What is the single statistic that best reflects the importance of brand strategy?

Read the transcript of this video

Let's take a step back and think about the value of a business. Value stems from 2 things – tangible and intangible.

The tangible sources of revenue are things like your inventory, capital, cash, plant, vehicles, equipment, real estate. The intangible sources of value for your business include things like the goodwill that you have with your customers, the heritage of your business, the relationships your business has, patents, copyrights, customer lists, trademarks. These are all sources of intangible value for your business.

Now, let's look at what brand means. Brand is the relationship between a business and its audience. It’s the sum total of all the associations that your audience has for your business.

A very large percentage of a business’s value is intangible, and a large portion of that is brand equity.

The investment company Ocean Tomo found that among S&P 500 companies, 90% of the valuation stems from intangible assets, including brand equity.

To illustrate, look at Nestle’s acquisition of Blue Bottle Coffee in 2017. Nestle valued Blue Bottle at $700M. Blue Bottle’s tangible value was small – 40 stores, a plant in Oakland, inventory, a small fraction of that $700M total valuation.

By owning Blue Bottle, Nestle now owns all the feelings associated with Blue Bottle — things that Nestle could not copy—the Blue Bottle brand and its loyal customers, and all its intangible assets.

Of the $700M valuation, only a small percentage is tangible. Most of that value comes from intangibles and is coming from brand.

So, to ignore brand is to ignore your primary source of value creation. If you’re seeking to expand your business, brand is your friend, because it’s the largest source of value creation there is.

When you think of the value of your business, are you considering the intangible value as well as the tangible value? There’s only so much economic value you can create through tangible assets. The key to growth is to harness your intangible assets through brand.

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If you liked this article and want to know more about focus, you may like this:

Which is more valuable to my brand, a big benefit or a narrow focus?

Brand vs. branding – why does this difference matter?

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About Lindsay

Ironclad Brand Strategy ?owner Lindsay Pedersen is a brand strategist whose clients include Zulily, Starbucks, T-Mobile, Coinstar and IMDb. Her brand strategies are tested in the crucible of her proprietary Ironclad Method. Lindsay arms leaders with an empowering understanding of brand, and an ironclad brand strategy so they can grow their business with intention, clarity and focus.

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Originally published at?ironcladbrandstrategy.com/ask-lindsay