Branding and Top-Line Growth

futurelab default header

by: Jennifer Rice

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.

Original Post: