In Focus: Building A Strong Brand

Did you know that organizations with a solid brand strategy outperform competitors by up to 20% in sales, and enjoy 50% more ROI on their marketing efforts (based on McKinsey & Company research)? Furthermore, research by Nielson found that 60% of consumers are willing to pay more for products from brands they trust. So how much are you investing to build your brand, and how much should you be allocating to this critical component of marketing? There's actually quite a bit of data to answer this question. On average, organizations should be allocating 5-10% of annual revenue to marketing and branding, but it can vary by industry and the stage of your business. For B2B businesses 5-7% is typical, while it can be as high as 20% for e-commerce and retail businesses. B2C businesses, particularly in competitive markets, should plan on investing 8-12% of revenue in order to stand out.

While it can feel daunting at times for new businesses to invest in marketing that is part of a long term strategy and not part of immediate lead generation, investing adequately in branding can lead to significant returns over time, such as improved customer loyalty, higher pricing power, and better overall business growth.

However, the key is to find a balance that aligns with your business goals, revenue, and industry norms. For most businesses, the recommended range of 5-10% of gross revenue is a solid starting point for sustaining and growing a brand.

Keep reading to see examples of how we partner with organizations to build strong brands.

This Week's Focus:
Building A Strong Brand

In 2023 I opened a local skate shop with my friend, Adam Bonine (owner of Fresh Air Vents MN, link below). We built the Hang Time Board Shop brand from scratch, partnering with Derek Hageness on logo design. While this endeavor can largely be described as a "side hustle" the power of content has been a key driver of our success because it lead to a massive Grand Opening event, e-commerce sales from all over the country, and year-over-year revenue growth of 26%. We have customers regularly driving hours out of their way (and past other skate shops) to shop at our store, and national customers who choose us over their local shops.

How could we talk about branding without mentioning our own brand?! At last week's MCN/MCF annual conference we met with hundreds of nonprofit organizations and heard more than once that "our reputation proceeds us." One person we spoke with even specifically mentioned that "you guys are known for producing outstanding content at a fraction of the price." Establishing brand values and living up to those values every day is at the core of our success and is what has allowed our brand to grow!

Measuring Your Brand Equity

To measure the impact of your brand marketing efforts, focus on metrics like brand awareness, customer perception, engagement, sales, and loyalty. Using a combination of tools like Google Analytics, customer surveys, and social media engagement can provide a well-rounded view of your brand’s performance and influence. Consistently track these metrics to understand the long-term effects of your branding initiatives.

Customer Lifetime Value (CLTV)

CLTV measures the total revenue a business can expect from a single customer over the lifetime of their relationship with the brand. Higher CLTVs often indicate stronger brand loyalty and value. It's important that you are tracking this metric to help qualify how much you should be spending to acquire new customers.

Customer Acquisition Cost (CAC)

Measure the cost of acquiring new customers. If your branding efforts reduce CAC while increasing sales or lead volume, it’s a sign of branding success.

Conversion Rates

Measure how effectively your branding influences customer decisions, especially on digital platforms. Track how often visitors convert into paying customers after engaging with brand content (social media, ads, website). Video is one of the best ways to improve your conversion rates.