Business leaders have generally perceived external market perception as a "soft metric," not realizing that poor external identity can negatively affect the quality of your sales funnel and erode pricing power.
This article breaks down the antiquated academic models that are prevalent in the industry today, illustrating the precise operating methodologies, timing, and technologies required for strategic brand management to create a linkage between your company's growth and the existing realities of your market.
Most likely, your current approach to defining your external market identity represents a significant loss of premium enterprise sales opportunities at this moment.
The Main Problem With Strategic Brand Management
The industry continues to be preoccupied with abstract definitions and feelings. A quick online search returns pages of academic-based theories in textbooks that provide guidance on how to create emotional connections with audiences. For B2B software companies selling complex offerings into logical buying committees over an 18-month sales cycle, these theories are of no use whatsoever.
Strategic brand management is not a one-time project that can be designed. Instead, it is a continual and methodical process of aligning your internal business reality with the market perception of your company. When your internal business reality and the external market perception of your company become disconnected, your sales team suffers.
The Problem With Brand Lag
A startup grows from $5 million in ARR (annual recurring revenue) to $20 million in ARR, and as it expands, its product improves significantly, and as it expands, its team grows, and its operational capabilities mature. Yet, in the eyes of the market, it is still seen as an entry-level tool at an affordable price point.
This gap of perception is termed "Brand Lag," a concept developed by firms such as WANT Branding. Companies like Uber and ServiceNow experienced this same brand gap perception as they grew. They simply outgrew their initial brand perception.
Without taking proactive measures to close the pricing gap, salespeople will continue to experience difficulty in selling against a price increase while simultaneously dealing with a value proposition that appears cheap based upon the company’s external presence.
Why Basic Models Fail
Marketing universities and outside marketing agencies continue to rely on Keller's Customer-Based Brand Equity model as the go-to method to move consumers from basic awareness to more emotionally charged levels of branding.
While there is nothing wrong with utilizing this model in a PowerPoint presentation, it is not a model that offers a clearly defined way for a marketing director to address a leadership team's misalignment regarding a brand’s core message.
In addition, it does not provide information on how to successfully unify the marketing collateral developed by multiple agencies over a lengthy period of time. Ultimately, to achieve success in selling software to members of a board of directors requires an operationally based business system, not simply an emotionally-driven pyramid.
Building a Working System for Today's Market
To identify the best course of action for each brand, businesses need more than just a new logo and a revised color palette. They also require an actionable approach to resolving the many difficult issues that can arise as a consequence of a change in market positioning.
Six Value Drivers Versus Emotion
Instead of having an emotional-based approach, today’s leaders utilize operationally-run systems like the "6 To Fix" framework to better understand their brand’s marketplace and consumer preferences.
The "6 To Fix" framework consists of six very specific, operationally-based categories: Brand, Customer, Offering, Communications, Sales, and Management. These categories are the bridge between an organization's marketplace and its business value drivers.
If an organization changes its positioning strategy, then its sales messaging will also need to change, as will its management structure and approval process. A complete organizational transformation must take place throughout the company to ensure strategic brand management is truly effective, not simply be present on the website as a brand statement.
When to Change Your Approach
Deciding when to change is critical. When is a complete repositioning required? When should you refresh your current look? And when should you take no action?
A complete repositioning of your organization will happen when your main business model has changed significantly or when your primary advantage is no longer valuable to your customers due to changes in the marketplace.
A "fresh look" will be needed when your current artwork looks outdated, but your business's core message continues to be an extremely effective sales driver. Without a solid decision-making framework, company leaders end up spending millions on updating things that do not need to be fixed.
Time, Money, and Hard Work
Timing and money are two of the biggest missing components of most discussions within the industry. Organizations often take on enormous projects without knowing what the actual monetary investment or how much time it will take before they begin seeing a return on their investment.
The True Cost of Agency Audits
An organization must conduct a proper audit of its business, including gathering all of its company assets, conducting a side-by-side evaluation of competitor offerings and identifying specific areas in the marketplace that need to be filled. It is not inexpensive.
For most small and mid-sized companies the average cost of an audit is between $25,000 - $75,000. The average cost for mid-size to large companies is $100,000 - $250,000 and for enterprise level companies costs can exceed $500,000.
If an agency is willing to do this for significantly less, that agency is missing the necessary in-depth market research to help them make smart decisions. You get what you pay for in the world of market positioning!
Investing in a Global Team Platform
Avoid sending out a long PDF guide with the rules you want your employees to follow, as no one will read them.
In order to provide a consistent presentation of your company’s message worldwide, you must have strong controls on your visual representation through the use of Digital Asset Management (DAM) solutions.
Technology such as Brandfolder (which typically costs between $500 and $2,000 per month) and Frontify (which ranges from $300 to $1,500 per month) are necessary in the modern day to enforce your design criteria as well as physically eliminate the possibility for your localized organizations to produce materials that are not on-message.
The Timeline for Pipeline Impact
Executives expect to see results immediately. Therefore, you must set realistic expectations during the early phase of the project. Real change takes time to be reflected on the bottom line.
- Weeks 1 to 12: implementation of a comprehensive strategy; ongoing internal research and stress-testing your positioning statement with key team members.
- Weeks 13 through 28: implementation of the new visual and verbal identity systems.
- Months 6 to 18: during this critical wait period, you will begin to see lasting changes in the quality of your sales pipeline and in the potential for price premium.
The Most Important Data
You cannot measure your progress based on how you “feel” about your work. Instead, you need to measure success by utilizing hard data and providing definitive metrics for your marketing teams to achieve.
Moving From Yearly to Quarterly Audits
Most companies perform an audit annually. This is too slow; markets are constantly changing, and competitors adjust their position every week.
You will need quarterly checks of your core metrics; using research companies like YouGov or Kantar will help you to measure market awareness and perception continuously. If you delay measuring the effectiveness of your marketing strategy until the end of a year, you've lost an entire year's worth of potential revenues due to missed opportunities in your target market.
What Are B2B Benchmarks?
What are the ideal metrics for B2B software companies? A B2B software firm making $10 million a year in revenue should target a minimum of 10% to 20% unaided awareness (unaided brand awareness is where buyers recall the brand without prompting from the surveyor; i.e., they name it without being asked).
You should target a Net Promoter Score (NPS) in the range of 25 to 40. The most significant aspect of strong equity is the ability to charge 15% to 25% more for your brand than your competition. Total equity is calculated as a function of brand strength (i.e., purchase intent + NPS) times the total amount of market recall.
The AI Search Threat
Markets (also search markets) are shifting now, and many companies are completely unprepared for this change.
The New Citation Economy
Generative AI will change everything about how businesses discover new markets in the next 2 to 3 years. According to current research, over the next several years approximately 2% of B2B companies will receive approximately 80% of the total (unprompted) AI-generated recommendations.
This means that AI models will overlook most of the market as they will not possess sufficient information to recommend the majority of businesses. Companies have to create an AI-optimal discoverability strategy.
Therefore, if a company's messaging is not clear, consistent, and cited (influencing) by multiple authoritative sources, the AI will recommend other companies. As such, human searches for a company are now secondary; therefore, the new model for survival is training an AI about exactly where in your market you are positioned.
Final Thoughts: The Rules of Market Power
The existence of a muted market identity is a significant threat to any organization's long-term viability. The practice of chasing emotional connections with consumers is dead; any viable organization must view its strategic brand management as a formalized operational system.
Achieving this level of integration requires a hefty investment in capital, commitment to a software solution to manage this new operational system, and a minimum of 18 months of rigid discipline before financial, measurable results will show. Stop making wild guesses on what the market thinks of your organization and start taking definite measurements of the exact deviation existing between your actual identity and the market's current perception of your identity.
Questions and Answers for Leaders
What blocks a new market position from reaching global teams?
Leadership misalignment and a complete lack of system control are the barriers to progress. When there is disagreement at the initial strategy phase among the executive leadership of an organization, that division trickles down to the various delivery teams. In addition, if local marketing teams do not have access to centralized digital asset management platforms and continue to operate from static guides, they will always be able to throw away the guidelines and create materials that are not in agreement with the output of the new market strategy.
How can leaders measure when a weak market perception leads to lost sales?
By measuring the sales cycle length and discounting rate at which products are sold. If the sales cycle is longer than usual and/or the discount rate is significantly higher than normal (e.g., 6% to 10% off the standard rate), this raises a strong indicator that your market identity is weak. If your salespeople are using extensive discounting in order to close even the most standard-sized sales, this shows that the buyer does not view the product as a premium product.
Why do expensive identity updates result in no financial return?
They focus solely on visual assets rather than the actual business outcomes. If a new logo does not address how the product effectively responds to the actual problems of the B2B committee, the update will be ignored, and buyers will not pay for it because of color or design style.
At what point do growing businesses outgrow simple marketing methods?
Between $5 million and $20 million in revenue is when the break occurs. At this point, the founders are no longer participating in all marketing decisions. Without the implementation and constant monitoring of defined structured rules and quarterly follow-ups, the message will break into different messaging throughout the company, resulting in one of the markets becoming confused and halting the company's ability to expand and grow.