Julie Carlyle and Fiona Gadd 13 Dec 2017 04:20pm

The value of brands to businesses

It is now widely accepted that businesses can no longer rely on financial performance alone to underpin their value. Why? Because today, any company’s brand equity exists not only on its balance sheet – but also in the minds of its customers, employees, suppliers and a wide range of other stakeholders

It’s a shift that is continuing every day, fuelled and accelerated by developments including increasing transparency, instantaneous global communications and the rising power of non-traditional media. So, what are the implications for retail and consumer product businesses?

To help us find out, we commissioned a nationally representative online survey of more than 2,500 UK consumers. In it, we asked them about the effect that brands’ actions have on their shopping habits – and whether there was ever a point where they felt values outweighed value when shopping for everyday products.

Consumers’ views of what companies do

The findings underline just how far the criteria consumers apply in their buying decisions have moved away from price and product, towards their perceptions of the companies they’re buying from. For example, 81% of consumers agree that the behaviour of a company is as important as the product it sells. And nearly three-quarters (74%) say they would boycott a brand whose actions they no longer trust.

Equally significant is that 80% of consumers question whether they should keep buying from a brand that they think has acted improperly, such as treating staff poorly. This view holds true across genders yet varies by age, with consumers under 35 – who will increasingly dominate the consumer marketplace in the coming years – proving to be more sensitive to inconsistencies between what companies do and the brand values they espouse.

Aligning behaviour with brand values

Looking across the findings, what shines through is that a brand’s values matter and can have a growing impact on consumers’ willingness to spend money on it. The most important values influencing the customer’s shopping journey and choices are the customer experience (86%), a clear brand purpose (82%), and, rather interestingly, good treatment of staff (78%).

Any of these factors can affect customer perceptions either positively or negatively, with a corresponding impact on enterprise value. For those companies that get this right, customers are still the best advocate: almost two-thirds (62%) of consumers in our study say they will act as advocates for brands whose values they support. It’s also interesting that social media (35%) is yet to supplant word of mouth (84%) or even traditional media (47%) as the most important external factor that consumers consider before buying from a brand.

A four step-programme for competitive edge

With consumers increasingly focusing their attention on brands’ behaviour when choosing whether to buy them, it’s clear that major opportunities for competitive advantage are up for grabs. So – to return to our original question – what does this mean for retail and consumer product companies?

To earn and inspire the trust that protects and builds brand value, management teams should focus on the outcomes that matter to their wider stakeholders who are now the arbiters and guardians of enterprise value. And an approach that aligns a company’s behaviour and the values inherent in its brand with its core purpose as a business.

Four steps that companies can use as a guide to sustain and grow brand value:

Identify and understand the key stakeholders, and what outcomes matter to them – be it environmental responsibility, good treatment of employees, or something else.

Deliver and protect these “outcomes that matter”. This means ensuring you’re looking after the outcomes, and developing and embedding processes and behaviours that will deliver them consistently and sustainably.

Communicate the outcomes to the key stakeholders in an engaging manner.

Establish an outcomes-based assurance framework to safeguard and grow brand value. This should consider all relevant assets – whether on the balance sheet or not – and the brand’s core values.

To find out more and read the full report click here

 By Julie Carlyle is partner and retail leader at EY and Fiona Gadd is associate partner at EY