Branding is a divisive topic in every business. Ask anyone from IT to Sales, front line workers to the executive suite, and everyone falls in one of two camps: Brand Believers or Brand Skeptics.
It’s easy to point out big-name brands that win, but when it comes time to put dollars behind it, Brand Skeptics won’t accept vague promises. Frankly neither will a board of directors - their job is to make data-backed decisions.
If you’re a Brand Believer (especially if Brand or Communications is part of your job description), it’s fortunately very easy to quantify the sales impact of branding and turn Skeptics into Believers.
Jonathan Fisher, Chairman of Brand Extract, shared a formula during a webinar on “Branding and the Power of 10” that gives you the numbers you need to start with. I’m using some of their figures below. Feel free to follow along on the back of that grocery store receipt you’ve kept in your wallet for way too long, or use our free spreadsheet template here.
First, you need to gather three basic metrics. I’ll add some examples below each:
Average number of new deals created (monthly or annually)
100 new deals/year
Average deal size
$100,000 average contract value
Average win rate (the percentage of deals you’ll win the same period as above)
25% of the deals we bring in are won
Now that you have these numbers, let’s run the quick math at our “current state.”
A x B x C = $
100 deals x $100,000 average deal size x 25% win rate = $2.5M
I expect our team to produce $2.5M in revenue based on these figures.
Here comes the tricky part. You need to be conservative about how much you think a strong brand can positively impact these metrics. It will surely impact some of them more than others but start with something a Brand Skeptic can’t argue against.
In our example, we’ll say we believe we can get a 5% overall lift from being a top brand in our category.
Side note: How reasonable is a 5% lift? Well…
If I have 100 new deals every year coming into my pipeline, this is only 5 more deals. Can I get involved in 5 more buyer evaluations by being one of the most well-recognized brands in my space? Without a doubt.
If I have an average deal size of $100k, can I command a $105k price as a top brand in my space? Absolutely.
If I currently win 25% of the deals in my pipeline, can I step that up to 26.25%? You betcha.
Now we take M (stands for branding Magic) and multiply it by each of our factors in the original formula.
(AxM) x (BxM) x (CxM)
105 deals x $105,000 average deal size x 26.25% win rate = $2.89M
That $390,000 in new business compounds year over year as you solidify your position in the market. That 5% lift in pipe grows as you continue to expand the gap between you and your competitors in the minds of your buyers.
That’s powerful, quantifiable stuff. And we’re being conservative!
If you started with 1,000 deals, a $25k average deal, and a 15% win rate, then rose that just 5% across all the factors, you’d go from $3.75M to $4.34M, adding an extra $590k in closed business.
Imagine you calculate the brand impact at 8% across all factors -- that’s nearly $1M in additional revenue.
It’s time for branding to take its place in the budget consideration discussions, and for brand marketers to make their impact known in quantifiable terms.
Hopefully, our simple calculations give you a starting point for those conversations with the Brand Skeptics.
And, of course, when it’s time to optimize your brand consistency across every employee’s email signature on every device, we hope you turn to Opensense.