â€œOur brand is strongâ€
â€œOur brand is admired around the worldâ€
These words and phrases make most entrepreneurs and employees roll their eyes. They view brand as an overused term that means very little to the world outside the company.
But your brand may be the most valuable asset your company has. Itâ€™s also the most fragile.
Hereâ€™s why a brand is so important, what can happen when a brand is damaged, and how to create a great brand.
What is a Brand?
“Your brand is what other people say about you when you’re not in the room.” – Jeff Bezos
A company brand is an intangible asset because it is not a physical object. This is opposed to a tangible asset, such as your company office and company equipment.
And while it is not a physical asset that you can look at or hold onto or assign value to, it is perhaps the most valuable and fragile piece your company owns. One mistake or PR blunder and your brand, and thus your company, will be damaged.
Why is a Brand Important?
A brand is what people think of when they think about your company. If youâ€™re in the airline business, you want your brand to be known for reliability and quality. You donâ€™t want to have a customer service disaster like United Airlines had, which meant significant damage to their brand.
Brands are built overtime, but can be damaged very quickly and result in a significant loss of sales. Public companies routinely place maintaining their brand reputation as a risk factor in annual reports. This means that your company, no matter how small, cannot ignore your brand.
Brands are not built overnight. Instead, they are built up over years and can be destroyed in days.
What Happens When a Brand is Damaged?
To further understand the impacts that a brand has on a company, letâ€™s look at what happens when a brand is damaged, using a few examples we all know.
If you asked a person in spring 2015 what they thought of Chipotle, theyâ€™d probably tell you they served delicious burritos. The food was quality and the prices were reasonable. And shortly after telling you that, theyâ€™d go to Chipotle and order one of those delicious burritos.
Ask that same person in 2016 and theyâ€™d tell you that it would be risky eating at Chipotle and there are probably some better Mexican food options nearby.
The e coli and norovirus outbreak at Chipotle restaurants. This outbreak resulted in significant damage to the brand (could anyone say their food is quality?) and declining sales. Just look at what happened to the companyâ€™s value after this outbreak:
This is what can happen if your brand is damaged. Your company value can be cut in half. And if youâ€™re a startup, you could be put out of business if you lose customers and investors trust.
Today, Chipotle is still recovering from the damage their brand took from the food safety issues. As I stated, building a quality brand takes years, but can be damaged in days. Thatâ€™s what happened to Chipotle, and theyâ€™re still working to restore their brand to what it once was. It will only take time and a long string of no food-borne issues.
Similar to Chipotle, Equifax had another safety issues. Except this time it wasnâ€™t about food safety, it was about information safety.
Because of poor security measures, Equifax was hacked and left the extremely private information of hundreds of millions of US customers vulnerable to cybercriminals.
After the hack was announced, there were more bad headlines about how poor the security measures were at Equifax:
Equifax has taken steps to restore public trust and rebuild their brand, but theyâ€™ll have a long way to go before anyone can trust them again.
Today, would you use Equifax for any of their services? Probably not, as you couldnâ€™t trust that theyâ€™d do a good job or keep your data safe.
Remember Yahoo? Some of you may still use it. Personally I havenâ€™t used Yahoo in a number a years because their competitors offer a better product.
Yahoo used to have a strong brand. The classic shade of purple, the yodel, the beautiful design, and the array of features that came with the Yahoo brand.
But that was early to mid 2000s. Over the last few years, Yahoo has suffered a decline. The board hired Google executive Marissa Mayer, and while she gave a valiant effort to rebuild the empire, she ultimately came in too late for it to be saved.
Yahoo was acquired by Verizon and while it is still around today, itâ€™s nowhere near its peak.
So what happened?
Hacking, malware attacks, privacy concerns, increasing criticism, and a product that didnâ€™t keep up with competitors or the times has led to Yahooâ€™s downfall.
And while Yahoo is still one of the most visited websites, their brand has been damaged and will likely never recover.
Travis Kalanick created an innovative new service that changed the world. Uber made it possible for anyone in an urban area with a smartphone to be picked up with the touch a button. It took over, growing to billions of dollars in annual revenue in only a few years.
Then came a PR nightmare.
He was caught on camera telling a driver to take responsibility and boasts that a tough culture is needed to win.
Then the influential New York Times did a feature piece that didnâ€™t shed the best light on him. And another piece was published that reported that Kalanick had knowledge of Uberâ€™s sexual harassment problem but didnâ€™t do anything about it.
Apple CEO reportedly threatened to kick Uber off the App Store because it violated Appleâ€™s privacy standards.
Kalanick wasnâ€™t always well behaved, but he was a tremendously talented entrepreneur. But by the time he grew Uber and the brand, the Board decided it was time for Kalanick to go and Kalanick submitted his resignation.
Today, Uber has a new CEO. He’s got a big job to do in rebuilding trust in the brand, but has a strong company behind it.
Iâ€™ve experience one of my companies brand’s being damaged. The company I cofounded, KISSmetrics, took a hit to our brand when we were sued. It resulted in significant damage to our brand at the time, and it still lingers today.
The lesson here is that your brand is the most valuable asset. It needs to be built up and protected. A good brand can take your company a long way.
Now, letâ€™s look at companies with strong brands and what we can learn from them.
Creating a Brand
Brand building is an important step in starting a business. People that are looking at your new business need to know what your company stands for.
Know What You Stand For
This is the most important step. Great companies have brands that stand for something. Here are some examples:
- Zappos stands for customer service
- Virgin Airlines stood for an airline experience that was fun, not stressful
- Whole Foods stands for healthy, organically grown food
- Patagonia stands for environmentally friendly outdoor clothing
- Firefox stands for being the privacy browser.
You have to know what your brand will stand for. â€œSelling quality foodâ€ isnâ€™t a stance. Any company can say they sell quality food.
â€œSelling the highest-quality organic and natural foodâ€ is a stance because you know what youâ€™re getting when you go that store. You canâ€™t buy Skittles and Coke when you visit this store. You can buy organic food there. People now know what you stand for, and will visit your store when theyâ€™re seeking those items.
A lot of companies will say they build world-class products. Many of those companies also have dozens of products. The simple reality is that you canâ€™t be world-class at 12 different things. You need to know what youâ€™re willing to be bad at.
In this video, Scott Belsky discusses why companies have to be willing to be bad at certain things in order to exceed in others. I’d recommend setting some time aside to watch this.
There will have to be tradeoffs. If you have great customer service, you may have to have higher prices to maintain your margins.
Just look at a company like Apple. Consumers know that Apple products are quality. There arenâ€™t a lot of bugs, itâ€™s well-built, and their products generally last for years. Any bad news about their product quality is going to significantly affect their brand. Thatâ€™s why they go a long way to protect it.
So when the issue came out about the battery usage on older iPhones, Apple had to go to great lengths to win consumer trust back. They wrote a message to customers and offered a battery replacement for only $29, a $50 reduction in price. This means that Apple will make less money, but consumers ran to Apple stores to get their batteries replaced.
The takeaway here is simple – if you screwed up, admit it to customers (even if it was a misunderstanding). Then offer a discount or something else to win their trust back. For 8/10 customers, this will work great. The other 2/10 will never be pleased.
Make your brand something memorable that stands out in a crowded market.
So when you know what you stand for, you can then effectively message this to consumers.
Messaging Your Brand
You know what you stand for, now itâ€™s time to make sure customers know.
Remember this viral video?
Believe it or not, this is actually a video promoting a brand.
The video features Trent Kimball from Texas Armoring, a company that builds armored vehicles. If you were looking for an armored vehicle (chances are you arenâ€™t, but stay with me) then it would be difficult to not buy something from this company. Itâ€™s the owner of the company literally standing behind his protect while three gunshots are fired.
This is Kimball doing his best to message his companyâ€™s brand. While you donâ€™t have to go to similar lengths, you should do all you can to make your brand message stand out and be memorable for people.
Letâ€™s look at a couple other examples of how companies message their brand.
Spotifyâ€™s message is simple. They can message the â€œMusic for everyoneâ€ because their music catalog has something for everyone. No matter who you are, you know that Spotify will have music for you to enjoy.
Lifelock wants you to connect two terms – data breach and Lifelock. When you hear about a data breach, think of Lifelock. They are the protection against any breach on your data.
Where to Message Your Brand
Many B2C companies message their brand through their website and advertisements. It’s also common to use social media to message your brand to followers.
Just look at the social media followings of companies like Skittles, Wendy’s, GoPro, Denny’s, and many more. In many cases, most people wouldn’t even know much about these brands if they didn’t follow them on social media. These companies aren’t just tweeting and sharing promotions, they’re showing their brand personality.
Taco Bell is perhaps the one we all know about. When you think of Taco Bell, you think of a fun place to grab a quick bite to eat. And their social media supports this brand message.
Now, let’s get into the last step of brand building. This is perhaps the most important step because if you ignore it, you’ll lose public trust and your company will have big hurdles to overcome.
Create the Products and Services That Build Your Brand
Some entrepreneurs will tell you that a brand is overrated. Just create your product and customers will create your brand.
You are what they say you are and thereâ€™s nothing you can do about it but change your business. Once you change your message, then eventually customers will change what they say about you.
This is all true to some extent. The issue I have is that itâ€™s a passive mentality. It means that youâ€™re not doing all you can to message your brand.
You need to message your brand and build the products and services that support that brand message. Think of Whole Foods. We all know them as an organic grocer. Can you imagine if you went into one of their stores and saw Pepsi and Mike and Ikes for sale? The brand would be tarnished for you. Their loyal customers would be furious.
This is why your business must support your brand. Once you do that, and message your brand effectively, your brand will become a fixture for consumers. Theyâ€™ll know what your company is about. Warren Buffett says it best:
“Your premium brand had better be delivering something special, or it’s not going to get the business.”
In this video, Iâ€™ll go deeper into explaining not just why you need to build a brand, but also how to measure your brand using a simple tool from Google.
Entrepreneurs and managers frequently think of branding as unnecessary and a waste of time.
But when you have a company, you’ll have a brand attached to that company. It’s what consumers will think of when they think of your brand.
Brands are fragile. One minor slip up can damage your brand, which is why good PR skills are necessary. The good news is that a good brand will last forever.
As an entrepreneur, how have you been building your brand?
About the Author: Neil Patel is the cofounder of Neil Patel Digital.
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