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The Benefits of Branding: Understanding the True ROI of Brand Work

Benefits of Branding

What is the ROI of branding? That’s a question often asked by business leaders when considering a new brand strategy or identity initiative. Because of the complex nature of branding, however, identifying a clear ROI isn’t as simple as many leaders would like. Are there clear benefits of branding? Absolutely. Can return on investment be easily attributed to these benefits? That depends on your definition of “easily.”

In marketing, we create campaigns that drive traffic, and we track the resulting leads or sales. We’re then able to identify how much revenue came from those leads and sales, and we calculate the ROI of our campaigns. No problem.

Branding influences marketing along with every other aspect of a business.

I’m over-simplifying the challenges of marketing attribution a bit, but, still, you get the idea. Action. Outcome. ROI. That’s what leaders want to understand when making business decisions. Especially when those decisions relate to projects that require significant investments of time and money, as brand projects often do.

Unfortunately, branding is not marketing. In most cases, we can’t draw a straight line from branding investment to ROI calculation. 

Branding does, however, influence marketing along with nearly every other aspect of a business. The benefits of branding exist within that influence. That’s why branding is both incredibly valuable and difficult to measure.

Before we dig into the specific benefits of branding, though, let’s make sure we’re all thinking about “branding” in the same way.

What is Branding?

Your “brand” is what your audiences think and feel about your product, your people, and your business. “Branding” is the ongoing effort to shape those perceptions. 

Because audience perceptions are formed by every interaction between your business and an individual, almost anything a business does could technically fall under the “branding” label. With that being said, large branding initiatives are most commonly associated with the following types of projects: 

  • Audience and competitive research
  • Audience persona development
  • Brand architecture development
  • Company and product naming
  • Brand identity development (logo design, etc.)
  • Strategic positioning and messaging
  • Brand platform development

These are all foundational projects that help a business clarify who they are, what they believe, what they do, and who they do it for. This work typically happens at times of organizational transition (i.e., business inception, product or service launch, mergers and acquisitions, strategic shifts, etc.). Each of the listed projects contributes to brand development in its own way. The cumulative result is a strong brand that influences and benefits all aspects of a business.

But, what exactly are the benefits of a strong brand? Let’s take a look.

The 11 Benefits of Branding

1. Increased Brand Awareness

Putting in the work to build a strong brand helps to create a memorable presence in your marketplace. This presence makes it easier for your target audience to think of your brand when doing research or making a purchase decision. 

Yes, this is true for well-known consumer brands like Nike and Apple, but it’s also true for mid-sized businesses, B2B technology companies, educational institutions, and every other type of brand.

By consistently applying and reinforcing your brand’s identity, positioning, and values, you increase the likelihood that potential customers will think of you first when they need a product or service in your market. 

2. Competitive Differentiation

No matter what industry you’re in, it’s crucial to stand out from the competition. A good brand identity helps differentiate your business visually, while a solid brand strategy helps you stand out by highlighting your unique value proposition and values. 

No matter what industry you’re in, it’s crucial to stand out from the competition.

When your prospective customers are conducting research or considering multiple options, what will they latch onto? What will make them remember your offering and see it in a way that elevates it above your competitors?

Defining and shaping that differentiation is branding, and it can help nudge your brand to the top of your prospect’s shortlist.

3. Increased Credibility

Successful branding will help establish your business as a respected and credible presence in your industry. By consistently delivering on your brand promise and values, you signal to audiences that you are a reliable and trustworthy partner. 

Before you can live your brand, however, you need to define it. How does your organization hold itself accountable to its customers and employees? What are the values that guide your business’s actions and decisions?

Once you’ve answered these questions, and applied the answers, your business will reap the rewards of a strong brand reputation. For most businesses, this means new opportunities, high-quality referrals, and long-lasting relationships.

4. Elevated Perceived Value

Strong brands elevate the perceived value of products or services, allowing businesses to charge premium prices and increase profitability. This effect is obvious with consumer brands where individuals will pay a pricing premium for products associated with brands they know and like (e.g., think of your favorite shoe brands, clothing labels, or even bottled water varieties). But, this isn’t just a consumer brand benefit. 

Business buyers who choose to purchase an expensive technology solution over a less-expensive option do so because they perceive their chosen solution to have more value than the alternative. There are obviously a lot of factors at play within that sentence, but the keyword is “perceive.” When institutions or businesses build and nurture reputable, respected brands, they establish a sense of trust. Customers are willing to pay a higher price for that perceived value.

5. Improved Marketing and Sales Performance

In many ways, branding and marketing go hand in hand. It’s easy to see how each of the benefits we’ve discussed would help improve marketing—as well as sales—for any organization. If your target audiences have awareness of your brand, they understand how it’s credible and differentiated from competitors, and they perceive your brand to have value, much of the heavy lifting for marketing and sales teams has already been completed.

On top of that, a well-defined brand identity and cohesive messaging platform that resonates with your audiences will help make everything more effective and easier to create. Your email promotions will be more precise. Social media posts will be more focused. Sales communications will be more compelling. 

All of this means that you’ll see improved marketing and sales results without needing to spend more money. That ROI should be easy to understand. 

6. Increased Customer Loyalty and Advocacy

A compelling brand fosters an emotional connection with customers. This connection results in one-time buyers becoming loyal customers. It also creates brand advocates who spread their positive perceptions of your brand through word-of-mouth marketing. 

A compelling brand fosters an emotional connection with customers.

For most businesses and organizations, this type of brand loyalty and advocacy has immense financial value. It’s always easiest to sell to someone with whom you have a prior relationship. And, the second-best option is to sell to someone referred by a trusted friend or colleague. 

By developing an in-depth understanding of your customers’ needs, and by delivering on your brand promise, you can build the kind of loyalty that drives long-term growth. 

7. Easier Products and Services Introduction

Having a well-established brand makes it easier for a business to introduce new products or services because customers have familiarity with the reputation of the company and its offerings. This familiarity reduces perceived risks associated with the adoption of new products or services. Less perceived risk results in faster adoption, increased revenue, and additional return on investment.

Think about your own buying experiences. If you’ve had a good experience with a company’s products or services and that company releases something new, you already have a positive brand association with the new thing. You trust the brand, and, if it’s something you’re interested in, your decision will be much easier. That’s the impact strong branding can have on new product and service launches.

8. Improved Employee Recruitment and Reduced Turnover

Brand ROI is often associated with customer acquisition, but branding has just as much impact on employee recruitment. A well-regarded employer brand attracts talented individuals who admire a company’s mission, values, and culture.

Branding also helps foster a sense of pride and belonging among current employees. When employees feel good about what their brand represents, they’re more likely to stay and contribute to its success. This leads to increased productivity along with a reduction in employee turnover (and all of the associated costs related to recruiting and onboarding replacement employees). 

9. Operational Clarity and Guidance

While sometimes overlooked as a direct benefit of branding, a clearly defined brand strategy provides guidance for every aspect of a business. Your mission and brand values should be factored into organizational decision-making. Your brand promise should be integrated into your customer experience strategy. A comprehensive brand guide should streamline the development of your marketing materials. 

Brand efforts build organizational alignment. When team members understand a company’s mission, vision, and values, it becomes easier to align everyone toward the same goals.

This is true for a human resources manager developing employee onboarding packets, a digital marketer optimizing a paid search campaign, and everyone else who contributes to a company’s success. Operational clarity leads to increased efficiency and a more cohesive company culture. 

10. Improved Crisis Management

We’d all love to think we can avoid times of crisis, but the reality is that bad things sometimes happen. When problems do arise, though, a healthy brand can serve as a protective buffer and guide. 

During times of crisis, customers are more willing to give an organization the benefit of the doubt if they already have positive perceptions of the organization’s brand. These same organizations will also be able to use their brand platform to inform crisis response actions and communications. 

By working to build trust over time—and by establishing clear messaging and values—resilient brands can weather significant challenges and setbacks that might take weaker brands down for good.

11. Increased Company Value

Last but certainly not least, good branding increases company value. Because of all the benefits we’ve already listed, companies with strong brands command higher market valuations than their competitors. 

Ultimately, branding can be the reason one company thrives while another with a similar offering never gets off the ground. 

Measuring the Benefits of Branding

Part of the reason it’s difficult to assign a clear ROI to branding work is that the benefits influence business functions in so many ways. 

Your branding work should make things easier for every part of your business.

It’s logical that a strong brand would contribute to improved marketing and sales performance. How much of the improvement, though, should be attributed to work done by an organization’s branding agency compared to work done by its marketing or sales teams? 

Your branding work should make things easier for every part of your business. All of these things are interconnected, though, so assigning an ROI number to branding’s contribution can be messy or misleading. 

That doesn’t mean you can’t measure the benefits of branding, however.

Using a tool like Brand Tracker from Hanover Research, organizations can track brand perceptions over time, assess the impact of marketing campaigns, compare brand performance metrics with key competitors, and much more.

By establishing a brand tracker, businesses can gain clarity about their brand’s health and the impact of their branding work. These things may not be the same as a direct ROI calculation, but return on investment insights can be inferred from the data.

The Cost of Neglecting Branding

While it’s helpful to measure brand health and performance, the difficulty of calculating an easy-to-attribute financial outcome for brand projects can still give business leaders pause. And, in some cases, this hesitancy may result in taking no action at all. 

When it comes to branding for your business, what is the cost of inaction?

We understand. We’ve all been in situations where uncertainty leads to inaction. But, when it comes to branding for your business, what is the cost of inaction? How much more money will your business have to spend because your brand is inconsistent, undeveloped, or out of alignment with your business?

Think about the specific benefits of branding we’ve shared in this article. Now, consider the opposites.

Brand Investment Questions

  1. How much revenue will your business miss out on because your target customers aren’t aware of your brand?
  2. How many sales will you lose because your brand fails to stand out from competitors’ offerings?
  3. How much harder will your team need to work to build relationships because your brand lacks credibility in your market?
  4. How much revenue are you losing out on because your brand can’t command a premium price? 
  5. How much money will you waste on aimless marketing and sales efforts that lack a cohesive brand?
  6. How much money will your business lose due to customer churn and the lack of referral business?
  7. How much more money will your business need to spend to support new product or service launches in your market?
  8. How much additional money will you need to spend to hire new employees and replace talent when it leaves?
  9. How much extra time, money, and energy is your business wasting because it lacks organizational alignment?
  10. How much money will your business lose when met with a significant crisis without a strong brand reputation?
  11. How much value will your company lose out on to a competitor with a stronger brand?

The Benefits of Branding are Foundational

These questions may seem somewhat harsh, but they reveal an important truth. The real reason it’s so difficult to calculate brand ROI is that branding is foundational. It influences and impacts everything.

Good branding makes every part of a business more efficient. It focuses and clarifies every decision and action. It maximizes the value of every dollar spent. And, businesses that don’t invest in branding sacrifice those outcomes.

Is your business ready to reap the benefits of branding?  Learn more about our brand strategy services to discover how we can help your organization.

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Erik Norsted
Erik Norsted
Erik has spent his entire career immersed in every aspect of marketing and branding. His expertise around current digital trends, content strategy, and technical best-practices proves invaluable as he guides clients through the dynamic Modern Marketing landscape.