How to get a CFO to fall in love with brand value

Henry Innis explains how in order to get the c-suite to understand the value of a strong brand, it's time to stop spouting the usual marketing guff and start looking at the facts.

Here’s an old, over-asked question: do brands have value to the bottom line?

Ask ten people and you’ll often get ten different answers. They’re variations on a theme. ‘Brand value is intangible.’ ‘It’s built over the long term.’ ‘It can’t be built through marketing.’ And so on. People love to have an opinion on the matter.

For c-suite executives, it’s no wonder they’re struggling to figure out just how those brand guys contribute to the bottom line. We’ve done an awful job in showing how we get there.

Brands have value ­– there’s no doubt of that. But when we talk to the c-suite, we must get pointier about how that value is realised.

There have been some great articles correlating strong brand to financial performance, but we’ve never been able to articulate why. That leads to questions about exactly how brands drive financial performance and how they warrant investment.

To my mind great brands create value in two crucial ways: cost reductions and price elasticity. Both are fundamental to building commercially successful products with great margins.

Firstly, cost reductions. It’s well known that a strong brand builds metrics like NPS, awareness and consideration. And there’s often a strong correlation between great brands and sales.

But when these things happen, they also tend to reduce the cost of marketing for companies, especially in the areas of acquisition and customer engagement.

A great brand attracts people. It gets them talking about you. And as a result, it delivers reach more efficiently. If ten people are talking about you, generally you’re going to have to pay for less billboards to reach their friends.

If someone recognizes what your brand stands for because you’ve committed to a platform, you have to spend less on convincing them in media.

Not only that, but when people like what your brand stands for and are familiar with you, they’re more likely to respond when you ask them to buy something. You’re going to have to spend less money bombarding them with direct response ads as a result.

When working with an insurer we found this happening frequently. This company produced a lot of content marketing top of funnel (brand building, not sales). We found (through re-targeting on content/audiences) that when a prospect was engaged with our brand, it delivered significant cost reductions on their CPQ.

In short, great brand building can drive down your long-term cost of marketing and acquisition.

The second thing a great brand does is deliver price elasticity. Basically, you can charge more for goods (because people like your business) and command higher pricing (creating better margins on product).

BBH Labs, in their excellent piece on brand value, found this as well:

Not only that, but price elasticity can extend to cross-sell and up-sell. Strong brands typically have both. They drive the customer value up, because people like the business.

Apple has proved this time and again. The iPhone is consistently one of the more expensive phones in a crowded market – yet year after year thousands of people buy the phone at a premium price. Apple reaps the benefit of brand building through high-margin sales.

Staggeringly, most brand strategies I read are about finding the brand story – and they never articulate how that story is going to either drive cost reductions or increase price elasticity. It’s almost embarrassing how bad the industry is at proving our value.

So the next time a financial person asks why invest in brand, rather than give them the usual marketing guff about the customer, might I suggest a simpler, more pointed approach that’s in our audience’s (the people signing the cheques) language:

  • Brands deliver value to the bottom line over time
  •  If people like us, we have to spend less money pestering them to do things
  •  If people like us, we’ll be able to charge higher prices and margins
  •  And if we stop investing in brand, we can expect our customer acquisition costs to increase significantly and our margins to be eroded

By the end of it, we might be the c-suite’s favourite people.

Henry Innis is engagement strategy director – ANZ at Y&R ANZ.


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