Why is branding important for a business?
In a digital world full of fierce competition, strong branding has become the cornerstone for any successful business. With countless options now available to consumers, your brand is how you can set yourself apart, build a solid reputation and inspire trust. This translates into business growth, helping drive sales while increasing your brand’s value.
But exactly how does branding add value to a business? Whether you’re just starting out or already have a loyal customer base, here are 5 benefits of a strong brand that highlight the importance of branding in business.
1. Build brand recognition
The first benefit of a strong brand is that people can instantly identify you from the sea of competitors. This is what we refer to as brand recognition, when people know it’s you from just your logo, tone of voice, menu designs, or any other element of your brand. When we see a pair of golden arches, we know it’s a McDonald’s. When we walk into a dark café interior, we know we’re in Starbucks. Taste the rainbow? That’s Skittles talking.
Having a strong brand that’s consistent at every touchpoint allows you to go beyond awareness that you simply exist to brand recognition. Repeat exposure to the same branding elements helps embed your brand within their memory, gradually building a sense of familiarity. As that familiarity grows, your audience will come to see you as a reliable choice and be more likely to choose you over your competitors.
The key to building this recognition is through consistency, and one study found that for 33% of respondents, this contributed to 20% or more of their revenue, while 35% said it contributed to 10–20%. So not only does strong branding add value to your business by making you stand out, but the consistency also allows you to build recognition, inspire trust, and ultimately drive conversions.
2. Inspire customer loyalty
A recent study showed that over the last 8 years, customer acquisition costs for eCommerce have increased by 222%. This means that aiming to retain existing customers over acquiring new ones is more important than ever, and here’s how a strong brand can help.
A solid brand is designed to connect with your audience, enabling you to align your own values and aspirations with those of your customers. This creates an emotional connection that influences their purchasing decisions, and when faced with two similar offerings from two similar businesses, they’ll be more likely to stay loyal to the one they feel resonates with them more.
This emotional connection is further nurtured by the entire customer experience, from meeting you on social and exploring your website to unpacking your products or opening your online guide. Branding is key to shaping a positive experience across every touchpoint, and when it’s consistent, you become the brand that customers know they can depend on to deliver.
3. Encourage word-of-mouth marketing
Building a loyal community also brings with it another of the many benefits of a strong brand – word-of-mouth marketing. This is when your customers take on the role of brand ambassadors, recommending your amazing products or services to family and friends. In fact, brands that are loved receive three times more word-of-mouth marketing than those that aren’t.
Not only is this form of marketing free, it’s also highly effective. Traditionally one person would tell two friends, who would each tell another two friends, and the cycle would keep on going. But today, social media means that word of mouth is more powerful than ever before, with just one recommendation helping you reach hundreds of potential customers.
And since it has been found that people are 90% more likely to trust a recommendation from a friend and 70% from another consumer, it’s unsurprising that word of mouth leads to five times more sales than paid media. So by building a strong brand that people trust and love, customers will be more likely to support your business and help you grow through recommendations.
4. Increase your profit margins
Your brand can have a significant effect on your bottom line and profit margins by impacting the amount a customer is willing to pay for your products or services. This is known as price sensitivity, and building a strong brand can help you lower this sensitivity so that price becomes one of the less important factors in the decision-making process.
The reason for this is that a strong brand with a positive reputation will generally be perceived as offering better quality and value, which will help customers justify spending more. Even if they’ve never heard of you, delivering exceptional brand experiences like personalised interactions and purchasing convenience can help decrease price sensitivity.
Then there’s your loyal community. They trust your brand and know what to expect, which gives them total confidence in purchasing from you. This confidence means they’re actually willing to spend over 30% more than new leads, paying a premium on the brands they love and trust instead of spending time shopping around for a cheaper price.
In short, a strong brand shifts your customers’ focus from price to other values, such as trust, brand experience and emotions. This reduction in price sensitivity allows you to charge more for your products or services, increasing your profit margins.
5. Expand your business with new products
The importance of branding is also clear when it comes to expanding your business and launching new products or services. The credibility, recognition and customer loyalty that a strong brand gives your business all contribute to lowering the risk of any new ventures, allowing you to innovate, grow and adapt to changing markets.
How? A strong brand that follows effective brand guidelines will create the same experience across all products or services, both new and old. From your logo and colours to voice and messaging, this delivers a seamless experience that ties any new venture to your existing identity.
This consistency also means that you can draw on the brand recognition you’ve built to market new products effectively. If a customer sees your logo on a product, the reputation your brand has built will be transferred over and they’ll know it’s from a familiar business they can trust. This gives your latest offering a higher level of credibility right from the get-go.
And that’s all without mentioning the all-important emotional connection, which is known to spark curiosity among existing customers. In fact, those who have already used your products or services and love your brand are 50% more likely to try out new products than new potential prospects.
All of this means that building a strong brand can help increase the success of any new product launches, which in turn will help your business to continue expanding.
So, why is branding important for a business?
Branding is important for a business as it helps build brand recognition, inspire customer loyalty, and encourage word-of-mouth marketing. It also lowers price sensitivity for customers new and old, while giving you strong foundations for expanding your business with new products. The bottom line is that the importance of branding in business should never be underestimated.
Ready to build a strong brand? Whether you’re looking to build a new identity or refine an existing one, The Curious is a Shrewsbury Branding Agency that’s ready to help you reap the benefits of a strong brand. Let’s have a chat about how we can help.