[dropcap background=”#97cc02″ color=”#ffffff” circle=”0″]F[/dropcap]rom Wikipedia to Marketing gurus, the abundance of information in the public domain, which unequivocally defines “Branding” as a corporate strategy, underscores its importance in the mix of strategy imperatives. Arguably, brand recognition is an intangible asset; often considered the most valuable one on a company’s balance sheet. As such, brand owners have been increasingly astute at managing their brands to deliver value creation to their investors.
Recent hype about the concept of value creation, appear to reposition this concept as a novel idea; however, creating shareholder value with “Branding,“ as a top-level strategy, has always been one upon which marketing and advertising budget decisions are made and allocated to build Brand Recognition. However, businesses have recently shifted their focus towards “Brand Reputation;” which is the entire scope of perceptions formed about a company, based upon specific metrics, such as a result of social evaluation. Taking a holistic approach to “Branding,” which recognizes it drives bottom-line revenue and corporate-social responsibility, companies are progressively concluding that both can be collectively exhaustive. Read, Bridging the gap between Corporate Social Responsibility and For-Profit Businesses.
What is Value Creation?
Value creation can be looked at through the lenses of accounting and economic earnings. From the perspective of accounting earnings, profit is defined as the surplus created when revenues exceed costs and is a most simplistic explanation for value creation. While earnings from accounting focus principally on the income statements, economic earnings, however, are evaluated based upon a more complex sets of financial statements; such as cash flow, financing and operating statements. Operating statements recognize intangible assets, such as good will created by capital investments, made most notably for the long-term growth trajectory of companies and investments allocated in corporate-brand management. These include activities for brand recognition and reputation, which add to value creation.
According to an Institute of Management Accountants (IMA) report on measuring and managing shareholder’s value, the report concludes:
“To create value, management must have a deep understanding of the performance variables that drive the value of the business, called key-value drivers. There are two reasons why such an understanding is essential. First, the organization cannot act directly on value. It has to act on things it can influence, such as customer satisfaction, cost, capital expenditures, and so on. Second, it is through these drivers of value that senior management learns to understand the rest of the organization and to establish a dialogue about what it expects to be accomplished.”
As clearly stated, customer satisfaction—which is an integral part of managing the customer experience—is a key-value driver that can significantly affect the value of an organization. Within the context of controllable verses non-controllable aspects of effectively running an organization, customer satisfaction and managing the total customer experience are with no doubts driven by behaviors which can be influenced by managers and employees as stakeholders.
Whether your company is mature or emerging, and wants to consider developing a winning brand strategy with customer experience (download, Developing Winning Brand Strategies with Customer Experience), or building brand reputation with corporate social responsibility for enhanced value creation, let’s start a conversation!
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