A strong brand will not make you rich
Strong Brand =! $$$
For the past three months I have been doing due diligence in preparation to start a user experience design consulting business. During that time I have been reading a lot about branding, how important it is to create a strong brand, and how to create said strong brand. This has all been very educational and very helpful. I clearly see how a strong brand plays a huge role in the success of a business and how it is perceived by the public. I started to think about all the companies that had established and strong brands, companies like Apple and Adobe and how well they perform. That is when I fell into the trap.
The Brand Trap
Apple is a hugely successful company with a powerful brand identity. However by comparison their bottom line is small beans when compared to Merck or Chevron. Both of those companies have revenues 20x that of Apple, but they have no brand identity. Case in point, can you name the company that makes your pain reliever? Bet you would be surprised it’s no Tylenol. More importantly, does it matter even matter? Like most people you probably switch between Aspirin, Tylenol, and whatever store brand based on cost & availability. You certainly don’t buy because it’s Tylenol. The same principal applies to gas, it is unlikely you buy Chevron because it is Chevron, but rather you buy because it is the cheapest and available.
The trap is to cannibalize your brand in search of revenue, spreading yourself so thin and stamping your logo on as many things as possible. This tactic might net you increased revenue in the short run, but over time your brand will become so diluted that you move from being an Apple into being a Chevron. When this happens you lose something much more valuable than money, you lose customer loyalty.
Loyalty is Royalty
So if a brand will not make you rich, why bother? Loyalty. A strong brand foster brand loyalty, something your customer can relate with and be a part of. When was the last time you say people lining up days in advance to get the latest gas formula from Chevron? But every product launch from Apple entices a fanboy and media frenzy for weeks. That frenzy is a direct product of a strong brand.
Even more important than media frenzy, loyalty makes it much more difficult for your competitors to draw your customers away. Once a customer has bought into your brand they think of themselves as a part of your business. They invest a part of themselves. If you continue to treat them right and give them a consistent experience with you, no amount of fancy advertising or discounts will draw them away from you. People complain about the Apple Tax, or the ticket prices for Disneyland, but they continually plop down the cash to interact with those companies. That is the effect of loyalty, created by a strong brand.
Avoiding the Trap
Avoiding the Brand Trap is easier than it might seem. When we set out to define and develop our brands, we need to make the indicator of the brands success loyalty, not revenue. There are countless books on how to increase revenue, how to squeeze more dollars out of each touch point, so there is no reason to dilute your brand to that end. The temptation will present its self regularly, but making it a business rule to only judge your brand by loyalty will help you maintain course. In the long run loyalty will make you rich.