Corporate board members have a long list of responsibilities and concerns: succession planning, executive compensation, regulatory compliance and business growth strategies -- not to mention shareholder interests and value.
One topic that gets less attention is brand, often because many senior marketers have not mastered the art of turning marketing-speak into the financial language that resonates with directors. If brand value and the benefits of brand-building investments are not translated into the language of numbers, marketing will always be at a disadvantage in winning over the board.
Here are five reasons to bring brand into the boardroom:
1. Brand is the most important intangible asset of a company -- estimated at a value of 15% of the market cap of top-tier organizations. It can also be more: Disney's is 32%; McDonald’s is 40%; and Coke is at 42%. What happens at a company with a market cap of $100 billion with its brand at 20% of that or $20 billion, if there is a major, brand-damaging catastrophe such as what happened with BP or Toyota? Brand value plummets -- as does the stock, putting brand in the board’s wheelhouse.
2. Brand is typically the most important driver of customer purchase in both B2C and B2B, playing a central role in business growth and discussions of how it will be achieved. A 2012 study on corporate reputation -- a critical aspect of brand -- found that consumers were twice as likely to purchase, pay more for, and recommend products/services from a company with a leading reputation and brand versus a failing one. And the strongest brands can move customers from consideration to purchase 90 percent of the time.
3. Brand value is not grown or sustained without investment. Companies spend a lot in advertising and marketing to manage the perceptions that drive brand. It’s important for directors to stay on top of these investments, always comfortable that their spend is effective. Not only will it ensure that the brand’s value grows, but it will support bottom-line performance as well.
4. Companies do best when corporate strategy, brand strategy and culture are aligned and are the basis of decision-making. It’s a mistake to consider market expansions, acquisitions or new product lines without examining how brand enables or inhibits success. [In the brief, non-Howard Schultz era at Starbucks, the new chief executive pursued a strategic course of adding food, like breakfast, to the menu. Schultz believed that from a brand perspective, such moves were a conflict. When a brand is all about coffee, why dilute the impact of the aroma of the day’s freshly brewed blend with that of burnt cheese on a microwaved breakfast sandwich?]
Given today’s era of transparency, and consumers’ desire to know the company behind the product, the character of the company cannot help but influence customer perceptions and purchase decisions. Aligning business strategy, brand strategy and human asset strategy makes that happen and maximizes the value of the business.
5. Brand is more than a “marketing thing.” A strong brand plays an integral role in talent acquisition, retention and engagement. It also influences a business’ standing with constituents from analysts to shareholders. Employees who embrace the brand’s purpose are engaged, motivated ambassadors for their organizations. In fact, data shows that professionals who considered their companies’ “brand values to be crucial and part of everything we do” were 600% more likely to say they work for a superbly led organization, and those companies have on average 4x higher profits per employee. Investors also have more confidence in companies with strong brands.
Board members who have been won over in terms of the brand’s influence and role in the enterprise’s ultimate success will find three questions helpful to staying on top of its progress: What is our brand worth? What drives its value? What are we doing to protect and increase our brand equity?
The reach and responsibilities of the corporate board have expanded dramatically as scrutiny has intensified over the way members uphold their fiduciary responsibilities. By growing a better command of brand matters, directors will add another important dimension to their service.
Board members should consider Abraham Lincoln’s words: “Character is like a tree, reputation is like its shadow” --and keep in mind that building a brand is not about manipulating the shadow. It is about nurturing the health of the tree. That’s the role of the board of directors.