If you find yourself contemplating the sale of a business, taking note of your brand differentiation and developing a strong marketing plan highly impacts your valuation multiplier directly. When it comes to exit transactions, companies with strong brand differentiation and positioning can command a premium.
Brand positioning is one of eight core valuation standards used to determine a valuation multiplier. Valuation experts note the importance of understanding your potential market share and identifying attributes of your business that will give you a dependable market position. Reviewing your marketing plan on a regular basis as your company develops, the market evolves, and competitive threats emerge is key to maintaining leadership in your market.
Five Steps to Building Brand Equity
Differentiate Your Product or Service
Your brand equity lies in how your customers recognize that you are different from your competitors are are the better choice in the marketplace. Use brand loyalty to help build brand equity and don’t discount the importance of good customer service– customers will stay with your brand if they’re treated well.
Be Clear About Company's Position in the Marketplace
How is your company different from all the others? Find the answer and you find your brand. Once you’ve found your brand, how can you communicate that brand clearly and concisely? Fill out this sentence: My company is the only company that solve [problem] by [unique identifier]. By filling in that sentence, you have to think clearly what the problem you’re solving and the unique solution is for your customers. If you can’t complete the sentence, you can’t explain your brand equity to customers and prospects.
Believe in Your Brand and Your Employees Will, Too
Once you’ve figured out how your brand is different, teach your employee, too. By telling them why your company is different, it can give employees a feeling of greater purpose in their work and will help them to build an emotional connection. When employees are invested in the brand, they’ll be excited to talk about it and educate customers which, in turn, helps customers build an emotional connection to the brand. It also helps build a better customer service experience and helps build loyal customers.
Create Methods to Make Your Product Memorable
Customer awareness is critical to generating sales; the more aware a customer is of your product or service, the more likely they are to buy from you. How can you increase your top-of-mind awareness? Creating a simple logo is a great way to start and use that logo on all of your products, marketing and advertising messages. A slogan can also make a product memorable. Use the slogan in conjunction with the logo to maintain a consistent message. Nike is the perfect example; their simple “swoosh” is instantly recognized globally and their slogan “just do it” is instantly recognized as well.
Capture Customer Feedback
The customer has all the power– if they don’t recognize the brand, they won’t buy. That means, to understand and analyze how you’re doing in your marketing efforts and what needs to change, you need to capture customer feedback and measure how well your efforts are working. To find that information, you can survey your customers, analyze search rankings and website traffic changes or check your social media comments. If things seem to be moving in a positive direction, customers are interacting positively with your social media pages, you might be able to assume your efforts are working.
If you can determine true proprietary competitive advantages and show that your company holds a defensible industry leadership position, your business valuation might reflect an EBITDA multiple as much as 1.5 times higher.
When you differentiate your brand’s offerings, you minimize risk for the potential buyer. Optimizing market perceptions of your brand, and developing true differentiation through brand strategy, can move you from a sale for only the value of fixed assets to a sale where you can walk away with millions!