Brand Dividends: Why Investors Should Be Part of Your Equation
We recently partnered with a fast-growing data analytics company. It had successfully leapfrogged larger, more established competitors by providing hands-on, high-touch, over-the-top customer service. Branding around this level of service was a no-brainer, right? Well, maybe not. The company was preparing to go public. High-touch service is a great message for customers, and a potential pillar of a strong brand. But would investors read “high touch” as “high cost” (and low margins)? Could the company scale up while providing this level of service?
To Align or Not To Align
This situation illustrates an all-too-common conundrum for public companies – or companies that anticipate going public: how to create a brand that resonates with an investor audience as well as with the more expected brand targets: clients, prospects, partners, influencers, employees and recruits.
Service isn’t the only potential territory of conflict within the brandscape. A commitment to R&D can help position a company as innovative and forward looking. But investors may see R&D as a cost, not an opportunity. Pharmaceutical companies in particular face pressure from investors to rein in R&D costs, which can make it tough for them to build a brand around innovation and the quest for new life-saving drugs. Smart technology companies often create brands built on the benefits of their IP rather than the IP itself. But investors tend to assign a higher multiple to pure tech plays with proprietary IP.
The challenge is heightened because you really can’t create a pure “investor brand” distinct from your company’s brand. This may have been possible once, but today brands live across platforms and communications channels. Investors will visit your website, check you out on social media, perhaps even kick the tires at a trade show. Your brand needs to be synchronized across all channels, and that means a single brand deployed consistently, everywhere.
Where to Start
For all these reasons, we highly recommend including investor audiences in any rebranding research. This is true even for private companies, because most of them will need to finance their growth at some point, whether through a public offering, by attracting venture capital, or even through a commercial loan. This might involve evaluating a company’s “comparables” – the public companies with which it competes; this can be an effective way of gauging what investors are looking for. Speaking to current or prospective investors can also be very helpful in understanding a company’s business model, growth potential and even its value proposition. Professional investors make their living studying companies, and they almost always look beyond financial statements to evaluate customer loyalty trends, sales momentum and the competitive arena. They’re objective, unsentimental evaluators, and as such can be a great resource in the branding process.
A few years back we rebranded (and renamed) an energy consulting firm. The new brand (and name) emphasized the company’s proprietary technology and data resources rather than its methodology – the focus of its legacy brand. This differentiated the company from competitors, but it also positioned it as a technology player that could appeal to tech investors. Two years following the rebranding, the company received a major investment from one of Silicon Valley’s largest and most admired venture capital firms. This VC firm does not invest in consulting firms. It invests in technology companies.
Putting It All Together
Investors look for different things in different industries and companies. But they always focus on the future. Your customers want to know what you or your product can do for them today; investors want to know where the company is headed. So the brand needs to convey a vision for investors as well as a value proposition for customers. These shouldn’t be in conflict; in fact, ideally they will complement and reinforce each other. In addition, your messaging platform should enable you to amp up specific messages for the investor audience while staying within the brand framework.
As for the data analytics company mentioned above, we did in fact build a brand inspired by its above-and-beyond client service. But the brand emphasized the overall client experience rather than specifics of what the company did. This played well to client needs and aspirations, and avoided frightening off investors with a focus on labor-intensive activities and deliverables.
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In today’s complex and even hostile investor environment, a company can no longer rely on performance and strategy alone to connect with investors. Companies with an engaging investor relations brand have the advantage of delivering focused, consistent messages that lead to more powerful connections with investors.
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