The Influence of Branding on Business-to-Business Decision Making

Research from McKinsey shows that B2B companies with strong brands outperform weak ones by 20 percent.

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It’s a common misperception among both B2B companies and Charlotte marketing agencies that building strong brand awareness and loyalty is somehow less important than for consumer brands. Studies show that many business-to-business CEOs view marketing as the domain of consumer goods brands, but, unfortunately, they are wrong.

This insightful white paper from McKinsey Consulting demonstrates how brands matter even more in B2B than in B2C. Why? Because many B2B companies compete in a confusing or fragmented marketplace where they’re trying to differentiate highly technical offerings by focusing on functional aspects. It’s a cliché of B2B marketing that connecting on a more personal level is best left for the consumer realm.

But initiatives that focus on creating value for B2B brands can have tremendous payoff. A Harvard Business Review study on B2B brands concluded that the corporate brand is responsible for an average 7 percent of stock performance. Depending on your market cap, brand equity can mean hundreds of millions of dollars.

Business Buyers Make Emotional Decisions Too

Preference and loyalty decisions are not unemotional, logic-driven events—even in the B2B space. Forrester analyst Laura Ramos, who blogs about areas of concern to CMOs, wrote that many B2B marketers still don’t understand that “B2B is really about the people.”

Business buyers’ purchase decisions tend to be a lot less value-driven than they tend to think. Like consumers, professional buyers use a vendor’s brand reputation as a short cut to reduce risk and simplify the evaluation process.

Many product managers purport that business marketing is all about superior products and services, offered at competitive prices. Sales executives insist that availability and service will make or break a deal. In their minds, branding is just the icing on the cake. Not so, according to McKinsey. While their research confirms the general importance of products, prices, and distribution, they have also found that branding matters. In fact, decision makers consider the brand a central rather than a marginal element of a supplier’s proposition.

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