Potential depends on purpose, responsibility, love and innovation
When inevitable and often unpredictable market fluctuations disrupt corporate performance, as in the 2016 BrandZ™ Top 100 Most Valuable Global Brands, strong brands add stability, and they help accelerate growth during better times.
Strong brands share three characteristics. They are: (1) Meaningful in ways that meet both functional and emotional customer needs; (2) Different in being perceived as trendsetters and unique from the competition; and (3) Salient in coming to mind quickly and easily at the moment of purchase.
BrandZ™ uses three key metrics to describe and measure the ways in which meaning, difference and salience impact brand equity. These three metrics were based on almost two decades of study of the world’s strongest brands, and have been validated to in-market performance. Brand Power describes a brand’s ability to generate volume demand. Brand Premium describes a brand’s ability to command a premium price. Brand Potential describes a brand’s ability to grow market share in the future.
These metrics are as relevant for B2B brands as they are for B2C brands. Achieving Brand Potential, for example, requires performing well on several interrelated aspects of brand building, including:
Purpose can be about a lofty objective such as making the world a better place in some way. But brand purpose is always about clarity in terms of what the brand stands for: its proposition or reason for being, the ways in which its very existence is important for the customer because of the useful, or even unique, benefits it provides.
Responsibility has to do with the brand’s behavior as a corporate citizen: its impact on the environment, its engagement with communities it serves, and its attitudes and behavior toward its employees. Responsibility is one of the factors that influence trust.
There are many large and enduring brands that operate in categories being disrupted by changing consumer expectations. As brands respond to those concerns, transformation takes time. Brands that are loved benefit from greater customer patience.
Perceived Innovation is about leadership, bringing something into the market that is new and not just iterative: new products, services, communications, or packaging – any introductions that are different and shake things up for the benefit of the customer.
BRAND POTENTIAL DRIVES VALUE
Dividing the B2B Top 20 into two groups – brands that scored high on Brand Potential in 2006 and brands that scored low on Brand Potential in 2006 – and comparing the performance of the two groups over the past 11 years reveals that brands with high Brand Potential increased 123 percent in value, while the brands with low Brand Potential increased only 23 percent in value. High scores in purpose, responsibility, love, and innovation also correlated with higher rates of brand value growth.
Research into the drivers of Brand Potential can provide an advantage for brand owners and marketers enabling them to engage consumers in meaningful ways that maintain differentiation.
B2B brands with high Brand Potential grew much more in value
Of the 14 brands that appeared in both the 2006 and 2016 B2B Top 20, about half scored high in Brand Potential, increasing in value 123 percent. These brands far outperformed the brands that scored low in Brand Potential, which grew only 23 percent in brand value.
Being meaningfully different today creates success tomorrow – Brand Potential. Brands that score high in Brand Potential grow faster in value. It is important to cultivate the drivers of high Brand Potential, which include: purpose, responsibility, love, and innovation.
Brands scoring high in purpose grew faster in value…
Brands that scored high in Purpose grew more in value than brands that scored lower. And the difference in growth rates is substantial, as becomes clear when the various aspects of Purpose are unbundled. Brands that scored high in “Makes Lives Better” grew 81 percent in brand value between 2006 and 2016, while brands that scored lower in that component grew only 24 percent.
Brands that think of their consumers, rather than only themselves, and genuinely attempt to improve consumers’ lives will succeed to a much greater degree.
… Responsibility, trust drive value…
More trusted brands grew 80 percent in brand value between 2006 and 2016, while less trusted brands grew only 25 percent.
This finding is important for B2B brands, which are often in categories, such as technology or banks, where customer trust is an important issue. In technology, concern with privacy and data protection will become even more evident with the implementation of the Internet of Things and the greater involvement of technology in people’s lives. Trust is critical for banks, especially among millennials, as banks seek to expand their retail businesses. Some brands have a reservoir of trust built up over time. But to be sustained, trust needs to be renewed constantly. Similarly, companies that are seen to treat their employees well grew brand value at three times the rate of companies less known for treating their employees well.
… Love also drives value …
This finding dispels the notion that people may be emotionally engaged with B2C brands but not with B2B brands. The brands that scored high in love increased brand value 60 percent over the past 11 years, compared with the brands that scored low in love and increased value only 43 percent.
Love is an important discriminator between brands that are more successful or less successful. It is important for a brand not just to be loved but to be loved for a purpose – that is, for the contribution the brand makes to people’s lives.
… And innovation can have an enormous impact on value
The brand value impact of being perceived as different or creative is enormous. Brands seen as different or creative almost doubled in value between 2006 and 2016, while brands perceived as low on those characteristics improved in value only by around one-fifth over those 11 years.
The drivers of value for B2C brands also hold for B2B brands, and they provide an excellent guide for driving future value growth.