Why brand value needs to be a board room priority

The other day I found myself talking to a Board of Directors and their C-Suite, explaining why brand value is not only the responsibility of a company’s marketing team, but one of the most important areas of responsibility for the board itself. As an intrinsic part of my work as a Non-Executive Director, this is a fairly common occurrence, but it never fails to surprise me how often boards try to shift that priority down onto the C-Suite and their marketing team, forgetting that it’s their principle responsibility to protect a company’s assets and that usually the most valuable asset it has, is the brand; the repository of long term shareholder wealth and value.

Brand value is a tangible asset

Put simply, if you look at enterprise value, it will almost always be larger in branded companies than the physical assets our accounting colleagues can put on the ‘books’. The difference has to be accounted for by something. Sometimes it’s in with patents and trademarks, but for the majority of businesses, it is in this thing called ‘brand value’. As representatives of shareholders, the board’s job is to curate and build that value over the long term.

What is a brand?

In essence, the core of what a brand is hasn’t changed since the Ancient Egyptians started putting brand marks on their livestock. A brand is that thing that’s issued under your company’s name or names.

Brands are extremely important to consumers because they are a promise of consistent delivery, for which they’re prepared to pay a premium over the commodity value of the article itself.

They’re very important to retailers because they command higher prices than the commodities they often sell, and which provide their customers with shelves full of choice and independent guarantees of quality.

Brands are also critically important to shareholders, not just because they allow the product to carry a price premium, but also because demand is easier to forecast. That, in turn, allows for economies of scale and less risky production, and finally, ultimately you can sell the thing – someone will buy a solid brand from you.

How do you build a brand?

The basics of building a brand have not really changed even in the modern era. Initially you have to establish what the brand’s essence is, why it’s here; what its values are, what you believe in; and how you behave. You must decide what benefits the brand gives to the consumer, and then you design-in the necessary features to achieve that promise.

However, one of the greater difficulties now, is the environment within which brands have to be built. If you’re working on a brand that’s been around for 200 years, a lot of what it stands for is already in the public eye. Its values and benefits are already evident because you’ve built a reputation over time.

Today, we operate in a more transparent space, most notably a more web-based environment. Here both supporters and antagonists are operating. That transparency necessitates a 360 degree approach to marketing, where once upon a time it might have been more of a 180 degree transmit approach. That doesn’t just apply to the customer journey – for example if you have a transactional online business, but also for the huge proportion of brands who may not transact online, but still need to manage their presence and reputation in the public space.

Challenges to building and protecting brand value in a more transparent environment

If you’re any good at marketing, then you and your business will not be targeting everyone with your product or service, you will be targeting a relatively small group. However, because of the almost inevitable rise of special interest groups who may take against you, and who have awareness and visibility of your company because of this transparent environment, you do need to be mindful of public sentiment regarding how your business operates, often well beyond your target market.

For that reason, as well as others, there is a greater need to be aware of the international marketplace and your reputation or potential reputation in that, even if you’re not really operating in it.

The areas of your consideration will stretch from whether you pay your taxes appropriately or not, through to the personal lives of the directors and the activities you’re seen to support. It will also include areas such as your ‘employer brand’ – looking at how you treat your people, issues of diversity and inclusion and whether your company is a good place to work. People will comment openly on public platforms, and if you want to attract the best people to work for you and to maintain consumer as well as staff loyalty, your employer brand is something the board should be discussing on a regular basis. It’s important that your brand’s values are consistently reflected in all of these areas.

Taking a holistic approach to brand management

The truth is that most businesses and most brands operate by public consent, and a more intense light is now being shone on that. Everything is increasingly open to scrutiny, not just by your customers, but by everyone, and there’s nothing you can do about it, so have to manage it.

The inherent problem with this is juggling the need for centralised control, where the board really makes sure it has its hand on the tiller with a proper robust strategy, alongside the need for relevant adaption to different geographies.

The result is that you have to take an holistic approach to brand management, and that includes making brand value a primary focus and responsibility at board level. All too often boards only concentrate on finance, and in particular, current financial performance, occasionally looking at future investments and employment policy. Although important, current financial performance is generally a short-term issue, while long term value growth is wrapped up in that most important task– building the brand.

So, what can the Chair do to put brand value at the heart of board discussions and take control of it? For one, the CMO needs to be understood in the context of being a strategic commercial leadership position and not just a management one. And crucially, you need to make sure that everyone on the board, irrespective of their core discipline, understands that their job, ultimately, is to manage the brand on behalf of the shareholders.

Originally published on Linkedin.

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