The ROI of (re)branding is like that of putting on your shoes


For many things, the ROI is difficult to calculate. Take for example getting dressed in the morning, putting on your shoes, or the “ROI of your Mother”, as Gary Vaynerchuk puts it (the video below is totally worth it, check it out to see the master in action). We all know that these things -clothes, shoes, and also mothers-are extremely important for the success of a meeting, of a day or even for the rest of your life. They are indispensable and yet it cannot be calculated how they will pay off today, next month, or over the next 5 years.


Branding is another such topic: What does a strong brand deliver? What is its value if you sell your company? What does it do for your revenues and profits? Having goodwill and a strong brand is valuable, and also requires investment to create visibility, deliver good products, expertise, and customer experience. It’s hard to pick one element and say: ‘That’s what determined the value of our brand’. Are you successful because you employ experts, have a visionary CEO or a great product? Or is it due to a combination of all the above? Or are you successful despite missing one of these elements? Would fixing that one issue greatly increase your success?


Last week I had the privilege to advise a very cool company about the possibility of rebranding; a company with great expertise in an industry that is currently in the spotlight. They run two partly overlapping brands that are both well-known in their industry and reliable, but at the same time need some refreshing, reinforcement and scaling. Their business has been heavily affected by Covid-19, in both a negative and a positive way. The current brands can’t make enough use of the situation while over the years, their offering has become extremely broad and difficult to summarize. The meeting was about merging these two brands and clarifying the market position. The next step is actually quite clear but processes such as these require many considerations.


A few thoughts on that:


Only invest if it creates value


You should only invest in a brand, in thought leadership, visibility, and rebranding if the outcome leads to higher business value than the initial investment. Ideally, it wouldn’t just be a little, but a lot higher. That’s the ROI of branding. This is not always as evident as you’d want it to be. Branding, or thought leadership, for example, will never be the only step/conversion in the sales process. There are countless other instances that can undo the created “profit” through visibility. But overall – and if you do it right – building visibility, confidence, and branding enlarges the top of your sales funnel. You will get in touch with more potential customers, which increases the chances of closing deals. Company value is related to revenue and revenue potential in addition to the goodwill of the brand or company. You won’t find it in your bank account today, but it is on the balance sheet.


ROI versus CoDN


What if the I of ROI is lower than CoDN: the Cost of Doing Nothing? Then it’s not an investment. I don’t call painting my house an investment, that’s called maintenance, something you do to prevent additional costs in the future. In many cases, “maintenance” and “necessary adjustments” in a company can look very similar to an investment. And that paint on the window frame also feels like an investment and sometimes I catch myself trying to postpone it to avoid costs. However,  if you compare the cost of investment to the cost of refraining from it, the line of action becomes obvious. You just paint the house. In our case, you have two brands that you can merge fairly easily without any significant loss of brand awareness – as both brands would benefit from stylistic and strategic updating anyway. Thus, merging means that you only have to do that work for one brand, instead of for two. From that moment on, all future brand investments will be scaled up across both brands and areas.


Rebrand or reorganize


Making the decision on investing in rebranding, as an important step for the future of a company, is rarely about the initial investment and even less about the money. It is more so about investing in the setup as a whole. A brand change is a business change, it is a re-organization (and nobody likes that word). Changing or merging brands is always a signal of something much bigger. The old jacket no longer fits. So even if the brand change is a clear next step, people can still have doubts about everything involved in the process, and those doubts aren’t unfounded. So we come to the question and the trade-off: Can we step up (now)? Of course, there is a chance that you won’t find out until you do it. But that’s a completely different blog post.