(This story was originally published on entrepreneur.com and was edited for content and style.)
Stocks are slipping, tech growth is halting and bubbles are bursting. If you haven’t already felt it, you’re bracing for the impact. When markets start to shift, businesses are forced to quickly pivot and adapt to minimize fallout. In tech, we’re seeing this play out in the form of budget cuts, mass layoffs and hiring freezes.
There’s no denying that some of these reactions are justified, albeit unfortunate. A 10-plus year economic boom gave way to inflated growth trajectories, overvalued startups and unprecedented hiring. But the wake of casualties left as a result provides a rare peek behind the curtain. When the going gets tough, how do priorities shift? Who or what is the first to arrive on the chopping block? Do these cuts align with the goals and vision defined by the company, or are they merely a band-aid designed to ease the fears of anxious investors?
A long-term mindset reaps long-term rewards
In 1997, Amazon’s initial public offering launched at a price of $18 per share. Two years later, the company’s valuation soared to more than 50 times its IPO value. Then the dot-com bubble burst and a stock that was once soaring above $100 dropped to less than $10. It wasn’t until the end of 2001 that Amazon started to return a profit to investors. Today, it is the world’s fifth most valuable company with a market cap of $1.1 trillion.
How did the company survive while so many others failed? Much to the dismay of investors, Amazon took the slow and steady approach, focusing more on brand recognition and innovation than income.
In a “60 Minutes” interview, Amazon CEO, Jeff Bezos, explained this strategy, saying: “The long-term approach is rare enough that it means you’re not competing against very many companies because most companies want to see a return on investment in, you know, one, two, three years. … I’m willing for it to be five, six, seven years. So just that change in timeline can be a very big competitive advantage.”
Similar to Amazon, the online travel booking website, Priceline, lost $1.1 billion in the dot-com crash. Instead of cutting back on brand marketing, the company doubled down. You probably still remember the TV commercials featuring William Shatner as the “Priceline Negotiator,” a brand marketing campaign so successful that it ran for the next 14 years. The company never took its foot off the gas, spending $3.8 billion on marketing in 2021. Today, the umbrella company of Priceline, Booking Holdings, has a market cap of $78 billion.
The ROI of brand equity during times of crisis
It’s tempting to focus on short-term solutions during periods of volatility. You start digging into the numbers, looking for areas that will deliver the highest return. Brand equity is rarely displayed as a line item, because brands are built over years, not quarters. But focusing on nurturing your brand value is just as crucial during times of crisis as it is during times of stability. Trends change, customer needs shift, yet who are you remains consistent, and this equity pays off during challenging times.
Your brand is your most valuable asset. It is who you are, why you exist and how you deliver on that promise. It’s not your colors, mascot or product. Instead, it’s how people feel as they interact with your company across any given touchpoint. You should be able to describe a brand just as you describe an individual. Are they progressive and principled? Feminine and fierce? Empowering and authentic? With successful brand marketing, the right brand identity, cultivated, nurtured and ingrained in the minds of your audience can deliver evergreen results.
For example, during a time when budgets are being slashed, a strong brand will continue to deliver:
Word-of-mouth: 91% of B2B buyers are influenced by word-of-mouth when making buying decisions, making it more influential than Google, Facebook and Twitter combined. What drives word-of-mouth? Brands that inspire emotional intensity receive 3x more word-of-mouth marketing than less emotionally connected brands.
Loyalty and retention: Retention is significantly less expensive than acquisition. When customers feel connected to your brand, a part of your journey, they’re more likely to weather the storms by your side. For more on this, just look at Nike.
Trust: According to a 2022 Salsify survey, 46% of consumers say that they would pay more to purchase from brands they can trust. Especially when times are hard, people look to brands they feel they can rely on.
Revenue: The consistent presentation of a brand across all touchpoints has the potential to increase revenue by 33%.
If you build it, they will come
Above all, people buy from brands they believe in. As Simon Sinek said, “People don’t buy what you do; they buy why you do it and what you do simply proves what you believe.”
Your brand identity is the expression of this “why.” It is the driving force behind your behavior, your voice and the feeling left behind after every interaction with your organization. Investing in and cultivating a powerful brand will be the defining factor in how your organization weathers both the good times and the bad.