Why is Branding Important for Startups?
Harvard professor Gerald Zeltman claimed in his recent the book “How Customers Think” that around 95% of customer purchasing decisions are subconscious. This effectively means that an average customer chooses to buy one product over another based on factors that are directed related to a company’s branding, and how customers feel about a particular company.
The rest 5% of the time, customers tend to choose products based on non-branding factors such as pricing, convenience and features. Therefore, while the basic idea behind your brand or startup might be based on an improvement with respect to pricing, convenience, technology or other features with respect to the products of your competitors, that is only 5% of your overall job.
As a matter of fact, the market today is filled with products that might not be the best in market with respect to price, features or other factors. However, the company’s branding over the years tends to result in a threshold level of trust among customers. This in turn allows the brand’s sales to thrive despite the fact that the products that they offer are not the best on paper
Therefore, especially in today’s market, branding of a company is the most important step in its journey to success. This is even more true for startups, simply because most startups tend to enter markets that are already being dominated by bigger companies that have better resources, technology, manpower and an established sense of connection with the customers.
However, this need not necessarily be a disadvantage that cannot be shrugged, by startups of today. As mentioned above, a products price, features, and convenience only plays a 5% role in the final decisions of potential customers. 95% of the overall decision depends upon the branding of the company, the one area that does not require a large pool of resources to formulate.
Hence, in either case, a brand/startup must first aim to create a viable brand story that they believe can resonate with their potential customer base. The existence of belief in the products/services that you offer tends to create a situation where you are not necessarily lying to your potential base, therefore increasing your chances of creating a degree of trust in the customer’s mind.
Howard Schultz, CEO of Starbucks, said the following about forming customer bases:
“If people believe they share values with a company, they will stay loyal to the brand.”
It is a well-accepted fact that while the perfect product might be difficult to sell especially in the short term, the perfect brand story allows a company to generate sales both in the short and the long term. Creating a relatable, concise brand story is therefore one of the most important things a brand needs to do in order to create services/products that customers can identify and feel familiar with.
This is especially true for startups that are attempting to disrupt industries that already have established companies dominating them. The fact that 95% of the customer decisions depend upon the brand story might make it difficult to disrupt the market. However, it need not necessarily be a disadvantage, especially for brands with creative, trustworthy brand stories.