.
- Vision, values and beliefs drive the behaviors that convey the brand. Understanding and clarifying these areas is essential to building a meaningful professional services brand.
Your Brand Story: How To Make The Abstract Visceral
Brands are ultimately about meaning. Stories are the building blocks of meaning. And stories that connect your brand with a fundamental human need can help you build a powerful connection with your clients.
That is as true for consultants, accountants, lawyers and architects as it is for car makers, computer manufacturers and food brands. The difference is that while we have long accepted that emotional connection can drive consumer purchases, we like to think that business-to-business purchases are driven entirely by cold reason. They are not.
Take the case of the world’s top two strategy consulting firms, McKinsey & Company and The Boston Consulting Group (BCG). They both hire the top graduates from the same small pool of elite business schools; they both offer a similar range of services to solve a similar range of client problems; they both sell to C-level executives in large, complex businesses; and they both have excellent reputations.
On the face of it, the two firms seem so similar that it ought to be hard for a prospective client to choose between them. But the brand story that each firm tells is quite different. At the heart of the McKinsey story is the promise of power and control – the stability and order that enables prosperity. BCG on the other hand, tells a story that promises understanding and transformation – the insight that empowers you to change your circumstances for the better. Both are compelling stories, but they each appeal to a different client mindset.
So how do you discover and then develop your authentic brand story? There are strong clues in the recurring iconic stories about the firm that your professionals tell themselves. The stories that clients tell about you (and the language they use to tell them) are also powerful sources. In both cases, it takes skilled questioning and astute listening to draw out the truth in the tale.
Once you have discovered the fundamental brand story that fits your organization, it then has to be developed into compelling market-facing messages, woven through all your communications and, crucially, embedded in the culture of the firm and the behavior of your people.
Three Steps To Building A Powerful Professional Services Brand
Building a brand that is meaningful, authentic and capable of delivering the benefits described above generally involves moving through three phases:
- Discover. This is a foundational phase that defines the core building blocks of the brand, the key attributes, and importantly, the “brand story”. This is a critical step as finding the right brand story helps everyone in the firm live the brand.
- Communicate. There is an art and a science to unpacking and then expressing a brand. In this stage of work, the focus is on defining key messages, identifying the key issues that your brand needs to “own” and focusing your intellectual capital development to support those issues. The brand story and external messages are then expressed in a suite of external marketing tools and woven through everything from your client credentials deck to your website.
- Embody. Your brand is a mandate, not a mask. Beyond words and symbols, a professional services firm needs to learn to live the brand. In this phase, the focus is on aligning the internal and recruiting brand with the external brand, and embedding the brand into the three core business processes (developing clients; developing talent; developing ideas).
Professional services brands are not like consumer brands, and the process of developing them is different. Programs that work in traditional businesses often fail. But with the right approach, one that accounts for the realities of the professional services “ecosystem”, it is possible to develop a powerful brand proposition that appeals to both head and heart, one that differentiates the firm and generates greater demand.
For deeper insights, contact:
John K. Grace
President & Managing Partner
Tony Tiernan, Founder
Authentic Identity Inc.
July 26, 2018 Comments Off on Differentiation: The Key Challenge For Professional Service Firms
Build a great differentiated brand or drown in a sea of sameness. Today having a strong investment management brand is not a nice to have, it’s an imperative.
For years building an investment management brand was left to the big mutual fund players and others vying for retail clients. Then, with the global financial crisis and the massive outflows across segments, firms of all shapes and sizes rushed into the market with what they thought was “branding”. Today, just about every investment management firm has a website, a pitch book and a LinkedIn page—likely all blue and peppered with navigational logos and images. Many thought, therefore, that they had built a brand and that this, combined with good, consistent performance was enough to get them noticed, win business and develop loyal clients. Once upon a time that may have worked, but not today.
With the increased complexity of the financial markets, expansion globally where firms may be virtually unknown, commoditization and a growing preference for specialty managers—many are taking serious stock of their brands.
The Value of Truly Building an Investment Management Brand
Brand strength is the second most important attribute in selecting an investment management firm after performance. As the lines between retail, intermediary and institutional buyers blur, more stringent disclosure requirements are imposed and with the move to more global distribution, brand and reputation are increasingly more important drivers in clients’ decision to invest. As the following chart shows, according to intermediaries, brand strength and reputation ranked as the second highest factor when considering a firm.
Key Drivers of Asset Growth
Intermediaries rank past performance (a perpetual top driver) and brand strength as the leading factors for attracting assets from their clients.
Most Important Factors for Attracting Assets – U.S. Intermediary Market
The field is crowded, noisy and confusing. Today hundreds of investment management firms with countless strategies and vehicles are battling it out for assets. Add to that the lack of distinction between firms, it’s nearly impossible for potential investors to see through and understand what a firm does and does better than its competitors. Net, it takes a lot to win and retain loyal clients.
Key promises sound the same. Without doing the work to create meaningful differentiation, most firms push out promises that sound identical, creating a virtual sea of sameness. So, to get noticed in an over-crowded marketplace a firm must build a brand that means something and ultimately matters to its clients. To do this, the story it tells must be clear, differentiated and memorable.
Investment Management Firms Face Unique and Formidable Challenges
Simply put, investment management brands are different—from their products and services to their diverse audiences—and operate by a different set of brand rules.
How do you brand thinking, advice and insight—all intangibles?
With consumer goods or manufacturing, customers can “experience” a product, they can taste it, wear it or drive it, and this offers more opportunities for differentiation. However, with an intangible based brand, creating an experience and ultimately building a brand is much more difficult. In investment management, the proposition rests largely on the thinking, insight and expertise of the managers and they are therefore chiefly responsible for conveying the brand to investors. It is important to identify and cultivate a brand idea that captures the essence of the “intangible”, is at the core of what the firm stands for, and that all can rally around.
How do you build an authentic brand experience when your audience is layered—sometimes its B2C, sometimes its B2B, sometimes it’s both and both at the same time?
Investment management brands are neither consumer brands or B2B brands, they’re different. Their primary audiences are a mix of professional buyers—financial advisors, plan sponsors, institutional consultants—and consumers with very different needs and expectations. They must be perceived as offering the deep insight and information required by professionals and at the same time instill a sense of trust and confidence with end investors. Adding to the challenge, is that all of this needs to be conveyed through a complex distribution system. Deep knowledge of the markets and investment products—from traditional to non-traditional—and a solid understanding of the nuances of various distribution channels is key to mapping out relevant propositions and communications.
Investment Management Layered Distribution
How do you build an investment brand when what investors are buying is a promise that their assets will grow and outperform, when the future lacks certainty and that promise is based upon past performance?
Customers and intermediaries alike are ultimately expecting that their assets will grow and they are being asked to believe that they will based on past performance and information. The problem is that the future is uncertain, promises are just that, and history doesn’t necessarily repeat itself. Therefore, clients need reasons other than history to believe that a firm will deliver. It ultimately comes down to trust. Crafting a brand of reliability, openness and confidence are keys to gaining that trust.
How do you build trust, because that’s what it takes, in an industry that is largely considered not trustworthy?
With the financial crisis came significant investor skepticism and lack of trust in financial institutions. It was a logical outgrowth. Rebuilding trust starts with uncovering the firm’s authentic identity and value and from there a compelling brand can be constructed.
The Keys to Building a Powerful Investment Management Brand
Developing an investment management brand takes not only an understanding of the complexities of the industry—intermingled audiences, complex distribution and nuanced products—but also the knowledge and expertise of brand-building.
Identify a core, unifying brand idea that embodies the purpose of the brand and the ultimate benefits to all that it engages. Brands are essentially about a firm’s identity, driven by purpose and meaning, and the connection that people make to that purpose and meaning. So, getting to the essence of a firm, who it is, what it believes, how it’s better or different than others and telling a credible, compelling story is how great brands are created.
Understand what each target audience needs to hear to engage. Because audiences are often layered and over-lapping, spend time developing a brand messaging strategy that communicates effectively to each important audience and at the same time builds common equity for the benefit of each product or service.
Tell a meaningful and differentiated story. For years, investment management firms stayed in a very narrow range of brand building—lackluster messages focused largely on performance, rock-star teams, and complex, at times mysterious, descriptions of who they are and what they provide. It became a maze of mirror images making it difficult to distinguish one firm from the next. So, the new rubric is about telling a true and meaningful “story” that is the surest route to clarity and differentiation.
Be consistent in all communications and behaviors. Again, investment management firms must appeal to a variety of different audiences. Add to this that each distribution channel has a distinct process and preferred system of communication. This condition offers ample opportunity for messaging to break down and ultimately dilute brand awareness and appreciation. To develop investor confidence and build brand equity, careful attention must be paid to consistency in communication and alignment with the brand messaging strategy.
Invest in building the brand. For a time, with good performance, generally content investors, reasonable compliance constraints and an intermediated sales process, many firms were reticent to develop a powerful brand. In fact, their strategy was to “stay under the radar”. Then the markets melted down in 2008 creating a fog of mistrust of the industry. This changed the game almost overnight with clients looking for reasons to believe beyond performance. This is where investing in a powerful, differentiated investment management brand became an imperative.
Building a strong and enduring brand in the investment management business is both an art and a science. The pursuit involves two essential pieces; understanding the true and authentic identity of a firm to create powerful differentiation, and having a deep understanding of key audiences to unlock what they need to hear to engage. From this foundation, strong brands can grow.
For deeper insights, contact:
John K. Grace
President & Managing Partner
June 28, 2018 Comments Off on The Investment Management Brand Imperative
Brands have value, sometimes quite a bit. There are ways to measure and leverage this value to grow business. In the last two decades, there has been significant work in refining methodologies to both measure brand value, and then use it as a proactive business tool to benefit businesses. This paper will describe the methodologies and applications so that business leaders can determine if brand valuation has application to their organization.
What is Brand Value?
Brand value measures the economic asset value of a company or product brand. It details how much of the company’s operating income and free cash flow is derived from the brand, the influence of the brand within each consumer purchase decision driver, and the associated brand risks.
By linking the brand to the economics of the business at a detailed level, brand value opens the door to a number of useful applications. Brand Valuation can answer questions and help business leaders move a franchise forward.
Some typical questions include:
- How can I prove that branding offers real value to the CEO, CFO, and the Board?
- How can I justify a proposed marketing budget?
- How should we optimize the marketing budget across the brand portfolio? What else can brand value tell us that will make our marketing investment as efficient and effective as possible?
- How can we align the commercial organization around a metric that ties better to financial performance?
- How can we use brand value knowledge to evaluate acquisition opportunities? Is the acquisition brand gaining value or in decline?
- What is the optimal royalty rate for a licensing opportunity? For a co-branding opportunity? For an ingredient branding opportunity? For a non-profit co-marketing opportunity? How do we grow this revenue stream?
- In evaluating joint venture and partner relationships how can we optimize the brand relationship to capture the maximum value?
- In our selling process, how can we best tell our brand story with a better economic fact base to win more business?
- How can we use purchase driver insights from the Brand Valuation methodology to focus investments? Drive innovation initiatives?
- How can we use our brand heritage and value to drive higher prices?
- Given that brand drives earnings and therefore taxes, how can we leverage brand value to lower taxes?
- How can leverage brand value insight to retain the current employee base and reduce turnover?
- How do we quantify the damage to our brand in legal defense?
Brand valuation, as a methodology, has historically helped articulate the value of branding in many different types of business situations:
- Household brands like Apple and Coca-Cola are worth more than $70+ billion as an asset. Companies now understand that brands can contribute anywhere from 30-70% of a company’s market capitalization.
- There are also over 200 brands that offer economic value exceeding $1 billion, including well-known companies like Google, McDonald’s, Tiffany’s, BMW, Coach, Harley-Davidson, Starbucks, Caterpillar, and Verizon. More than that, even a small $5 million business may have $1 million in brand value that can be leveraged.
- Academic work has shown a relationship between brand value and shareholder return. Companies experiencing the largest gains in brand equity saw their shareholder return average 30 percent; conversely those firms with the largest losses in brand equity experienced stock return average a negative 10 percent. Another study has shown that a portfolio of high brand value companies outperformed a total stock market index by a wide margin (23% per annum versus 16%) throughout most of the 1990’s, and at a lower risk profile.
Calculating Brand Value
There are three types of calculations; Market-based, Cost-based, and Income-based.
Market-based valuations look at comparable market, company or stock transactions. If these transactions are readily available it might be possible to estimate one brand’s value by comparison with the value of another comparable brand – a rare situation.
Cost-based valuations assume it is possible to value a brand on the basis of what it costs to build or what it might cost to re-create. Unfortunately, past “cost to build” is not a guide to current value. And, by definition, unique brands are not re-created easily.
Income-based valuations come in two common forms; royalty-relief method and discounted cash flows (DCF).
The Royalty-relief method assumes that a business does not own the brand and therefore needs to license from someone else. If a brand has to be licensed from a third-party, a royalty rate will be charged for the privilege of using the brand. In contrast, ownership of the brand relieves the business from paying a royalty rate. While occasionally seen in legal cases, the royalty-relief method can prove difficult because it is dependent on finding comparable royalty rates and the details behind their calculations.
Discounted cash flow. This method looks at free cash flow generated by the business under solid assumptions and then applies an appropriate discount rate to determine the business’s present value. This is the most common form of brand valuation used today.
The Discounted Cash Flow method separates analysis into three areas:
Financial Analysis to isolate free cash flow
Brand Driver Analysis to determine the influence of brands on that cash flow
Brand Risk Analysis to discount the free cash flow based on calculated risk
Below is a step-by-step process that results in a Brand Value that has many potential applications.
Discounted Cash Flow Brand Valuation Process
Using Brand Value Applications
There are at least twenty different proven brand valuation applications developed to date that fall into three general areas of business management decision-making; increasing revenue, lowering cost, or reducing risk. Depending on the business need, a strong brand valuation methodology can be fine-tuned to address specific challenges facing an enterprise. Most applications can be highly profitable with little or no capital investment.
Brand “Option Value” – Identifying Future Value Opportunities
Brand Valuation looks at current data to calculate value and determine optimal management tools to move a business ahead. But one real opportunity is to use valuation methodology to identify future opportunities. A brand with many avenues to future growth is undoubtedly more valuable than a brand with limited growth opportunities.
In classic finance terms, a business valuation can include “option value” in addition to the discounted cash flow valuation of the existing business. Option value relates to quantifying the value of future choices. For example, if a company has a plant in Asia that was built with regulatory approval, it may own barriers to entry versus its competitors. As a result, it may
have access to additional product revenues with little competition. So focusing on Brand Option Value can identify ways to optimize and grow a business from the perspective of the brand. This becomes a powerful lens for growth.
Another example of this is Apple. Their continuing expansion has also fueled greater options for growth. When they initially moved from computers into music via iTunes and the iPod, this gave their brand greater stretch and consumer permission. This momentum continues to drive them into new territories of value. Along the way, they have locked in attractive raw material pricing, lower manufacturing costs, higher levels of customer service capabilities, etc., and often cornered the market in new technologies. Think about the iPhone, iPad, iCloud as new foundations. So Brand Option Value can be an organic tool for focusing growth. Today, Apple has many options beyond computers.
Brand Valuation, as a formal business tool, can help companies plan, optimize and navigate their future. By identifying incremental revenue opportunities, or ways to lower cost and reduce risk, companies can move forward with greater certainty and clearer direction.
For deeper insights, contact:
John K. Grace
President & Managing Partner
May 23, 2018 Comments Off on Brand Valuation – Leveraging Brand Value to Increase Revenue, Lower Cost, and Reduce Risk
Brand Architecture is a key strategic tool to organize a business so that audiences will understand what you offer and how they can engage.
The rules for organizing brands today are evolving. There are important forces that have changed how external audiences engage with brands. Probably the most important is technology and how it has enabled people to know more, purchase more efficiently, and decide more quickly. The consequence is that a company and its products and services need to be communicated with a new simplicity so that all key audiences easily understand the business you are in, how they can find what they need, and at the same time understand the breadth of value your company brings. This is the goal of building a strong brand architecture.
Why it is an Imperative?
Muddled Offerings. The most common branding issue we see today is that corporations have a very muddled array of products and services that are not well organized and therefore difficult to figure out. This is caused by a variety of circumstances:
- Consolidation through acquisition, merger or organic reorganization
- Evolution of a business into new areas that are either completely new or adjacent to existing capabilities
- Expansion into higher margin businesses from a legacy offering
- Spin-offs that require new levels of explanation.
Need for New Understanding. The shakeout from the economic trough we experienced, while difficult for most businesses, has presented the opportunity to look at the resulting business through a new lens and to sharpen focus to generate new levels of interest and generate higher revenues. Further, this sharpening can have enormous benefit for the financial community, helping them not only understand the business better, but also have more confidence in a company as it moves forward.
Galvanize and Engage Employees. In addition to the obvious outward value of a clear and easy-to-understand brand architecture, in many cases the employee base doesn’t always understand the breadth of what their own company offers, how the parts are interrelated, and the opportunities to expand customer relationships. Just imagine the power if every employee more fully understood your business and could be a true brand ambassador.
So focusing on a clearer and more understandable framework is an essential task in the new economy. The good news is that there is a disciplined process to determine the best way to organize and communicate a business’s offerings to more easily engage with key audiences.
Organizational Architecture Should Not Drive Brand Architecture.
Brand architectures should be designed for external (outside) audiences to “explain” a company’s business so that they can understand and engage. The easier it is for an external audience to understand, the greater the chances they will respond, whether it is a customer audience, a business or trade editor, or a financial analyst.
Companies are often organized for reasons that may not make sense to external audiences. The drivers of internal organization can include:
- Legal requirements
- Tax circumstances
- Financial reporting
- Legacy business history
- Acquisition complexity
- Leadership opportunities
But often these organizational decisions are not the way outside audiences see a company’s business. From their standpoint, they want to engage to find a specific product or service, and really don’t care how the company is organized. The consequence is that a company needs to have a “brand” architecture constructed from the outside in. While this sounds relatively obvious, getting internal leaders to agree is usually a significant challenge.
Below are some helpful ideas about how to engage the leaders to successfully develop an appropriate brand architecture.
What kind of Brand Architecture?
A Brand Architecture is a systematic means of focusing and organizing your brand assets to ensure that target audiences understand the breadth and depth of value you offer them.
There are several basic types of brand architectures that, in a pure or hybrid form, are the underpinnings of clarity. Each is developed by determining the best way to express the business vision through the lines of business.
A Masterbrand Architecture is a monolithic structure where, from a branding standpoint, all business units, subsidiaries and divisions share the same brand. The “Masterbrand “ is also sometimes referred to as the “Corporate, Umbrella, Parent or Mono” brand. Good examples of this strategy are FedEx and GE. In general, everything carries the FedEx and GE Masterbrand and sub-units are defined by descriptive language.
An Endorsement Brand Architecture uses a common endorsement for all of the operating units, and the parent brand functions in a subordinate manner to each operating unit brand. For example, United Technologies operates as a parent brand as it faces Wall Street, but each operating unit is identified by its own brand with an endorsement. The Sikorsky business is branded Sikorsky, “A United Technologies Company,” but uses the iconic “gear wheel” symbol, as does Hamilton Sundstrand, etc. To make matters more complex, sometimes the sub-brands of United Technologies use a legacy identity when facing specific customer audiences.
A Portfolio Brand Architecture, sometimes called a “Free-Standing Brand Architecture”, keeps separate identities for many or all of its brands. Particularly if there is sufficient marketing support for individual brands and it is believed the parent does not provide any brand equity that would benefit the individual brands, a portfolio architecture is appropriate. Procter & Gamble manages a portfolio brand architecture. General Motors also manages a portfolio of brands with little overt brand equity supplied by the parent.
An Ingredient Brand Architecture uses a principle brand (e.g., Intel or NutraSweet) as a common element in supporting and qualifying other brands. The premise is that if the ingredient is good, the brand it amplifies is better than without it. In the case of purchasing a PC, there is research that indicates that consumers look first for the “ingredient”, the (Intel) processor, before the brand it is within.
How do you decide which type of architecture is best? If you remember the golden rule (from the “outside in”), that should be the starting point. You start by determining which are the most important audiences. For most companies it is customers. But for others, it is financial & industry analysts, key trade media, and even governments. Therefore, the first task is to determine audience priority. The next step is to determine what each discrete audience needs to “hear” or understand in order to engage with your brand. You must look at your company from their point-of-view. This often requires outside help and research so that you can have an objective view of the marketplaces you serve. Almost every company we work with has a belief about how external audiences view them, and this view is naturally biased and often incorrect. Having objective insights also helps put in perspective internal beliefs that have built up over the years.
How do you engage the line of business and other leaders? Evolving to an external facing brand architecture is a process. It not only requires audience research, but also leadership team involvement so everyone understands their role in how the company speaks outwardly. Today, when companies have many different lines of business and products and services, it becomes imperative for the key stakeholders to work together to arrive at a brand architecture that serves both their individual need, but more importantly the corporate vision.
Where we have seen the most resistance is in situations where the broad leadership is not deeply involved. Because how a company portrays itself is so critical to the future, developing a strong, outward-facing brand architecture is a strategic mandate. Get the leadership involved and keep them involved.
Who should manage the process? Development of brand architecture is a strategic initiative and should be managed by the most senior corporate leader who can rise above line-of-business interests. In some cases it is the CEO, but more often it is the Chief Strategy Officer or Chief Marketing Officer. Among other values, strong brand architectures usually signal a new future while creating clarity. Thus, if a specific line-of-business leader is tasked with the initiative, the solution often becomes weighted in favor of that business unit, and not reflective of where the long-term business is headed.
Brand architecture can be a powerful tool to help a company accelerate its growth. Investing the time and effort to optimize a company’s brand architecture can deliver higher near and long-term revenues and profits.
For deeper insights, contact:
John K. Grace
President & Managing Partner
April 26, 2018 Comments Off on Why Brand Architecture is a Critical Strategic Imperative
The erosion of loyalty in the workplace is pervasive, especially among millennials. This is the result of organizations not providing ways for employees to see meaning and purpose in their role and in what they do. If properly addressed, the over-arching “brand” can become the galvanizing idea to express an underlying inter-connection of Vision, Mission and Values, and provide a focal point for developing pride and greater loyalty. This new lens is about understanding the importance of congruence and how to use it.
As far back as 1968, various studies1 have concluded that the congruence between self-image and brand-image eventually plays an important role in improving brand loyalty. Today, the thinking about congruence and incongruence comes from Carl Rogers’ humanistic approach to psychology that suggests that humans want to experience and behave in ways that are consistent with their self-image and what they would like to be.
When examining what motivates us, it’s clear we are driven by intrinsic factors far more than extrinsic ones. Thus congruence, and how to shape it, is an under-lying key to engendering loyalty, which becomes a significant competitive advantage.
Shift in loyalty
What we know from research is that 71% of millennials2 say they are not emotionally and behaviorally connected to their job or company. The days of organization and corporate loyalty have shifted dramatically, and continue to do so. 66% of millennials3 already say they plan to leave their jobs by 2020. In other words, they are already thinking about moving on and not staying to build a long-term career. This puts an enormous burden on organizations to figure out the underlying needs and re-frame themselves so that they can align and engage. There are many companies trying many different activities to retain and build loyalty, but many of these programs are simply band-aids and not fundamental cures.
What is causing the shift?
There are many factors that collectively impact why employees do not feel congruent with the organization they work for. Here are some of the main reasons:
- Acceleration of industry disruption. The rate of change is increasing. Technology has disrupted virtually every industry. Thomas Friedman writes eloquently about this in “Thank You for Being Late”, a text describing the tectonic shift in attitudes resulting from technology evolution.
- Mergers creating mixed cultures with little rationalization or explanation of “why”. As markets consolidate, mergers have created larger and larger organizations, where different cultures may not share a common view of the future, and the role they can play in it.
- Mixed messages are everywhere. Think about how the world is filled with mixed and often untrue messages creating high levels of skepticism:
- Political messages are often untruths and shake our confidence in believing
- Religious leaders have been misleading us about pedophilia and other issues within the church
- Advertisers mislead us. Consumers know that we can find almost any product at a lower price than advertised
- Corporate communications from the top are often suspect. Employees are sensitized to reading between the lines
- Employees often feel unheard and unmanaged. Because of the rate of change, it is hard for companies to keep up with acknowledging individual needs. This dynamic can further distance employees at a time when they need more communication, not less.
- Corporate visions and missions are often generic and uninspiring. There are relatively few corporate visions and missions that are specific and unique to a company. Much of the time they use generic words instead of language that guides employees to feeling like they are part of something special.
- Corporate values can sound nice on paper, but are often not differentiating and compelling. When values start sounding generic, employees tune out as they do not feel any deep connection to the DNA of the company they have selected to work for. It’s about the specific values as well as the actions that support them such as compensation, incentives, training, advancement, etc.
Meaning and purpose are what employees want
At the core of millennials’ concerns (and we believe a much broader swath of employees) is the need to have meaning and purpose. They want to be part of something that aligns with their beliefs, and has a culture that validates what they are doing. 87% of millennials4 seek something greater than themselves, such as participating in cause work. This is a dramatic shift from prior generations.
The result is that to build and sustain a loyal workforce, organizations must establish congruence in the work place. The new mandate is that employees must truly believe what they do is viewed as part of what they would like to be. It is not enough to strive to be an organization that is the “best” at something, unless this is attached to a belief that reinforces purpose.
Congruence comes from the inter-connection of Vision, Mission, Values and Brand
In building a powerful brand, organizations need to think broadly about the narrative of Vision, Mission and Values. This is what, in total, creates congruence. Each element plays an important role in not only shaping the future, but building a community that employees want to be part of. Over the years, we have spent a lot of time guiding organizations to clarify and understand what each element is and the role it serves. We have found that stepping back and re-evaluating each element offers the opportunity for an organization to ask the hard questions about whether each is appropriate for the future the organization is facing. A tougher question is whether there is a consistent narrative that defines the organization, guides behaviors, and resonates with the changing needs of the emerging workforce.
- Vision describes what the organization aspires to be. It is, ideally, expressed to communicate the better world an organization hopes to bring about. It must be inspirational and speak to all stakeholders. A powerful vision becomes an aspirational north star.
- Mission is what the organization must do to achieve its vision. It is the guidance of what it must dedicate itself to achieve, to move ever closer to achieving the vision.
- Values are the non-negotiable beliefs an organization holds to deliver its mission. Each value should be backed up with explicit policies that are embedded in the way it does business.
- Brand is the promise of value represented by the sum of the vision, mission, values and expertise. It is conveyed through communications and behaviors.
Together, these elements form the narrative that creates meaningful congruence by embodying an idea or ideas that employees can attach to. What has changed is the need to look at all four elements as part of a whole so employees can experience congruence
The most successful brands today shape a unique narrative. One that it is honest and true, and expresses a belief system that resonates with employees. Importantly, they reject generic corporate language and develop a unique story that could only be from that organization and none other.
Amazon really gets it… no wonder they are successful. Their Vision is:
To be earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.
Knitted together with their Mission:
We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience.
You can see how these core tenets might be attractive to employees.
Amazon Values (or what they call “Leadership Principles”) are very powerful. Notice how they focus on being the leader, and help shape the Amazon way of doing things:
- Customer Obsession.
- Invent and Simplify.
- Are Right, A Lot.
- Learn and Be Curious.
- Hire and Develop the Best.
- Insist on the Highest Standards.
- Think Big.
- Bias for Action.
- Earn Trust.
- Dive Deep.
- Have Backbone; Disagree and Commit.
- Deliver Results.
When Vision, Mission and Values are part of one fabric or narrative, they shape a brand that connects with current and prospective employees.
The internal brand language at Amazon is “Work Hard. Have Fun. Make History.” The words “make history” point to the opportunity to do something big and important. It means more than money… it signals that customers can derive extraordinary value because Amazon exists.
Successful brands that are driven by powerful ideas enable congruence
The truly great brands, large and small, spend a great deal of time focusing on their brands as the expression of the narrative.
IBM has brilliantly picked up on the need for congruence. They focus more today on “creating a world that is fairer, more diverse, more tolerant, more just.” Think about that… their over-arching philosophy does not reference products and services, but summarizes what they believe.
From a brand communications perspective, IBM links this idea to employees by speaking about “…a world we want to live in. The world you’re building…”. They make the connection for the employees so that they can see purpose in what they do every day. This is congruence at work.
Here are some corporate visions that communicate, in short form, a better world that employees can see themselves part of:
To the extent that a vision sets the stage for what millennials want to associate with, the company will attract the right people and develop greater levels of loyalty than their competitors.
The challenge is to determine whether each element provides enough guidance to shape a congruent experience so that employees stay loyal and enthusiastic. As meaning and purpose evolve as the primary driver of attracting and retaining talent, the “Congruence Narrative” becomes the epicenter of the connections.
If an organization creates a “Congruence Narrative” that resonates, just imagine how much easier many processes will become; from attracting the right talent, on-boarding, training, through internal communications, etc.
How to approach developing a “Congruence Narrative”
There is an organizing framework that can simplify developing a “Congruence Narrative”. It is based on acknowledging the role of specific groups in shaping the future. There are three distinct groups:
CEO & C-Suite. This should be the core group responsible for the Vision. They should be focused on the future and where the organization needs to go. By understanding their key task, this will simplify the number of people and speed of the process. Often, involving more people tends to complicate the process, not help.
Senior Leadership. This must be the wider team to articulate two things: 1) the Mission of the organization to achieve the Vision, and 2) the Values that drive behaviors. Involving the broader group not only develops these elements, but also generates critical alignment.
Associates. Once a draft of the Vision, Mission and Values are developed, it is imperative to involve associates to validate that these elements resonate. Critical listening to feedback will inform and help modify to result in a narrative that truly engages the workforce of the future and develops high levels of loyalty.
Organizations that take the time to truly step back and look at the inter-connectedness of Vision, Mission and Values, build much stronger levels of congruence. Think of the benefits:
- Employees will stay longer
- Turn-over costs will be significantly reduced
- Deeper corporate knowledge and intellectual capital can be transferred to each generation
- Employees will become advocates palpably socializing Vision, Mission and Values
- Internal and external communications will have an anchor to create consistency
When done, you should have a brand that signals an organizations core reason for being, and clearly telegraphs the purpose and meaning employees are seeking.
For deeper insights, contact:
John K. Grace
President & Managing Partner
1 Birdwell 1968; Bellenger, Steinberg, and Stanton 1976; Dolich 1968; Hughes and Guerrero 1971; Munson 1973; Sirgy 1980; Stern, Bush, and Hair 1977.
2 Gallup Reports (How Millennials Work)
3 Gallup Reports (How Millennials Work)
4 Case Foundation (Millennial Impact Report)
February 14, 2018 Comments Off on “Brand Congruence” Offers a New Path to Securing Loyalty
There has been a fundamental shift in how brands are perceived and the value they provide. This is true in consumer and corporate brand arenas alike. There is truly a “different world” emerging in how brands build relationships with customers, consumers, employees, the media, the financial community and other important audiences. To understand the impact on brand strategies, it is important to understand what is changing.
What Has Happened to Get Us Where We Are Today?
Loss of Credibility and Increased Skepticism
Over the past four decades there has been a continual downward drift in the credibility of many institutions that we have admired in the past.
- Government and political leaders have misled us for personal agendas and gain
- Church leaders have tried to hide the truth and stay aloof to their responsibilities
- Corporations have become places where employees are skeptical of messages from the leaders feeling that there may be a different agenda than the words often incorporated in a corporate email.
- Manufacturers, by the nature of offering everything from cents-off deals to deep discounts, have undermined the perceptions of the value of what they make or provide.
The result has been a growing “tuning out” of messaging.
The Millennial Workforce Values Different Things
Millennials are driven, to a large extent, by meaning and purpose. They are seeking something larger than themselves, the job they hold and the company they work for. If they don’t connect with fundamental purpose of a company and how it shapes a better world, they will leave. Recent research indicates that 71% of millennials say they are not emotionally or behaviorally connected to their job. Additionally, they want to use their skills for a greater good… 87% feel encouraged to volunteer or participate in their company’s cause work. Consequently, understanding the workforce is critical to building the future.
Brands are Overpromising More Than Ever
In challenging times, two things can occur. First, brands tend to amplify and exaggerate their brand promises to ensure that their voices are heard above the crowd. This often accelerates customer frustrations as claims are often filled with over-promise and become unbelievable to key audiences. Second, brand marketers may become nervous and start to throw as many promises “against the wall” as possible hoping that some will resonate somewhere. This creates an atmosphere of uncertainty and wariness. To succeed today’s world, it is imperative to resist overpromising and scatter strategies.
Intelligent Purchasing is The New Status Symbol
Since the 1970’s, there has been a continual rise in discounting and promotional couponing. The result is that we have been sensitized that things can always be purchased at a lower price. Corporations and consumers know they can find and purchase goods and services below promoted price-points. One consequence is that “intelligent purchasing” has grown to become the new status symbol both socially in the consumer markets, and as reputation builders in B2B markets. This puts the burden on crafting a strong value proposition to mitigate price and build strong and loyal customers. This shift in emphasis is how company’s must differentiate in competitive markets today.
Consumer Support is Where Brands are Frequently Defined
Because of the access and availability of almost everything, at attractive prices, brand loyalty is often defined at the point a customer needs support. There are some companies that put the customer first and stick with them until a problem is solved. They tend to be market leaders. Because, in that moment when we need help, the way in which a brand responds to us says a lot about who it is and how it chooses to build a customer relationship. For a period, companies did not “see” the value of customer support as a brand-defining behavior, but this is changing. Today, strategies for helping customers and building longer-term loyalty through customer support have become brand-defining elements. An additional benefit is that customers will often pay for additional support, as long as it is superior and meets their needs.
“Community” is Where We Get Authentic Help and Insights
Technology has enabled the rapid growth of communities. They are critical as today we get our information and confidence from these communities, both consumer and corporate. So for brands to succeed, they must recognize the power and value of communities, and build strong and deep involvement in each to stay connected, knowledgeable and relevant. Smart companies today use communities to test ideas and concepts before putting enormous resources against new concepts. Not only efficient, feedback often provides new insights and innovative directions.
8 Rules for Branding in the “New World”
Brands must be shaped in new ways. These new rules should become the “filters” used to create and evaluate brand strategies, communications and behaviors.
Rule 1. Value must be communicated. Key audiences want to understand the value they receive by engaging with a corporation, product or service. This is as true in the B2B and B2C arena. Where lofty aspirational promises were part of some brand positionings, there has been a natural shift towards “value” as a foundational element. Customers and consumers have a much larger magnifying glass to evaluate price/value comparisons and will find it hard to justify a purchase without a very strong reason-why. Therefore, value has become a very important driver of preference.
Rule 2. Finding and communicating a brand’s meaning and purpose is more important than ever. If a company or its brand does not communicate an authentic and relevant meaning or purpose, employees will not fully buy in and may ultimately leave. No longer are payroll, incentives and title enough. Today’s emerging workforce needs purpose in what they do more than ever. Further, as corporations strive to find socially responsible programs, consumers will applaud these efforts. Spend time on this important issue and build a long-term, committed and involved employee and customers.
Rule 3. Determine the balance between “function” and “end-benefit”. For practical and emotional reasons, customers need to both understand the functional benefits of a brand and the end-benefit as well. Finding the balance is harder than ever, but understanding that there is a balance will guide brand development. Every category and industry is different, so there is not a cookie-cutter solution. The most successful corporate brands communicate functional benefits under a compelling end-benefit driven brand idea.
Rule 4. Transparency and honesty are mandatory. There are two aspects to transparency; a) acting in a transparent manner, and b) communicating this transparency. In today’s world, both are imperative. This means changing internal behaviors to recognize the importance of being transparent, and communicating transparency in new ways. Customers will be looking at this aspect of their brand relationship as one important criteria for maintaining a relationship. Consequently leaders must ask: a) is my company/brand being as transparent as possible?, and b) are we communicating this transparency in a truthful manner? This is an important new filter for companies to meaningfully engage with their audiences.
Rule 5. Messaging must be simple and clear. The hype of the past decade has left everyone breathless. In the new economy, brands must shed multiple claims, over-promises and implied benefits, and bring a new simplicity and clarity to messaging. It means creating new ways to evaluate existing messaging and developing communications strategies that isolate what is important and what should be shed. A changing brand landscape offers the opportunity to re-evaluate everything from communications and marketing materials, to focusing speech content and training materials.
Rule 6. Express confidence and optimism through visual identity. In challenging times, it’s no surprise that people want to be uplifted. Because an identity is the visual expression of a brand, it should reflect a company’s core beliefs and strengths, and also signals an optimistic and positive attitude. This is a good time to take stock of both a company’s central identity, and also the rigidity or flexibility of the identity system. There may well be room for modifying an identity to project a more realistic and optimistic statement about the brand.
Rule 7. Communities are critical to brand acceptance. Participate. The evolving shift from top-down to bottom-up brand influence is being further accelerated. Trying to build a brand alone is very difficult without the value of communities to create forums for learning, sharing, connecting, validating, and testing. Embrace how communities can help. Allow them to be democratic and not autocratic. Think of them as organic opportunities to connect. And while there is no perfect answer, participating will be a very strong way to ensure brand acceptance.
Rule 8. Customer service can be a brand-defining attribute. For many companies, the critical touch-point where a brand is defined is when customer service and support is needed. For example, when there is a technical issue, or a product doesn’t work, or there is a general “how to” question, this becomes the seminal moment where a brand can build a bond and relationship or turn a customer off. It is a touch-point loaded with skepticism and hope at the same time. Successful brands of the future will embrace the importance of this interaction and think about building world-class customer service rather than merely adequate, competitive levels of service.
As the rules for brand strategies are shifting, it is up to smart leaders to evolve their brands into this new environment. Using these rules can be very effective in shaping brands to capture and sustain leadership.
John K. Grace
September 19, 2017 Comments Off on Brand Strategies are Changing – 8 New Rules
“What really drives customer loyalty?” is a straightforward question that many CEO’s are asking themselves. A popular response is to employ a loyalty program. This is not necessarily the right answer.
Every airline, hotel, credit card, and grocery store has a loyalty program, and they spend in aggregate $50 billon dollars a year on rewarding customers according to Forbes. Just look at the numbers:
– 83% of consumers participate in a loyalty program
– On average each U.S. household belongs to 29 individual programs, but are only active in 12
– The airline industry alone in North America earned $9.6 billion by selling miles to partners in 2013.
Loyalty programs are big business.
But if you peel back the onion, you’ll find that only 42 percent of program members are active, engaged or participate (The 2015 Colloquy Loyalty Census). That’s a lot of wasted dollars that could be put to use elsewhere. This is not to say that loyalty or reward programs don’t work. They should be used as a form of recognition for valuable customers. But marketers need to reframe how they view these types of programs. The purpose of the programs, including the common practice of providing awards to all customers – good, bad and even unprofitable ones – needs to be rethought. Read more →
June 22, 2015 Comments Off on Don’t Confuse Loyalty with a Loyalty Program
High growth globalizing companies often find it difficult and unprofitable to enter the U.S. and other developed markets. To achieve the turnover and ROI they seek, they are finding that it is the brand asset that differentiates an offering and drives higher margins and profitability. Particularly for companies in China, India, Brazil and other high growth countries, successfully expanding their global footprint is an enviable objective, but more difficult to achieve than ever. Many seek to minimize risk and expand with a price entry. However, unless corporations recognize and act upon the importance of building strong “brands”, they will most likely fail to achieve their U.S. objectives.
The mega-trend shift towards high growth market-based companies who have been successful in their home countries trying to expand to the U.S. is based on sound logic:
- Drive for greater revenues and profits
- Appeal of the large middle class with strong per capita income
- High number of diaspora living in the U.S. that often become the first wave of “acceptors”
- Recognition that the U.S. ensures a stable government and significant economic incentives
- Access to skilled labor forces, technology, and strong distribution channels.
October 3, 2014 1 Comment
The outsourcing industry has become highly competitive with many new entrants. It has also become highly commoditized. Purchase decisions are predominantly driven by price, recently fueled by pressures of the struggling global economy. Branding, which is often overlooked in the outsourcing industry, is a very helpful tool to break through the clutter and elevate a company away from commodity price comparisons. In addition, a strong brand can help secure new customers, grow the business franchise, and improve margins.
Buyers of outsourced services today expect more than tactical support and inexpensive labor. Today, companies look at outsourcing as a strategic imperative to grow on a national and global scale. So providers must address the customer’s needs in unique new ways. Said another way, a strong “brand” can help communicate a unique value-added aspect of a business and generate great interest.
Outsourcing has grown rapidly over the past decade and continues on an upward trajectory. HfS research estimates that the total market size will exceed $950 Billion in 2013. Traditionalists break it down between IT Services and general BPO services. The sheer scale has attracted many providers who claim anything and everything, muddying the waters for the legitimate companies that provide excellent solutions for their customers. The result is a complex melting pot of companies providing off-shoring, in-shoring and even rural-shoring. And because the traditional markets that have historically provided very inexpensive labor are changing, there is the added pressure for buyers to understand the implications, and find value-added partners to deliver services in new and different ways.
March 21, 2013 Comments Off on Branding Can Differentiate an Outsourcing Company to Grow Business and Profits
The IPO pipeline is the largest it has been since pre-financial crisis levels. It is projected that there will be 191 new IPO filings in 2011 which is a 24% increase over 2010 and significantly higher than the 9-year average of 133. There are currently 250 companies in the IPO pipeline, which means that it will be much harder for companies to get the attention and ultimately the public financing they need.
Number of IPOs Filed in the US by month
Source: Renaissance Capital, Greenwich, CT
June 29, 2012 1 Comment