Financial services marketers often talk about the benefits of brand building in technical marketing terms.  They talk about satisfaction scores, customer engagement, customer retention rates, client acquisition, brand awareness, brand relevance, brand equity, brand personality…. the list goes on.  Whilst it may be somewhat gratifying to us marketers to have our very own vernacular that nobody else really understands, it can also mean that Boards relegate brand to the marketing department or heaven forbid, an external agency.

Boards and CEOs cast very long shadows across their organisations, so their ownership and approach to brand will significantly impact staff views and behaviours around brand.  And considering that in the service-based financial services industry, employees are the mainstay of brand, it's critical that Boards and CEO's buy-in to and take ownership of their brands.

Let's look past the technical marketing guff and talk about the real benefit of brand to businesses.  Here are seven reasons why CEOs and Boards must buy into branding in today's competitive environment.

A clear brand position delivers clarity to the strategic direction and governance of an organisation. It unifies the Board and staff at all levels both strategically and operationally. There is greater resolve in decision-making and strategy and tactics can be executed more effectively and efficiently as all stakeholders understand the single driving force behind the organisation. Simply put, strong brands give organisations genuine purpose.

One of the world's most successful financial services marketers, American Express, believes "While there are many directions a financial services company can go today, we will only do that which supports the growth of our brand." Amex understands the benefit of brand and the strategic clarity it brings.

Brand also facilitates a market orientation.  It forces a technical organisation to look outwards and consider its customers and the market, rather that inwardly to its own competencies and interests. A market orientation helps ensure that products and services are designed to meet real needs and wants to deliver better financial performance.

Strong brands generate higher demand and create additional value in the minds of consumers.  People are prepared to pay more for favoured brands.  The brand premium your product or service obtains is how much the market is prepared to pay for your product or service over and above similar commodities available. 

When offered the exact same PC with an Intel chip and one without, the one with Intel will fetch a higher price.  Despite both Dom Perignon and Moet and Chandon both being champagnes of good taste, Dom Perignon will fetch $400 more a bottle.  A financial planning firm can command higher prices because of the reputation for performance and trust it has built.  Because of strong brand equity, the cost of member acquisition for a super fund may be much lower than competitors, thereby increasing margins or conversely reducing costs.

The brand adds tangible value by reducing consumer search costs by being trusted and perceived as a safe purchase.  Frankly, people are extremely busy and just want their Saturdays back.  They can't be bothered spending the time to investigate all of the options available (especially in a low-involvement category like financial services) to make a truly rational decision about which product or service to choose. Strong brands in financial services are often chosen for this very reason.

A consistent application of brand across the business brings lower unit costs and an overall cost saving.  The scale economies come in design, copy writing, coding and material production and apply to signage, printing, advertising, promotions, electronic marketing and most other areas of marketing.  Larger organisations can achieve significant cost savings that go directly to the bottom line.

Brand is an intangible asset that can add significantly to a business's balance sheet. In financial services, business often don't carry much by way of physical assets making brand value a significant contributor to overall asset value.  Brands are formally valued by agencies such as Brandz and Interbrand.  Brandz has valued ING’s brand at US$15b, American Express at US$25b and Citi at US$30b. There is a growing trend for banks to lend against secured intangible assets, such as brands, offering businesses opportunities for increased leveraging and improved cash flows.

Brand value must be carefully determined and managed in mergers and acquisitions.  For the company looking to be acquired, higher valuation for a strong brand can directly correlate with a higher selling price. For business that have acquisition-based growth strategies, brand value must be assessed to determine fair value and then very carefully managed in the transition to retain and build on the value paid for it. Strong brands can deliver significant value on both sides of the fence.

Employer brand equity is the impact your brand has on your workforce. Strong brands attract and retain the best talent because people want to work for organisations that have great reputations, stand for something and have real purpose. The benefits include reduced search and hiring costs as talent seeks out your organisation, reduced salary costs as staff will accept less pay to work for great brands, reduced attrition, improved morale and increased productivity through the clarity of purpose that brand brings.

Strong brands can influence share price through improved business performance and favourable investor sentiment. Few other business factors can influence shareholder-company relations as much as brand. Well managed, blue-chip brands instil investor confidence in the current and future performance of businesses.  Poorly managed brands with reputational issues can completely destroy it (eg. Enron, Worldcom and Andersons).

So the next time your Marketing Manager starts talking about brand equity, just remember the seven reasons why your brand delivers real business value.

Bruce Stafford