Brand

Marketing, advertising and PR firms all work to brand their clients. But how important is brand to these firms themselves? We sought to answer this question in the Wellesley Hills Group and RainToday.com’s latest research report and found that brand does indeed make a difference for the firms whose very business it is to brand.

In the Fees and Pricing Benchmark Report: Marketing, Advertising, & PR Industry 2008 published in April 2008, 343 respondents described their company’s reputation in its target market as either “very well-known” (brand leaders) or “not very well-known.” Exactly one-quarter of the responding firms said they were “very well-known” and three-quarters indicated they were “not very well-known.”

Here are four undeniable benefits the self-described “very well-known” companies enjoyed.

1. Brand leaders have increased their fees over the last two years.

Brand leaders were more likely to have increased their fees over the past two years: 79% of them have increased their fees, compared to 63% of less well-known firms.

2. Brand leaders have experienced annual revenue growth.

Along with an increase in fees, brand leaders were more likely to have seen their annual revenue grow in the past two years, while the lesser-known firms were more likely to have seen their revenue levels stay the same:

• 79% of brand leaders “grew” versus 65% of lesser-known firms
• 23% of lesser-known firms “stayed the same” versus 12% of brand leaders

3. Brand leaders receive higher fees by up to 33%.

Brand leaders not only priced their services higher than their lesser-known counterparts, (41% of brand leaders are premium-price firms vs. 24% of lesser-known firms), but they also got higher fees for their services.

The percent increase that brand leaders actually realized versus non-brand leaders by level of professional is as follows:

• Highest-level professionals: 33% higher
• Upper-level professionals: 13% higher
• Advanced-level professionals: 4% higher
• Mid-level professionals: 20% higher
• Entry-level professionals: 27% higher

4. Brand leaders are more profitable.

Brand leaders were more likely to have been profitable in the past year: 69% of brand leaders were profitable versus 56% of lesser-known firms.

Making the Financial Case for Branding

Arguments about brand are common. Brand advocates tout the need for, and the value of, brand. Skeptics decry the value of branding, with calls of “show me the data,” “prove the case,” and the occasional “branding is fluff and puffery and doesn’t do anything.”

Lest there be any further argument about the value of brand, our research shows that firms that are well-known in their target markets receive higher fees, see their revenue grow, and earn higher profits than lesser-known firms.

This is not to say that lesser-known firms can’t generate premium fees, grow, and profit. They can and do. But it seems the brand leaders have a better chance of doing so and have an easier time of it.

The recently released Wellesley Hills Group and RainToday.com research Fees and Pricing Benchmark Report: Consulting Industry, 2008, focused on the consulting industry, will be the first of five industry reports to launch. The other industries of focus are:

• Marketing, Advertising, and PR
• Architecture and Engineering
• Legal Services
• Accounting and Financial Services

Over the course of the coming weeks, I’ll be posting various pieces of data and commentary from the research here on the Services Insider Blog.

Regarding pricing, we wanted to know what brand leader firms do differently than the rest of the pack. Do they have different challenges? Use different pricing strategies? Do brand leaders grow faster? Are they more profitable? Have higher fees? Do they consider different factors when pricing?

While both brand leaders and less well-known firms have similar standard rates, the median actual rates realized by the brand leader firms were always higher than the not-very-well-known firms – by up to 35% for entry level professionals.

Hourly Billable Rates
Brand Leaders vs. Less-Well-Known Firms

% Increase in Fees Realized by Level of Professional

The next time someone says that brand doesn’t make a business and financial difference, show them the data.

Last Wednesday the first part of my article “The Myth of Being Different” ran in RainToday.com. Although only the first half of the article was published so far, it received quite a number of responses (even one guilt/shame trip!)

Here are a few of them (responses, not guilt trips):

While I found your article “The Myth of Differentiation” entertaining and somewhat interesting, you unfortunately fell flat in the valiant attempt to prove your point. While you hooked your eager readers like me in the opening paragraph, there simply was not enough substance that followed to solidly prove your underlying premise.

Where’s the beef? The companies you cited as examples of poor differentiation strategy clearly deserved criticizing. They were indeed off the mark by a mile. But those weak examples alone did not “destroy the myth.”

Honest differentiation is a powerful marketing tool when properly applied. I’ve used it in my business and have done extremely well financially. It can, and often does, set a service or product apart, giving it an edge in the “positioning of the mind” (Troutt and Reiss).

Many of us out here love reading your anti-traditional thinking, but back it up with concrete evidence that truly sways opinion.

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Thank you for a clear, common-sense rebuttal to the over-used, over-simplistic differentiation planning framework. The issue that I have with this approach is that differentiation becomes the goal. Being or sounding different for the sake of contrast carries the risk of choosing an ineffective path. Taking the thought to the next level, differentiation isn’t a valid strategy. If competitors are failing to meet market needs, then the strategy is to align products and services to better meet needs. The strategy isn’t to be different, it’s to address voids.

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Mr. Schultz’ blog on the Myth of Differentiation was thought provoking, possibly because I just spent two hours yesterday at a networking event. I often ask prospective clients and agencies how they differentiate, and typically I get similar answers, stated in different ways. After reading this article, I reflected on my ‘elevator pitch’ and quickly realized I can also be placed in the category of uniquely stated sameness.

I do however believe that organizations can and do differentiate, however that differentiation is often based on actual client experiences, not on product or services. It is difficult to articulate in a short elevator pitch, however these experiences can be brought out through examples i.e. “clients tell us they were surprised and delighted by our….” Time for me to rethink my own elevator pitch and website copy and focus more on actual client experiences then interesting and ‘unique’ ways to state what everyone else is already doing.

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The “need” for differentiation grew so strong because companies thought that customers needed a way to to see them differently from their competitors. For some companies this worked but there are only so many USP’s. Eventually all the points that companies used to differentiate themselves actually made them all look the same. Perhaps they should just have asked customers what they wanted in the first place.

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Your article on differentiation is misleading for small businesses looking for guidance. Being unique, which we all are – and articulating it are two different things. The low quality promotional copy used in your article to illustrate your point is most often written in-house or by hacks. Generalizing from there is…misleading to your readers, particularly when nothing is being offered as an alternate or better way to go. Shame on you!

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In the first part of his two-part “Myth of Differentiation” series, Mr. Schultz muddles the meanings of the words “unique” and “different” and narrowly defines differentiation as a communications process (“differentiating to the client”), ignoring the value of differentiation as a process of introspection—figuring out what makes you different from the competition so that you can better position yourself to your market or client.

First of all, the words “unique” and “different,” while synonyms, do not have identical meanings. In order to be “unique,” something must be different from every other thing in existence. Answering the question, “why are you unique?” is nearly impossible, because the comparison set is so huge—the entire universe. So I think that the word is usually used poorly in marketing, to describe a firm that isn’t really unique (or, at least, probably couldn’t tell you how it’s unique).

But the word “different” sets the bar lower, on a scale we can deal with. Something is different only in terms of how it compares with other things in the same limited category. In thinking of what makes a firm different, we consider the direct competition, and think about what makes us special.

This is an absolutely necessary part of positioning your firm for a market or a specific client. Otherwise, you’re just talking about yourself, without a competitive context, and you have no way of anticipating how effective your words will be in reaching your client. Once you know how you’re different, you don’t necessarily need to say to the client “We’re different because…” but your understanding of how you’re different can inform ALL of your communications.

I agree with Mr. Schultz that calling yourself “different” or “unique” does not make you either one, but I do believe that an introspective process (informed by research, of course) about how you compare to your competition is invaluable in developing client-focused messages that differentiate your firm from the competition. The real problem isn’t with the words, it’s with using them incorrectly to describe things that aren’t actually different or unique.

Walk around any marketing conference and you can hear folks talking about brand. Typically much of the discussion centers around brand tactics: how to create a brand identity, how to build brand messages, how to test for brand penetration, how to implement a brand, etc. The question I often get from company leaders is more along the lines of, “What should a brand actually do for a professional services firm?” In other words, “Why bother?” In my estimation:

Brands increase sales effectiveness: If a potential buyer says, “I know your company… you have a reputation for doing a great job and treating clients well,” you’ll be in much better shape than if they say, “Now who are you again and why are you here?” Also, we all know that large buying decisions have multiple people influencing the purchase from the buyer side. When your prospect asks around and hears, “Yes, I’ve been following their research for years. They’re a leader in the space,” or “I’ve worked with them before…they’re as solid as they come,” it’ll be much better for you than if they hear a chorus of “Nope…never heard of them,” or worse.

Brands help generate leads: If a prospect knows and respects your company and reputation, they’ll be more likely to accept when they get an invitation to an event, an invitation to download a new white paper, or a telephone call to see if they’d like to have lunch and discuss business. If they’ve never heard of you, the messages can often go unnoticed and untouched. (Until the messages build up enough over time and they’ve seen them for a while, but then you’re starting to establish a brand…) Research supports this argument.

Brands create premium fees and pricing: It may be basic, but buyers are looking for services firms to do what they say they’re going to do. If your brand and reputation a) creates a promise for what the buyer can expect from you, and b) supports the belief that you deliver on your promises, you’ll garner higher fees.

Brands help you beat competition: If a buyer knows he’s going to get top quality, high output, reduced risk, leaders and thinkers, or whatever your brand is they often value that over the lowest price. Without distinct criteria for them to evaluate what you will do versus someone else, or knowledge that what you say is, indeed, what they’ll experience from you, price often becomes a central factor.

Brands facilitate repeat business: When buyers know what to expect from interactions with you, that you keep your promises, and that you deliver at and above their expectations, they’re less likely to switch or stop buying. Boil it down, and a brand is simply the degree to which a buyer prefers to purchase from you versus other options available to them.

Brands draw strong labor pools: In good economies and bad, services firms need to hire the best people they can possibly find. Brands are often a force in attracting the best job candidates and getting them to accept positions at your company versus the others.

Brands increase the value of a company: As discussed throughout, brands help create premium fees, new business leads, strong sales, strong labor pools, and other benefits. These are long-term financial advantages. These advantages translate into higher market value and company valuation, especially because of how long it takes to establish a brand from scratch. This point may only be interesting to the owners of a business, but, then again, they often hold the purse strings and keys to success for brand and marketing initiatives.

Last week I delivered a webinar on the topic of Marketing Strategy, Planning, and Budgeting through RainToday.com. (Repeat performance on December 13.) We had quite a number of questions that came in during the webinar and throughout the Q&A time.

One attendee wrote in:

What’s involved in developing a ‘strong’ look and feel in terms of brand?

When it comes to developing and launching brand identity, think about:

• Your Strategy: I know $1m companies bent on having a world-class look and feel that are gearing up to spend six figures on a project with a designer. Typically, they’re going too far.

Conversely, I’ve seen $20m companies that look like they hired a 13-year-old (and not a particularly talented one) to design their website, logo, and materials. I see companies like this hindered all the time because of their look and feel. Conversations go like this:

o Mr. Prospect: No, I wouldn’t consider them as a service provider?

o Mike: Mr. Prospect, why?

o Mr. Prospect: Well, I looked at their website and I simply don’t think they’re in our league as a company.

In my experience, “in my league” starts with, and sometimes ends with, a first impression based on look and feel.

• Leadership: The company has to be ready to spend the money and go through the process to up the ante on how you look. Sometimes it’s not a matter of money; it’s that leadership doesn’t really think it’s a priority. Regardless of the matter, when something is not a leadership priority, you can find yourself in a losing battle. (Think Sisyphus.)

• Designer: Designers come in all shapes, sizes, and prices. Hire someone “in your league.” A bad designer will say they do the same thing as a good designer “for less.” Good designers cost a pretty penny. And they should.

Vet the designer portfolios carefully. They don’t need to be huge, but you have to like what you see. If you don’t have a good design sense, you’ll just have to trust someone who does to help you make the decisions. (If design isn’t your thing, don’t trust yourself. Smart people with good intentions that have no design sense have succeeded mucking up many a good design with their “helpful feedback.”)

• Design Process: Don’t get bogged down in the details. Graphic design processes at services firms can devolve into pure pain. (Think Kafkaesque morass.) Read this article to learn more.

• Implementation: The new look and feel needs to be in everything you send out. And, of course, the more you send it out, the more effect you’ll get. Just be careful not to get too enamored with the look and feel because it’s such great design. The design is a backdrop for the actual messages you want to get out and actions you want prospects and clients to take. It’s not the message in and of itself.