ROI CONSIDERATIONS FOR A BRAND REFRESH.
Updated: Jun 24
As brand stewards with more than three decades of experience consulting in a wide variety of industries, we’ve often found ourselves thrust into the role of “referee” for companies whose leadership is divided on whether or not to pursue a brand identity refresh. Our clients have valued the thoughtful, strategic approach we take, particularly CFOs – from initial assessment to launch.
With good reason too. In self-interest, designers and agencies are routinely quick to campaign for identity updates with little appreciation for its financial impact. It should go without saying that “change for change’s sake” is not a good strategy, and a brand refresh should not be taken lightly considering the capital costs and risk vs. reward trade-offs. This holds true regardless of the age of the brand.
As you contemplate your own brand identity update, we offer these considerations based on three decades of success.
The Key Takeaway.
Never ones to bury the lede, here’s the key takeaway for CFOs: Generally speaking, should the market factors justify it, we have found that brand identity updates can be a valuable investment with an ROI that is usually greater than its capital cost. More so, the time to pay back the investment can be theoretically short even when only relying on its positive impact on loyalty among those constituents with the weakest brand commitment.
Return on Investment.
While there is no precise algorithm that calculates an expected ROI on a brand identity update, there is ample published research substantiating the value in doing so.
Interbrand and J.P. Morgan have documented that, on average, brands can account for more than one-third of shareholder value, corroborating that brand equity is just as important as anything else on the balance sheet (1). Identity is an inextricable part of that brand equity formula.
Loyalty (i.e., brand commitment) also has been shown to be stronger where the consumer perceptions of a company having similar/shared values is highest. That’s a crucial insight because a company needs all of the variables in the brand equity formula to be communicating values important to our customer base.
The importance is further underscored by small businesses’ financial resource, Fundera, who substantiated in its own study how nearly 90% of consumers feel loyal to brands that share their values. Further, the most loyal consumer will often assume such strong connections between themselves and the brand and believe them to be integral to their lives (2).
Other studies have also linked equity in strong brands (i.e., high brand commitment) not merely to the quality of the product or service but also to other intangible factors including the type of personality the brand portrays, the feeling that the brand tries to elicit in customers, and the type of relationship it seeks to build with its customers. Without losing sight of its core strengths, the strongest brands stay on the leading edge in the product arena and tweak their intangibles to fit the times (3).
Most critical to any financial justification is yet another study which has proven that brand attitude increases as the degree of change in the brand identity increases among consumers whose loyalty is weak. As a visual cue, logos can become the basis for triggering brand-related associations and thoughts in consumer memory.
To the extent that brand associations and their strength emerging from the brand logo vary based on commitment, the study revealed that a logo change differentially affects consumers based on their commitment to the brand.
While highly loyal consumers are likely to view identity changes as threatening to their relationship with the brand, logo redesign affects the perception of brand modernity among consumers with weak commitment, thus highlighting the importance of certain logo characteristics in explaining logo attitude and demonstrating the effects on brand modernity, brand attitude, and finally, brand loyalty (4).
When Is It Time To Do a Brand Refresh?
The short answer is when the landscape has changed dramatically. Or, when you anticipate that it will, and it is to your strategic advantage to be a prime mover in your category. Other scenarios include:
Evolving Business Model
New Audiences to Attract
Redefined Brand Values
Obvious of course is that a brand refresh is advised when the brand is severely tarnished and any further investment will be wasted effort, as was the case with client Assisted Living, Inc.
As owners of more than 200 senior living centers across the county, its previous leadership had so severely mismanaged the locations (a plethora of code violations) that negative press was persistent.
New equity partners purchased the company, and we assisted with reinventing this troubled asset under a new brand (Enlivant Senior Living) and new positioning (“Where Senior Living Thrives”) that we feel contributed greatly to their reported 5X ROI.
See other brand identity samples here.
EVOLVING BUSINESS MODEL:
As was the case with client Business First Bank. In support of their branch updates on an acquisition, we were called upon to reimage the brand away from its historically stodgy feel to one more attuned to today’s modern banking consumer.
Intentionally planned, but not divulged at the time, was that it was a strategic first step in transitioning away from being exclusively commercial-centric to a more personal-banking-friendly regional brand, b1BANK. As the institution continued acquiring regional community banks, the name change was intended to reflect both the bank’s diversified growth to $2.2 billion in assets and its commitment to the future of the various communities they serve. Our initial Business First Bank logo was intentionally designed with this eventuality in mind. We took a two-phased approach.
First, update the stodgy Business First Bank brand with a simple aesthetic and refreshingly un-bank-like voice. One that imbued a “simple” vs. “complex” experience and a “pleasurable” vs. “stodgy” disposition. It included a contemporary “b” icon to accompany the name. Then the Business First was retired when they became b1BANK.
See the digital and traditional advertising campaign for b1BANK here.
With three decades of experience and nearly universal brand awareness, on paper On The Border appeared to be the premier destination for Tex-Mex cuisine. Yet, when they engaged us to help with a repositioning, their business was contending with numerous competitor pressures that had significantly stifled growth. Namely, the emergence of similar competitor offerings, oversaturating the segment and providing fresher and more authentic experiences. A refreshed identity was an exercise in balance, requiring elements that brought to life the vibrancy of a fresh new experience, while remaining anchored to the heritage that had been established.
See more digital and traditional advertising campaign for On The Border here.
NEW AUDIENCES TO ATTRACT:
The world’s leading producer of aloe remedies, Lily of the Desert, recognized an opportunity to expand its product line beyond health food stores and into supermarkets and drugstores with a new line of skin care products. While they had long considered an update to their identity after so many decades of use, a new product line in a new channel facilitated the introduction of a more contemporary identity on this new product line.
Our new design earned the Remedies Magazine 2017 Body Care Award for this fast-growing upstart brand.
See other brand identity samples here.
REDEFINED BRAND VALUES:
Client A-MAX was a leader in providing auto insurance to low-income households, but strictly defined its persona on price. We recognized a significant missed opportunity in the tone of its brand. Its target audience had always felt marginalized and treated like second-class citizens with higher premiums and a lower level of trust during the claims process.
Through our brand strategy process, we added the concept of respect to the brand personality (in brand vernacular, “MaxRespect”) to set them in stark contrast to the other price-driven options. A brand refresh was connected to the introduction of a company-wide “MaxRespect Initiative” that reset the tone of customer service and included broad community outreach.
See the digital and traditional advertising campaign for A-MAX here.
The Risk of Loyal Customers.
The degree of departure from an existing identity should be carefully planned. Customers with strong commitment to your brand are likely to interpret changes as threatening to their relationship, anticipating changes to other areas of your business. It opens the door to your competitors. Thus, it’s critical to put any update in context for loyal consumers and, by many of the examples above, connect it to other news about the brand.
Careful Planning to Maximize ROI.
While there are risks to any changes in the brand identity, especially among your most loyal of customers, there is upside potential with the opportunity it presents to reassess and if necessary realign your brand with values important to them. Ultimately, our experience has been that a return on the investment strictly among customers with weak brand commitment can be theoretically short. Establishing a baseline of sentiment through primary research is an important first step to understanding the latitude you have with an update.
Your Brand Can Catch Fire.
Since its inception, PYRO has developed more than 100 brands across every business category. So, the conditions surrounding your brand refresh is more than likely something that we’ve gone through as well. Our team of designers are seasoned professionals with an equally strong commitment to taking a thoughtful, strategic approach to decision-making.
Whether it’s under the existing brand identity or a new and improved one, we’re here to create the spark, add the oxygen, and fan the flames either way. We have all the resources you need under one roof and a team structure that focuses on your interests, not just ours.
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