Over many years a business’s brand accumulates dreaded branding debt. The more branding debt accrued the bigger the challenge to come out from
under it’s weight and move your brand forward. The more branding debt you own the harder it is to differentiate yourself and grow your marketshare. If you haven’t figured it out yet, “Branding debt” is real and it’s damaging your company from the inside AND out. Branding debt is all the negative things that is dragging your company down.
Branding debt can include but is not limited to:
•Image inconsistencies.
How many times have you seen one sign on the building, another different one on a sign or vehicles, and yet another different logo on the web and stationery. An inconsistent identity confuses your customers. Sometimes it looks like entirely different companies.
•You’ve been reduced to a commodity.
You’ve aligned yourself so close to the sales leader in your category, you’ve reduced your brand to commodity – selling on price.
•Internal communications lacking.
You’ve allowed your staff to keep abreast of company news through the rumour mill. They hear directly from management so little, they’ve lost trust it what they say.
•Corporate culture.
The cultural well is poisoned. Staff are disenchanted with company direction and are hungry for solid leadership.
• You’re a follower brand.
Your brand follows at the heels of the competition falsely believing that if it’s good enough for them, who are you to change up things.
• Failure to engage the competition.
Your brand is lacking the confidence to stand for something, being content with the mediocre.
•What is your brand?
Failing to define your own brand and exploiting it’s uniqueness.
• False differentiation.
Failing to see the true differentiator, excepting that it is the low hanging fruit such as employees.
•Using a crutch.
Looking at a re-brand as changing the logo and slogan. Lipstick on a pig. These changes do nothing for the fundamental branding debt you are carrying.
•Paying down branding interest and hoping the branding debt principal will take care of itself.
This is a wish and a prayer. Succumbing to this strategy will send confusing messages to your stake holders.
•Lack of Confidence.
How many entrepreneurs don’t see themselves as the experts they are. They fail to center attention on their achievements and benefit from the attention.
•Discrepancies in brand values.
Not living up to your brand values or even compromising them adds to your branding debt.
Just like financial debt, branding debt is a liability. Knowing how much branding debt your company can withstand, will help you to determine what resources are needed to put your brand in a healthier position. Your branding debt ratio allows you to compare your debt to your branding assists. What items are contributing to the success of your brand and how much debt is holding it back. A brands goodwill is defined by its branding debt. Through proper analysis a bread with 10 brand assets and 4 brand liabilities could be said to have a branding debt ratio of 40%. This important ratio is the benchmark or limit that will allow your brand to thrive or suffer. The strength of your brand will best determine if a high ratio is sustainable or not. The stronger the brand the higher the branding debt ratio it can withstand. If the brand is weaker a lower branding debt ratio is all it could support. If the weaker brand has a high branding debt ratio then it is much harder to sustain negative market conditions and that results is a loss of market share. Branding debt ratios are common sense. The more things your brand is doing wrong directy infringes on its ability to succeed. More assets than debts means the brand could withstand some devastating blows that a weaker brand would succumb to. Like financial debt, branding debt is best when there is very little of it.
Great points, Ed. This sort of sneaks up on us; but most businesses would admit that we don’t have the brand we want or planned on. Business managers can’t impose a brand — that’s up to the market — but we can *influence* the way customers, suppliers, competitors and partners view our company. And it’s great to have an annual brand review, so branding efforts can be redirected if necessary.
The brand review is good housekeeping. Thanks for taking the time to comment.
Brilliant post Ed! I think the point you make about not understanding your brand is the one that sticks out. I think this is what gets most businesses into difficult situations- only by knowing what your brand is about, what its aims and goals are, the company ethos, who your customers are and so on can you ensure your business is on a steady path
Thank you Joe. Most brands I think assume an awful lot. Once they get a handle on things, it’s much easier to promote and more effective with customers.
Thanks for taking the time to comment Joe.