Brand Value for B2B Tech Firms (Part 2) March 31, 2010
Posted by N.P. Menon in Branding.Tags: branding for start-ups, branding technology products, technology branding
add a comment
In an earlier post, we discussed the value that a brand brings to B2B technology firms, especially those in the start-up phase. We talked there about how branding aids the customer acquisition process significantly and what it can do to bring down selling costs.
We also touched on the impact of branding on scalability very briefly. In this second edition, we discuss that in greater detail, especially from the perspective of start-ups that seek to move from early phase to the next stage.
From a VC perspective (and to a lesser extent, for other investors too), the ability of a start-up firm to quickly scale up and move to stage 2 is critical; this is where product acceptability is high and reliable revenue sources have been established. Companies that have captured a distinctive space in the customer mindset with a strong brand will find it easier to build and keep such revenue sources. (As we clarified in the earlier post, branding should include defining the customer experience – it is not just about advertising).
Secondly, companies that have invested in creating a brand (whether it is a product or corporate brand) will find that this brand works not just with customers, but with a larger stakeholder audience such as the media and financial analysts. For a company that has grown exponentially and seeks to go public or where the investors want to exit through other ways such as getting acquired, the goodwill generated with this stakeholder audience plays an important role as well. (Good read: What is a brand worth?)
From a more long-term perspective, branding has a big role to play in sustainability due to the impact it has on diversification and new market entry. Companies with strong brand values can more easily extend the brand to related categories. Think Titan which has recently entered the eye wear category – its strongly established values of style and precision are enabling the brand to move into a quite different category. At the other extreme is Microsoft, a technology giant that nevertheless has very little resonance as a brand on the web. To enter this market, Microsoft has not been able to leverage any of its existing brands; instead, the company has to had to invest in Bing, a completely new brand and will likely spend enormous amounts of money in an effort to challenge Google.
For technology start-ups that hope to quickly put their start-up days behind them, these financial implication of brand-building are worth thinking about.
Brand Value for B2B Tech Firms (Part 1) March 12, 2010
Posted by N.P. Menon in Branding.1 comment so far
Quite often, one hears a view expressed in start-up technology firms, especially those that deal in the B2B space, that ‘branding and all that’ doesn’t really matter to their business. The rationale is that much of their customer acquisition process involves direct contact between fairly senior teams on both sides – when our senior management communicates everything that is to be said, why do we need branding?
This opinion assumes that branding = logo or branding = advertising and promotional materials. While branding may involve all these, that is not the reason for branding one’s company and products.
Brand building is the establishing and communication of a definite set of values that the company and product stands for. In an ideal world, your product would be the one with the highest quality, sold at the most reasonable price and backed up by the best service. In the real world, most products will need to choose a few customer expectation points they will meet. Branding is all about establishing those parameters within which your product will operate, and for many reasons, as we will discuss below, it is as relevant to a B2B technology firm as it is to a B2C firm that sells televisions.
One very clear and obvious reason for branding is that it lowers the cost of customer acquisition. At this stage, you may frown, thinking of all the monies spent on promotional material. But, by communicating a set of clear and differentiated values to your customer, you are already letting them know what to expect. An office manager who places an order for a batch of Dell PCs knows that he can expect quick delivery and good quality for the price, even if not the highest quality available in the market. This set of expectations has been communicated to potential buyers thanks to Dell’s consistent branding of itself as ‘the’ player who offers an easy purchase process with reasonable-price and quality. Dell is an extreme example of a marketer that has almost eliminated personal selling, due to its clear brand values.
Of course, most B2B businesses may not be able or wish to completely avoid direct selling; yet, it is worth thinking at this point that the kind of direct sales that works for a start-up or SME may not work for a large enterprise. As the sales team grows larger, customer interactions can vary wildly from one location and team to another. Branding involves specifying what kind of customer experience a company will deliver and how it will be delivered. How long free trials are offered, what kind of discounts can be given, the product demonstrations customers receive – all of these say something important about the brand and need to be considered carefully.
For start-ups that have global ambitions and hope to scale up rapidly, branding is essential for sustainability. A direct, proportionate increase in sales team headcount as the business grows can eat up a large chunk of profits. Establishing what you stand for means that each sales team can deal with a larger number of customers, who already know who you are and what you can do for them.
Branding for technology firms has more benefits from a sustainability perspective, which I will be discussing in our next post on Branding and Financial Value.
