Why branding builds advantage in B2B

August 2019, Written by Sholto Lindsay-Smith

Brand is often viewed as the domain of consumer facing (B2C) businesses. Consumer brands need to persuade customers, who have a plethora of choice and are bombarded by communications, to buy their product rather than another.

But B2B customers aren’t choosing between soft drinks or running shoes. They are making well-informed decisions, often based on experience and personal connections. So why, as a B2B business, do you need to invest in your brand?

Brands are valuable assets

The answer is that brands are the most valuable intangible assets in business today. They provide orientation for customers and strengthen differentiation against competitors; drive demand, sales and price premium; help grow market share; attract talent and motivate staff (Bosch, McKinsey, Siemens or Google are B2B brands – yet they rank amongst the most popular employers); secure business partners; build shareholder value and reassure financial markets.

They’re a key to the success of many of today’s leading stock market winners because brand contributes more to shareholder value creation than any other asset – tangible or intangible.

Strong brands help crisis management

A strong brand builds trust and loyalty – which are especially needed in times of crisis.

Founded by Jeff Bezos in 1994, Amazon is the largest online retailer in the world. In 1995, Amazon made its online debut as a bookstore, eventually adding movies, music, electronics, computer software and many other consumer goods to its diversified offerings. Amazon’s initial public offering took place on May 15, 1997 at $18 per share, rising to more than $100 and subsequently dropping to less than $10 after the bubble burst. Amazon’s business plan focused more on brand recognition and less on income, and although it did not turn a profit until the fourth quarter of 2001, today Amazon trades at over $200 per share, and employs more than 37,000 people with reported net sales of $9.86 billion.

Strong and recognizable brands help justify decision-making

In a B2B business where the customer journey can be complex and take a long time, even years sometimes, B2B purchases are typically expensive and so involve a lot of research, as well as a personal connection between brand and customer.

And buying decisions are never purely rational – even in a business situation we can’t help emotional responses creeping into our decision-making. We’re all human after all. Customers need reassurance and clarity when choosing a company to do business with. In an increasingly busy and fragmented market, factors such as security, risk reduction and trust become hugely important.

A strong and recognisable brand helps buyers make their decision, and justify it if needs be. The reason that “nobody ever got fired for buying an IBM” is because there’s an inherent trust in the IBM brand and the consistent reputation it carries.

Brand can also impact the way a customer perceives price, quality or service. IBM products are unlikely to be the cheapest, but their products are associated with a level of quality and service that can be relied upon.

Brand reputation stimulates growth

Rolls-Royce, the luxury car manufacturer, moved into aero-engine production at the beginning of the WWI at the request of the British Government, owing to its reputation for engineering excellence.

Rolls-Royce’s aero-engine production now accounts for more than half of the company’s revenues. The reputation of the brand opened the door to this opportunity, but continued high levels of service have maintained growth.

So branding may in fact matter even more in B2B than in B2C markets.