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Gayle Turner


  Brand Clarity Frees Companies from the Tyranny of Competing on Price Alone

by Gayle Turner, Principal
 
Do your sales people ever say anything like this?

"The only thing our customers care about is price.
If we can't offer the lowest price, we will not get their business."

If so, and if your company isn't one of the few organized so efficiently that you can offer the lowest price and still meet your profitability goals, then you have a brand problem.
 
You're probably thinking, "How can he say this? He doesn't know me, my company or my customers." I know this: if your customers are fixated solely on price, they do not recognize the value they receive from your product or service. Companies that have crafted a clearly differentiated brand promise (based upon what their customers' value about their relationship) are able to shift the conversation away from what it costs to what you get.
 
A clear brand promise communicates to a customer why they should buy from you instead of your competitor. If you cannot sufficiently differentiate your company's products and services from your competitors' in terms of the value your customers receive, then the only metric they have for making their decision is price.
 
Hence, clearly stating the value your customers receive from your products and services, in words relevant to them, will free your company from the tyranny of competing on price alone.
 
The most effective way to uncover your brand image (i.e. what your customers value about your brand) is to have a perceived disinterested third party ask them, "How do you see this company?" Because your brand's image resides in your customers' perceptions, rightly or wrongly, those perceptions are your commercial reality.
 
With this in mind, I'm going to offer three areas in which being clear about your brand can positively impact your company's productivity, value and sustainable competitiveness.
 
Number One: Brand clarity translates into asset value.
 
The brand is most companies' largest asset. Brand clarity impacts the ability to sell on value versus price, to forecast more accurately post-merger success and to command the optimum price when selling a business.
 
At the heart of each of these abilities (to sell on value or forecast success), is a clear understanding of a company's relationship with its customers.
 
Recently, our firm was retained to help an insurance company more clearly define its position in the marketplace. After we learned that our client's customer base valued them for a different reason than they had been promoting, the insurance company changed its language of promotion and is now able to communicate a brand promise to its customer base in clear and compelling words.
 
When prospective customers heard the new brand promise, comments about competitors' lower prices greatly diminished; apparently the value of our clients' insurance was now being accurately communicated and respected.
 
Brand clarity is a major factor in acquiring and keeping customers that are profitable to your organization. And, keeping profitable customers is a key indicator of company performance.
 
Number Two: Brand clarity can smooth transition and enhance succession.
 
We are in the greatest period of wealth transference in the history of the world. As baby-boomer-generation business owners prepare their exit strategies, they are faced with discerning the value of their businesses. One of the major factors determining the worth of these businesses is the expectation of future sales.
 
So, too, the value of a brand is founded in the expectation of repeat sales.
 
Hence, the clarity of a company's brand is directly related to the owner's ability to reap optimal value upon its sale.
 
Number Three: Brand clarity impacts the success or failure of mergers and acquisitions.
 
Pundits have stated that as many as 70 percent of all mergers and acquisitions fail to fulfill their financial projections. The formula of 1+1=1 succinctly conveys the reality of many M&A ventures.
 
Prior to a merger, all too often the projected value of the merger is based upon the assumption that by putting two organizations together, they will be more efficient after the merger is completed. We observe that the high rate of financial disappointments is frequently due to little energy invested in discerning how customers will react to the new entity.
 
Two years ago, our firm observed a major manufacturer (regrettably) successfully practicing the 1+1=1 equation during a period of multiple acquisitions. Management assumed that post-merger, the acquired brand's customers would continue buying from the acquirer. Unfortunately, this did not prove to be the case. The acquired brand's customers had not done business with the acquirer before the acquisition. They continued not to do business with them afterward.
 
This tragedy can be avoided by understanding the value customers place on their relationship with a company and its brand(s). If the value of that relationship is clear, in other words, if the brand has clarity, then more effective decisions can be made and value can be created instead of lost.
 
A company should never act without considering the sanctity of the relationship between customer and brand, or employees and brand. When that relationship is ignored, value tanks.
 
But when a brand's worth is recognized and treated accordingly, it can strengthen the relationship between a company and its customers, employees and investors. The result is increased value.
 
Strong brands help you control your destiny.
 
In an increasingly competitive economy, with low-cost producers emerging from all corners of the globe, it is critically important to have a strong brand rooted solidly in key customer values.
 
Remember, if you don't make the effort to inform your customers of the real value you deliver, the only topic of conversation left is price.
 
© 2005
 

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