If you ever had any doubts of the value of a strong brand new research from the AMA Journal of Marketing will surely put paid to them.
I’ve written at length about the areas where a strong brand comes into play in securing the success of a business. A strong brand contributes more to the efficiency of a business than anything else. It eliminates wasted time and effort by making sure that everyone in your organisation is clear on their role and halting non-aligned initiatives before they leech away valuable resources. Investors back businesses with strong brands more readily and will support new initiatives and suppliers will have the confidence to deal more openly with you all because of your strong brand. And that’s before you even get to the many ways in which your brand works to make customer retention and acquisition easier and less costly.
When your brand is strong customers know what to expect from you and will more readily accept new products and offers from you, reducing the need for launch advertising. It costs ten times as much to sell to a customer for the first time than it does to repeat sell to an existing customer, but if you can reduce the cost of acquisition too, you hold all the aces.
We have always known that loyal customers will recommend you to their friends, which, straight away further reduces the need for all that up front acquisition cost, but the AMA research shows that referred customers are even more valuable than those who introduced you to them in the first place.
According to the research referred customers are 25% more profitable per year for the first two-and-a-half years of your relationship with them. They are 18% less likely to churn and they have 25% more lifetime value, plus, of course, they are going to continue the snowball process of referrals that reeled them in, in the first place. It’s a win – win that no business can afford to ignore.
Now more than ever the single biggest factor separating your success from your chances of failure is efficiency and a strong brand contributes more to this than anything else you may do.
Phil Darby
March 16, 2015