Branding and Top-Line Growth

The April issue of Harvard Business Review has an interesting article called "Take Command of Your Growth." The author outlines 5 revenue sources from which to build revenue growth:

- Base Retention (continuing sales to existing customers)
- Gross Share Gain (take business from your competitors)
- Market Positioning (show up where growth is already occurring)
- Adjacent Markets (attack neighboring markets)
- New Lines of Business (Invest in unrelated new businesses)

The first three stem from a company's core business; the other two lie outside the core. The author doesn't mention how a strong brand (or 'corporate self') spurs revenue in these areas, so I’ll fill in the blanks. To lay the foundation for discussion, I define a brand to be the idea about your company in the minds of stakeholders. That idea is created by operations and marketing (what you say and what you do.) If a company’s words and actions consistently deliver on customers’ needs, the brand gains power. That power manifests itself into revenue growth in the 5 areas listed above.

Base Retention: Prospects hear a meaningful marketing promise, make a purchase, and experience the delivery of that promise. Consistency builds trust. Trust builds loyalty. Loyalty leads to…

Gross Share Gain. Loyal customers refer new customers, which is the least expensive way to take business from competitors. Testimonials and case studies support direct sales efforts. Clear definition and communication of the corporate brand helps customers and prospects understand why they should do business with your company.

Market Positioning. Although plenty of companies in high-growth markets are simply order-takers, the few with strong brands ultimately win in the long run. Too often, companies in high-growth markets build up their sales and order entry divisions at the expense of customer service, operations or R&D. Without continuing to deliver on the initial brand promise, these companies put Base Retention at risk.

Adjacent Markets: The strength of a brand makes it much easier to penetrate related markets. Apple’s well-known brand attributes for fun, stylish and simple products directly facilitated its successful iPod launch. And Sony’s brand equity supports any new product launch in the consumer electronics category.

New Lines of Business: Same thought process as above. This is also where companies can capitalize on brand equity through licensing. A colleague of mine thought that Volvo should enter the baby-seat business; its ‘reliable, safe & secure” brand attributes would be transferred to a completely new category where these attributes are highly prized.

Bottom line, a corporate brand should be built with all five of these revenue sources in mind. A brand statement like “We’re the leading provider of xyz products for the abc market” is meaningless to customers and inhibits your thinking about non-core opportunities. Conversely, if you design a ‘corporate self’ with core attributes like reliability, innovation and style, you can be flexible in your top-line growth opportunities while maintaining consistency in your brand promise.

Comments

[Chris Eklund]

Andreas mentioned Britax and I'd like to add on to that. While I hadn't seen any advertising for Britax, a little searching on the internet revealed a lot of proud owners willing to say as much. Comments posted to Amazon only made the buying decision easier. Loyal satisfied customers spread the word and for $0 of ad spend, Britax got a sale. I'm also impressed with the seat and now a happy Britax owner. Now that I have a 'bond' with the product/brand, I'm much more tolorant of a safety recall, color options, and the like. I'm looking for reasons to continue the relationship not reasons to break it. My celluar provider Verizon is another matter. My displeasure with their service quality has me searching for reasons to pick a new provider once my contract expires. Loyality and trust can not be underestimated or undervalued!

[David St Lawrence]

I'd like to add to my comment on your earlier post, using the new examples you have given. In each, you are using a particular aspect of branding (brand as a promise, expectation of a level of service, delivering what is promised, etc.) to explain how to spur revenue in each area.

If you leave the word brand out, but communicate the conceptual functionality of what a brand can do, you have a powerful message without the need to clear the many definitions of "brand."

If you must, you can always add a footnote that hints at the increased control of revenue that comes with a complete understanding of the concept of a brand.

[Andreas Fuegner]

TTBOMK, Volvo did offer child/baby seats for a while, without success.

Another brand (by Britax) covers "safety,
reliability and security" very well and
brands are not that relevant in this category.

PS: THX for your blog, it is always interesting.