As we move towards the Fall when many companies will start planning their go-to-market strategies for the coming year, we thought it would be a good time to share some insights on strengthening brand performance.
For technology solutions being evaluated today, there is a heightened focus placed by buyers on capabilities and functionality, given how new and yet unproven so many AI-related capabilities still are. And many brands in the space being evaluated are new so there is no brand-building history for buyers to rely on.
According to the International Valuation Standards Council, an average of 18% of quoted enterprise value today is attributed to brand. This figure is corroborated from our conjoint studies where we test the impact of brand along with a list of product features to determine the relative impact of brand on the purchase decision and consistently see brand utility values of approximately 15% to 28%. This is a significant portion of valuation to leave on the table by not focusing enough on brand strengthening. For high growth tech companies seeking to raise equity this year, are you fine with undervaluing your company by 18%?
Here are some actions we use in our client work for you to consider for strengthening and quantifying your brand value for your market planning for the coming year:
- Brand Measurement: Not to sound too cliched here, but what gets measured gets improved. We are surprised at the number of companies we encounter who are highly measurement driven, but do not measure their brand. Brand measurement gets ignored because it's an intangible metric compared to so many other KPIs that are being tracked today. Moreover, to be a valid metric, the brand value must be measured in the marketplace and not just with existing customers, which often requires external help from third parties who can also generate data about a brand standing among both directly and indirectly competing solutions.
- A Focus on Brand Equity, and not just Awareness: Too often, companies focus on measuring brand awareness-what percent of people are aware of the brand? And comparing that with awareness of nearest top competitor brands. While useful in and of itself, brand equity measurement is s also required. The formula here is Brand Equity=Brand Awareness X Brand Stickiness where: Brand Stickiness is the length to which decision makers will go to resist pressure to switch brands, either due to corporate edicts from above, vendor consolidation and/or enticing offers from competitors to switch suppliers. This aspect can we measured and quantified though a series of survey questions asked of buyers and is of immeasurable value in decision making, especially around changes to pricing models of distribution strategies.
- Brand Usage Affinity: Corporate users of your product(s) have significant sway with top decision makers when it comes to renewing contracts or resisting compelling competitive offers. To this end, measuring product utility and its impact on your brand power becomes another arrow in your quiver for asserting the value of your brand. This is typically measured by deconstructing all the features and benefits of the products(s), having them stacked ranked by importance or utility by end users, then having those end users rank how well your products perform on those attributes. In this manner, we can construct brand power maps for your product(s) against top competitors
- Enterprise Worthiness: Last. but not least, for those selling to large enterprise, enterprise worthiness is something your large corporate decision-maker will want to evaluate your solutions on. Many sellers have used land-and-expand strategies to acquire large multi-division and global accounts. Departments or workgroups have often proven to be easier to pitch and sell to than central corporate entities and procurement groups. Such "rogue" or "shadow" installations (in the eyes of Central IT) are then propagated laterally to other workgroups and eventually floated for consideration upstream, at which point, various tests of enterprise worthiness of the platform are applied. For this reason, it is also important for large enterprise sellers to include enterprise worthiness perceptions and how these have progressed over time as the company garnered more company-wide implementations in their brand story. The picture above this post is a graphic from one of our studies for a business process automation platform (brand names redacted).
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Alan Nazarelli is Founder & CEO of Silicon Valley Research Group. Based in San Jose, CA with offices in Seattle and New York, the company works with the world’s most innovative brands to provide timely and actionable market intelligence and strategic guidance to enable them to make well-informed decisions to positively impact revenues and profits and to achieve their growth targets. Connect with Al on Linked in