Very often we hear B2B advertisers say: “Branding is for consumer products—B2B is all about relationships and people, not products because most of the B2B category is made up of commodity products and services anyway.” And we say: “Not so, a brand is a brand is a brand.”
It is just as important for B2B customers and prospects to know what brand of manufacturer or supplier, or distributor, or professional services provider you are as it is for the kid choosing a pair of basketball shoes. Since the definition of a brand is, “a claim of distinction,” branding is all about differentiating your company and products from your competitors. And if done well, buyers will pay a premium price for that distinction. It’s a proven fact that purchasers perceive brand name products to be of a higher quality and more reliable—worth more!
“Smart companies are sending their salespeople out with more than sell sheets and an expense account—they’re arming them with a unique, deliverable claim of distinction.”
B2Ber’s have historically relied almost solely on direct sales (relationships) to move product. Sales reps get an area, some sales aids and off they go calling on prospects. To increase sales they must bump their competitors out by developing a personal bond, expand their area or, (ghastly) offer concessions or specials to make deals. But the smart ones are sending their salespeople out with more than sell sheets and an expense account—they’re arming them with a unique, deliverable claim of distinction.
Scenario
John Smith gets an appointment with the Home Depot or Lowe’s garden center buyer and introduces himself:
“Hi, I’m John Smith, sales representative from Everyday Nurseries. Doing business with us is going to be real joy. Why? Because we promise and consistently deliver greater garden center success. We do it with the newest, most innovative marketing, merchandising and product support and a level of service that is second to none. Add to that our vast resources and logistical strength, and your garden center will become the bright spot it was intended to be—not only for your customers but your profit picture as well. Only Everyday Nurseries can grow your garden center business beyond your expectations ~ Guaranteed!”
Wow, what a claim of distinction. What a sales presentation—it’s all about Everyday’s brand of nursery. This presentation is a reiteration of the nursery’s unique selling points:
• We have a formula for retail success.
• Customer service is second to none.
• We are innovative.
• We are industry leaders.
• We have greater logistical strength than our competitors.
Most of Everyday’s competitors would go in, spread out sell sheets, talk about their quality products, what kind of support they provide, offer a price list and invite the prospect to dinner—not a word about what brand of nursery they are.
Well if I’m a buyer, I’m going to be a lot more interested in a vendor who has built their company around growing my garden center’s success than one with just low prices and an appetite. And I’m probably more likely to develop a long lasting relationship if Everyday delivers on their brand’s unique selling points.
Next Step
So how do we do brand development for B2B advertisers? Exactly the way it’s done for Starbucks, Gap or Nikon—discover the brands claim of distinction.
We call our brand discovery process “Turning the Telescope.™” This is a minimum half-day session at our office or other off-site location. We recruit attendees from marketing, brand managers, sales, operations, field personnel, and the president or CEO. The process starts with listing facts by examining the company, its history, origins of business, markets served, the founders, traditions, innovations, values, ethics, customers, the people, and culture. In this first stage, we uncover literally hundreds of facts. Then, through a series of three stages, we eliminate the non-unique characteristics, extrapolate potential truths, and finally, distill the remaining information until we have a prioritized list of three to five absolutely unique and deliverable selling points. From this, we establish the foundation for a proprietary brand franchise and a unique claim of distinction.
So, Nike, Perrier, or Joe’s Ball Bearing Works…it doesn’t matter. Because a brand is a brand is a brand.
Business-to-business companies tend to underinvest in their brand due to misperceptions about the role brand can play in their business.
These organization often attribute their successes or failures to the parts of the business they believe to be more relevant to the customer purchasing decision. As a result, B2B companies frequently let their brands age to the point of obsolescence – and it costs them.
In my work as a Certified Brand Strategist, I have heard many of the misgivings B2B companies have about the role of brand in their business performance and have boiled them down to five key myths. There is plenty of research available to tear these myths down, but I chose to focus on studies that can apply to any B2B company – small or large, public or private – in any industry to keep it relevant to as many organizations as possible. If you work in B2B markets, you’ll likely nod your head in acknowledgement on a few of these.
Myth #1: B2B is All About the Sales Relationship
Until recently, the sales relationship was king. Buyers were largely reliant on suppliers for information, specifications and pricing to help them evaluate possible solutions. And the sales person controlled much of the process. The digital age has completely blown up that dynamic.
Today, the business-to-business buyer is going online to investigate solutions, develop a list of requirements, gather specifications, and narrow down their options without any involvement of a sales person. A 2012 survey by the CEB Marketing Leadership Council and Google shows that customers are more than halfway (57%) through the sales process before they engage a sales representative. This is regardless of the price point of the product or service.
So what are the buyers doing to get that far down the purchasing cycle on their own? They are learning about your brand online, investigating your brand reputation with third parties, connecting with peers about your brand through social media, and otherwise having a conversation about you – but without you.
This makes it vitally important for a B2B company to have a strong sense of its brand and know how to deliver the right experience through every available customer touchpoint. The prospect of today needs to understand the value of your brand before you even know who they are. Or you might never know who they are.
Myth #2: Brand is Not an Important Factor in Selecting a Vendor
A second major misconception that I frequently encounter is that brand is a minor consideration in the B2B decision-making process. This could not be further from the truth.
A 2012 McKinsey & Company survey shows business buyers consider the brand to be a central element in selecting a supplier, ranking slightly higher than the performance of the sales team. This is largely due to the fact the stakes are often high with B2B purchases, so confidence in the brand is critical and buyers will pay for peace of mind.
“Decision makers are willing to pay a premium for strong brands because they make their lives easier, primarily by aggregating information and reducing risk,” wrote McKinsey. When all of the analysis of a solution is done, it is often the strength of the brand that separates a company from its competitors to win the business.
Myth #3: Product Attributes are the Most Important Factor in the Purchasing Decision
To be fair, the McKinsey survey mentioned above shows price and product are the top two factors in the decision-making process – ranked just ahead of brand. But what happens when the competitive offerings are not that different in the eyes of the buyer? It happens more than you think.
A 2014 CEB survey of B2B buyers reveals only 14% of customers perceive enough of a difference in vendor offerings and value to be willing to pay for it. This means the other 86% of buyers view the offerings as commodities – not good news for margins and sales win ratios.
This is where the brand plays a huge role. The same survey shows the emotional and personal values of the buyer have significantly more impact (42.6%) on the purchasing decision than product values (21.4%). Decision-makers are buying what a company stands for more than they are buying the products or services it sells. People are buying the brand.
Myth #4: Building a Brand is an Expense that Decreases Profitability
When brand building is viewed only as marketing spend, this is probably perceived to be true because the brand is being undervalued. That is why the member agencies of the Brand Establishment advocate for using brand as a corporate strategy – not a marketing tactic – that drives the entire business and actually increases profitability.
Each year, McKinsey & Company examines the correlation of brand strength and financial performance in business-to-business companies –and it continues to find the difference to be statistically significant. For example, in 2012, companies with brands that were perceived as strong generated EBIT margins that were 20 percent higher than brands that were seen as weak.
The superior margins can be attributed to the impact a strong brand has on marketing performance, leads generation, close rates, average selling prices, lifetime customer value, customer satisfaction and a host of other metrics. Improvements in all of these areas go straight to the bottom line, which in turn, helps build a stronger brand.
Myth #5: Brand has Nothing to do with the Value of the Company
Not only does a strong brand improve profit margins, but it enhances the overall value of the company. The easiest place to see how this works is with public companies because the data is readily accessible, but the same concept applies to private companies.
Harvard Business Review studied 450 public B2B companies over a 16-year period to assess the relationship between brand perception and performance measures like revenue, profits and cash flow that are linked to stock performance. HBR determined corporate brand equity is responsible for an average of 7 percent of market capitalization in the 47 industries it follows. The leaders in each category were closer to 20 percent.
The same is true in private entities. A study published in the Journal of Marketing examined 133 mergers and acquisitions involving private companies. The study concluded that, on average, the brand value of the target company accounted for 7.3% of the transaction value. In some cases, that can be much higher.
Know the role of brand in your business.
The research debunking these five myths is solid, but as with anything there are exceptions. In the early stages of a company, the sales relationship and product attributes may very well be the primary drivers of the business. But, as the company grows, the brand becomes increasingly important to the sustainability of the business.
So the bottom line is every B2B company needs to understand the role brand plays in its business at each stage and plan for how it will evolve in the years to come. It’s a matter of becoming a market leader or one of many followers.
Author:
Grant Kimball
Certified Brand Strategist
Brand Incite
Portland, Oregon
It’s been a strange election year, to say the least. The conventions are looming, and between July and November I expect that we’ll consume more political advertising, punditry and news than is healthy for any person.
But for two weeks in August, we can turn down the noise of the election and immerse ourselves in the Olympics. We can all cheer for the same Team USA, and enjoy some well-produced, heart-string-tugging ads in between the thrill of victory and the agony of defeat. Back in March, NBC announced that they had already exceeded $1 billion in ad sales for the Rio 2016 games, and anticipated record ad revenue for the games thanks to the prime-time TV-friendly time zone in Rio. World and Team USA sponsors include well-known consumer brands such as Proctor & Gamble, Coca-Cola, Nissan and Visa, but thanks to a change in the IOC advertising rules, it’s easier for non-sponsor brands to get in on the action. That means brands like Under Armour, which sponsors 250 Olympic athletes but is not an official sponsor of the games, can now buy valuable ad time during those two weeks.
Here’s a preview of what we might see from these brands in August:
Under Armour – Rule Yourself
Chobani – #NoBadStuff
America’s Milk Companies – Built with Chocolate Milk
Proctor & Gamble: – Thank you, Moms
P&G’s “Thank you, Moms” campaign has been the standout of the last two Olympics games, and it looks like they’ll be hard to beat this time around, too. We’ll be watching.
Go Team USA!
Author:
Michelle Taglialatela is Tag’s brand strategist, one of 35 nationally who is certified by The Brand Establishment.
Michelle applies Tag’s proprietary process to create one-of-a-kind brand strategies that transform cultures and improve the bottom line. Tag has brand depth rivaled by few; and has been working with clients for more than a decade helping them exceed their objectives and stand out!
