Branding strategy for small businesses

From: alexhormozi

A robust branding strategy can significantly impact a business’s success, allowing it to charge higher prices, improve advertising effectiveness, and cultivate customer loyalty [00:00:45]. For small businesses, understanding and implementing effective branding principles can be the key to sustainable growth and profitability [00:00:45].

What is Branding?

Many popular definitions of branding can be vague, referring to a person’s gut feeling, expectations, memories, or emotional shorthand about a product or organization [00:03:17]. However, a practical definition of branding, focused on actionable steps and financial outcomes, is crucial [00:02:25].

Branding as Deliberate Pairing

At its core, branding is the deliberate pairing of things through an outcome [00:05:21].

• Example (Coca-Cola): The “yum” (outcome) is paired with drinking (action) Coca-Cola (product). This successful pairing makes customers more likely to choose Coca-Cola when they desire that “yum” again [00:05:32].
• Good branding is the deliberate pairing of a business with positive outcomes for its ideal customers [00:10:09].

Advertising vs. Branding

It’s important to distinguish between advertising and branding:

• Advertising is letting people know about your stuff [00:06:40].
• Branding is the pairing that occurs as a result of that exposure [00:06:44].
  • For instance, a Bud Light advertisement with Dylan Mulvaney was good advertising because it reached many people, but it resulted in bad branding because many customers disliked the pairing, leading to losses [00:06:21]. To recover, Bud Light then paired with figures like Shane Gillis and the UFC, aligning with their audience’s preferences and improving sales [00:07:11].

The Financial Impact of Branding

Branding directly impacts a business’s financial success by influencing customer behavior [00:12:17].

• Premium Pricing: A strong brand allows a business to charge significantly more for products that might otherwise be commoditized. For example, a $5 white T-shirt can become a premium product when branded with a strong logo like Nike’s, allowing it to sell for a much higher price [00:14:07]. As Warren Buffet noted, the single most important decision in evaluating a business is its pricing power [00:17:39]. Good branding enables this pricing power [00:18:04].

• Improved Advertising Effectiveness: Strong brands lead to higher click-through rates (CTR) and better response rates in advertising [00:18:10]. A generic white T-shirt might get a 0.5% CTR, while the same T-shirt with a Nike swoosh could achieve six times that, at a higher price point [00:18:27]. This means cheaper customer acquisition and higher returns on marketing spend [00:18:46].

• Customer Loyalty: Good branding fosters deep customer loyalty, encouraging repeat purchases and protecting the business from competitors [00:18:54]. Like Apple, once customers buy one product, they tend to stay loyal and buy more [00:19:04].

How to Build a Strong Brand for Small Businesses

Building a brand is a deliberate process that starts with knowing what you want to pair your business with to attract ideal customers [00:20:23].

1. Start with a “Weak Brand”: Initially, your brand means nothing to your audience; they might recognize it as a logo but don’t yet understand its meaning [00:15:39].
2. Deliberate Pairing: Pair your brand with people, experiences, or other things your ideal customers like [00:15:49].
   • Example (Nike): Nike paired its brand with champions like LeBron James and Tiger Woods, associating itself with winning and peak performance [00:13:31].
   • Example (Dolce & Gabbana): They paired their brand with Kim Kardashian, appealing to an audience that desires association with fame, beauty, and wealth [00:16:22].
3. Brand Meaning Emerges: Through consistent pairing, your brand begins to embody the qualities and values customers appreciate [00:15:52].
4. Customer Association: Customers then seek to associate themselves with those desired outcomes or values by purchasing your product [00:15:57].
   • This is how a generic product, like a white T-shirt, transforms into a “winning product” that customers willingly buy to feel like a winner or embody the brand’s values [00:14:07].

Curating Your Brand Identity

Think of building a brand like curating a garden:

• You start with many different “flowers” (products, values, experiences, people) [00:20:54].
• The assembly and repeated pairing of these elements form the “bouquet” or brand [00:21:16].
• To narrow your brand, double down on a specific topic (e.g., only tacos). To expand, branch out to related topics (e.g., burritos, then food in general) [00:22:00].
• Avoid distant and random pairings, as they make associations difficult and dilute your brand’s message [00:23:09].

Recovering from Branding Mistakes

Mistakes in pairing can hurt a brand [00:23:56]. If a bad pairing occurs (e.g., a scandal, or a faulty product), you must overwhelm customers with more positive pairings until the negative one shrinks into irrelevance [00:24:31].

• Example (Kanye West): Despite controversies, Kanye has continued to release products people love (Super Bowl ads, shoes, albums), allowing consumers to re-associate him with positive outcomes [00:24:48].

The Importance of Product Quality

While external pairings initiate the purchase, the actual product experience significantly impacts long-term customer retention [00:25:51]. If a premium brand delivers a poor product, it undermines the positive associations built through branding [00:26:08]. Your product must be “dialed” to reinforce the brand’s positive image, rather than relying solely on the brand to carry a subpar product [00:27:01].

Measuring Brand Strength

Brand strength can be measured using three key metrics [00:27:45]:

1. Influence: How likely is the brand to change someone’s behavior? [00:27:49]
2. Direction: Is the behavior change towards the brand (positive) or away from it (negative)? [00:28:03]
3. Reach: How many people does the brand influence? [00:28:09]

A strong positive brand, like Taylor Swift or Apple, has high reach, strong influence, and a predominantly positive direction (most people react towards them) [00:29:55]. Even with a small audience, a brand can have high influence (e.g., parents influencing their children’s behavior) [00:31:10].

For small businesses, the goal is to continuously increase reach, influence, and positive direction by making strategic pairings [00:31:47]. While new pairings always carry the risk of losing some audience members, the aim is to gain more positive new people than those who dislike the change [00:32:51].

Practical Application for Small Business Owners

To build a brand, pair your content, products, or services with what your ideal customers like. For instance, if you want to be associated with business value and growth, create content and books that help small business owners profit [00:34:06]. When they experience profit, they will associate that positive outcome with you and be more likely to consume more of your offerings and recommend you to others <a class=“yt=“yt-timestamp” data-t=“00:34:18”>[00:34:18].

Ultimately, a strong branding strategy for small businesses means deliberately curating associations that resonate positively with your target audience, leading to increased sales, customer loyalty, and long-term financial success.