In the managerial pecking order within most organizations, finance occupies a more central role than the flimsy business of marketing.

Financial people use complex terms like ‘derivatives’ and ‘collateralized debt obligations’, and deal with multibillion-dollar sums on a daily basis. Marketers are a simpler mob, occupying their time with more basic duties, such as brand building and customer satisfaction.

However, when you think about it, shouldn’t it be the other way around? Shouldn’t the marketer, who builds the brand and works with the consumers who pay for everything, have a more exalted position than the manager who simply accounts for and invests the resulting income? Given the corporate shenanigans in the financial sector that emerge on a regular basis, doesn’t it make more sense to trust the marketers who generate value, rather than the incomprehensible financial markets that just seem to lose it?

Brands continue to provide empirical evidence that marketing does indeed beat finance. That evidence is mounting. The next time you are asked to make a case for building a strong brand refer to the following eight fact-based insights.

1. Brand Leadership Equals Business Leadership

The world today is far different from what it was only a couple of decades ago and these structural changes have placed brands at the forefront of business success. A review of stocks in the S&P index shows that businesses that own stronger brands perform significantly better than businesses that own weaker brands.

2. Why Brands Drive Financial And Business Results

The bottom line is that strong brands have a very strong positive impact on financial and other business results. Following are key data points on some of the ways in which this occurs.

3. Strong Brands And Corporate Growth

In what ways does developing a strong brand increase a company’s growth potential? A strong brand helps a company grow in three specific ways. First, companies can charge a higher price — which hopefully leads to higher profits, thereby resulting in more cash to expand the business further. For instance, since Caterpillar has a very strong name in the construction equipment category, it can charge more—because buyers know of Caterpillar’s great product and service quality. In earning more, it can grow faster.

4. How Brands Create Financial Value

Perhaps the biggest pay off of creating a strong brand is permission to extend into new product categories. If you have successfully built a strong brand, you can leverage the positive feeling people have for it by launching new products in categories that fit the brand positioning. In cases like these, it is more about how well you deliver on the brand promise. The brand itself is already well-known and appreciated.

5. The Role And Value Of Branding

So many people misunderstand the role of brand. They think it’s a synonym for marketing, and marketing is a synonym for media spend.

• A brand tells people who to value and why.
• Marketing tells them how the brand is valued, and where to access it.

The purpose of your brand is to use that perceived value to provide you, through marketing, with sustained sales at a greater level of return than the market is inclined to give you over the longer term.

6. Warren Buffett And Strong Brands

Buffett likes strong brands because they create a protective ‘moat’ around a business. He believes that for a business to earn excellent returns on invested capital, it must command a sustainable, long-term advantage. So, strong well-known brands are one of two types of brand that excite Buffett as an investor, the other being low cost producers. Buffett takes the long view for his investments. He is looking for a sustainable competitive advantage – not a quick win.

7. Why Strong Brands Drive B2B Markets

Brands matter in B2B markets. In fact, they may matter even more in B2B than in B2C.

8. The Business Impact Of Strong Brands

What is the business impact of strong brands?  Why are strong brands so important?

Brands deliver the following key benefits to organizations:

• Increased revenues and market share
• Decreased price sensitivity (or the ability to charge price premiums to consumers and the trade)
• Increased customer loyalty
• For manufacturers, additional leverage over retailers
• Increased profitability
• Increased stock price and shareholder value
• Increased clarity of vision
• Increased ability to mobilize an organization’s people and focus its activities
• Ability to attract and retain high quality employees
• Reduce cost of capital – A strong brand facilitates access to financial markets with more favorable conditions (lower perceived risk); also, perception influences the price of the stock
• Extend duration of cash flow – strong brands last longer than weak ones, therefore a strong brand would generate profits for a longer period of time than a weak brand.
• A strong, well-positioned brand extends the life of your organization indefinitely by providing independence from a particular product category, increasing flexibility for future growth (through extension), and therefore, increasing the ability to expand into new product and service categories and alter the product and service mix to keep up with marketplace demands. Without a strong brand, your organization’s life span will be tied to the life span of the products it manufactures or the services it provides.

Co-authored with Mark Ritson.

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With more than 100 events this year, the ANA heard a lot of marketing genius. In this presentation, we’ve pulled together the ten key takeaways from all of our events.

Celeste Headlee offers four insights for better political conversations. Yes, even this year. Screengrab courtesy TEDxSeattle

Is there someone in your life with whom you disagree? Has something gone unspoken for a long time that you would like to address? Or maybe you want to have a conversation about the future of our country or something close to home.

This holiday season, have that conversation. Before you stay home to avoid your family because you’re afraid of an argument, consider opening up instead.

Here’s all it takes:

1. Reach out to them and invite them to meet for a conversation.

2. Read through the suggestions below to help make this conversation a good one.

3. Talk and afterwards, thank them, and if you like, send a tweet or Facebook post with hashtag #hadthatconversation.

4 tips for having a good conversation about politics

1. Don’t try to educate anyone or change minds. It’s really hard to change someone’s mind. In fact, it’s incredibly difficult just to change your own mind. We almost never do it. We are all victims of the backfire effect. Multiple studies have shown that if we believe something and someone shows us actual evidence that refutes our belief, that proves it wrong, our belief grows stronger. In other words, seeing evidence and facts that go against what we think backfires. Don’t bother. Just enter the conversation intending to learn something, not to teach.

2. Don’t pre-judge. We are programmed to believe that people are pundits. We think that if someone supports Bernie Sanders, we’re going to agree or disagree with everything they say. People are complicated and nuanced. That’s what makes them so damn interesting. Don’t assume they’re your enemy. You may disagree on nuclear policy, but totally agree on health care. You may disagree on almost everything, but both think dogs rule. Be open to another person’s ideas. As Carl Sagan said in his Baloney Detection Kit, “Try not to get overly attached to a hypothesis just because it’s yours.”

3. Show respect. At all times. You think they don’t know what it’s like to be you? Well, you don’t know what it’s like to be them. Life is hard. It’s hard for everyone and while you may not like their solutions, they think they’re doing the best they can. More importantly, they are a living, striving human being. Show them the respect that you demand for yourself.

4. Stick it out. Don’t throw up your hands and say, this is pointless. Don’t walk off in a huff. I can tell you now that it’s not fun to listen to someone say things we disagree with. It’s upsetting. It can get your blood boiling. But take a breath, think before you respond, and stay in there.

I promise you, we can talk to people who disagree with us and we must. I think this election has shown that our nation has been in denial about a lot of underlying forces for a long time, and I hope we can find a way to grapple with the truth, instead of discounting facts and embracing what proves us right.

I hope we can start to have the tough conversations that we’ve avoided for too long now.

— Celeste Headlee and Phil Klein

What Is Your What? What is the one thing you were born to do? Steve Olsher, who has built several successful businesses, and who now helps other entrepreneurs succeed, visited my show to share his insights on how to answer this essential question. Below are some of the highlights of…

By Katie Paine I promise I’m not going to talk about social media’s impact on the election. That’s been hashed over to death in the media, and you can read all about it here, here, and here. However, I will talk about the impact of the volume and speed with which social media invaded our society […]

By Fard Johnmar As the Trump Administration begins to take shape, many are asking what the new U.S. government will mean for digital innovation in health—an area that has flourished over the past eight years of the Obama presidency. If the Affordable Care Act (ACA) is repealed (as appears likely), consumers, patients, insurers and others […]

Nissan recently gave the wildly popular YouTube star UnBox Therapy the opportunity to check out the 2017 Nissan Rogue One Star Wars Limited Edition, this model just happens to be 1/5400. The video appeared on his channel just a couple days ago and in typical UnBox Therapy fashion it was done in an unboxing fashion just on a much grander scale.

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MBAs are taught that a business is worth the sum of its future profits. This benchmark is how investors calculate the fair price of a company’s shares.

CEOs and their management teams are evaluated by their ability to increase the value of their stocks—and therefore care deeply about the ability of their companies to generate free cash flow. Management’s job, in the eyes of shareholders, is to implement strategies to grow future profits by increasing revenues or decreasing expenses.

Fostering consumer habits is an effective way to increase the value of a company by driving higher customer lifetime value (CLTV): the amount of money made from a customer before that person switches to a competitor, stops using the product, or dies. User habits increase how long and how frequently customers use a product, resulting in higher CLTV.

Some products have a very high CLTV. For example, credit card customers tend to stay loyal for a very long time and are worth a bundle. Hence, credit card companies are willing to spend a considerable amount of money acquiring new customers. This explains why consumers receive so many promotional offers, ranging from free gifts to airline bonus miles, to entice them to add another card or upgrade the current one. Potential CLTV justifies a credit card company’s marketing investment.

Habits Supercharge Growth

Users who continuously find value in a product are more likely to tell their friends about it. Frequent usage creates more opportunities to encourage people to invite their friends, broadcast content, and share through word of mouth. Hooked users become brand evangelists—megaphones for your company, bringing in new users at little or no cost.

Products with higher user engagement also have the potential to grow faster than their rivals. Case in point: Facebook leapfrogged its competitors, including MySpace and Friendster, even though it was relatively late to the social networking party. Although its competitors both had healthy growth rates and millions of users by the time Mark Zuckerberg’s fledgling site launched beyond the closed doors of 
academia, his company came to dominate the industry.

Facebook’s success was, in part, a result of what I call the more is more principle—more frequent usage drives more viral growth. As David Skok, tech entrepreneur turned venture capitalist, points out, “The most important factor to 
increasing growth is . . . Viral Cycle Time.” Viral Cycle Time is the amount of time it takes a user to invite another user, and it can have a massive impact. “For example, after 
20 days with a cycle time of two days, you will have 20,470 users,” Skok writes. “But if you halved that cycle time to one 
day, you would have over 20 million users! It is logical that it 
would be better to have more cycles occur, but it is less obvious just how much better.”

Having a greater proportion of users daily returning to a service dramatically decreases Viral Cycle Time for two reasons: First, daily users initiate loops more often (think tagging a friend in a Facebook photo); second, more daily active users means more people to respond and react to
 each invitation. The cycle not only perpetuates the process—with higher and higher user engagement, it accelerates it.

User habits are a competitive advantage. Products that change customer routines are less susceptible to attacks from other companies.

Habits: A Friend Or A Foe

Many entrepreneurs fall into the trap of building products that are only marginally better than existing solutions, hoping their innovation will be good enough to woo customers away from existing products. But when it comes to shaking consumers’ old habits, these naive entrepreneurs often find that better products don’t always win—especially if a large number of users have already adopted a competing product.

A classic paper by John Gourville, a professor of marketing at Harvard Business School, stipulates that “many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new.”

Gourville claims that for new entrants to stand a chance, they can’t just be better, they must be nine times better. Why such a high bar? Because old habits die hard and new products or services need to offer dramatic improvements to shake users out of old routines. Gourville writes that products that require a high degree of behavior change are doomed to fail even if the benefits of using the new product are clear and substantial.

For example, the technology I am using to write this piece is inferior to existing alternatives in many ways. I’m referring to the QWERTY keyboard which was first developed in the 1870s for the now-ancient typewriter. QWERTY was designed with commonly used characters spaced far apart. This layout 
prevented typists from jamming the metal type bars of early machines. This physical limitation is an anachronism in the 
digital age, yet QWERTY keyboards remain the standard despite the invention of far better layouts. Professor August Dvorak’s keyboard design, for example, placed vowels in the center row, increasing typing speed and accuracy. Though patented in 1932, the Dvorak Simplified Keyboard was written off.

QWERTY survives due to the high costs of changing user
 behavior. When first introduced to the keyboard, we use the 
hunt-and-peck method. After months of practice, we instinctively learn to activate all our fingers in response to our thoughts with little-to-no conscious effort, and the words begin to grow effortlessly from mind to screen. But switching to 
an unfamiliar keyboard—even if more efficient—would force us to relearn how to type.

Users also increase their dependency on habit-forming products by storing value in 
them—further reducing the likelihood of switching to an alternative. For example, every e-mail sent and received using Google’s Gmail is stored indefinitely, providing users 
with a lasting repository of past conversations. New followers on Twitter increase users’ clout and amplify their ability to transmit messages to their communities. Memories and experiences captured on Instagram are added to one’s digital scrapbook. Switching to a new e-mail service, social network, or photo-sharing app becomes more difficult the more people use them. The nontransferable value created and stored inside these services discourages users from leaving.

Ultimately, user habits increase a business’s return on investment. Higher customer lifetime value, greater pricing flexibility, supercharged growth, and a sharpened competitive edge together equal a more powerful bang for the company’s buck.

More on habits…

• Habits are defined as “behaviors done with little or no conscious thought.”
• The convergence of access, data, and speed is making the world a more habit-forming place.
• Businesses that create customer habits gain a significant competitive advantage.
• Winning via habits requires an experience designed to connect the user’s problem to a solution frequently enough to form a habit.

Contributed to Branding Strategy Insider by Nir Eyal. Excerpted from his book Hooked: How to Build Habit-Forming Products

Don’t let the future leave you behind. Join us in Hollywood, California for Brand Leadership in the Age of Disruption, our 5th annual competitive-learning event designed around brand strategy.

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This blog was written by Ilaria Maselli, Brian Schaitkin, and Klaas de Vries. Asked whether they agree or not with a set of changes to the Constitution, 65 percent of Italians (almost 33 million voters) showed up to answer on Sunday December 4. The response was a loud no: 59.1 percent of the votes. How […]