Who owns the brand in your organization? The answer we usually hear has something to do with Marketing, which makes sense because that is the group that defines how a company expresses itself. The problem is that “Marketing” is the wrong answer. The right answer is the CEO. Here are three reasons why:
1. The brand impacts company value
Perhaps the most important reason the CEO needs to own the brand is that it impacts the financial performance of the company. A 2012 study by McKinsey & Company revealed that strong B2B brands generate 20 percent higher operating profits than brands that are perceived as weak. This is because a strong brand commands higher prices for products and services, maximizes margins, and holds off commoditization to preserve value for the long term.
A strong brand also contributes to the overall company valuation. When pump manufacturer Gardner Denver was acquired by KKR in 2012, company officials determined that its brand reputation was a key contributor to the fact that 43 percent of its value lie in goodwill and other intangible assets. By comparison, the goodwill of Procter & Gamble is approximately 40 percent of total company value. No doubt this helped pump up the price KKR was willing to pay for Gardner Denver. And this is a “boring” B2B company!
This relationship between the brand and the value of the business means the CEO has to be responsible for both. Investors, board members, and employees alike expect the CEO to maximize corporate value – and that means treating the brand like an important asset that needs to be managed from the top.
2. Brand is a strategy
The reason brand has financial value is that it plays a strategic role in focusing the organization on its purpose. According to Sheryl Pattek of Forrester Research, “Your brand should serve as a guiding light that illuminates your organization’s direction, purpose, and value and provides clarity to all stakeholders.”
That guiding light is the basis for defining strategies for everything that helps grow the business including entering new markets, differentiating offerings from the competition, finding and retaining customers, hiring and training employees, and increasing profitability. Only the CEO touches such a range of critical issues, so only the CEO can own the brand.
3. Brand impacts the entire organization
It is common for companies to assign responsibility for the brand to the marketing department where the communications programs reside. After all, this is where the logos, taglines, and campaigns are created. The hidden danger is that those communications only reflect the brand promise being made to the customer – the rest of the organization is on the hook to actually deliver on that promise. That is where the brand is really built!
Only the CEO is in the position to make sure brand is a priority across the entire organization. He or she must direct the management team to support the brand by defining the functional strategies and directing the resources to execute the brand strategy. And the employees have to understand the role each individual plays in delivering on the brand promise. It’s a team effort and only the captain can lead it.
These are the reasons we partner with the CEO and the executive team in building the brand of a company. Only the company leaders have the vision, authority and resources to ensure that wherever a customer touches the organization, the experience reinforces why they do business with you.