Internal Branding is a concept that merges the disciplines of marketing and human resources. Developed by Dr Nikolaus Eberl and Herman Schoonbee as an academic discipline, Internal Branding is about aligning employee commitment to delivering the brand promise of the organisation.
- 1 Introduction
- 2 Employee Commitment
- 3 Why Clients Quit a Brand
- 4 What exactly is a Brand?
- 5 The New Dimension of Marketing
- 6 The Cost of Non-Commitment
- 7 The Role of Internal Branding
- 8 The Janus Effect of Internal Branding
- 9 Measuring Brand Strength
- 10 Measuring Brand Value
- 11 Related Links
- 12 External links
“Companies are becoming painfully aware that sending the right message to their employees is just as important as making a good impression with customers, vendors and investors” (The Wall Street Journal). This is why "aligning employee commitment with the brand promise" was found to be the key challenge amongst 700 global CEO's in a recent brand leadership survey.
Longitudinal research conducted across multiple industries by IziCwe Academy indicates that employees perform across five levels of commitment:
1. Total Commitment: The Desire to work to the point of exceeding expectations;
2. Active Compliance: The Willingness to do what is required of you, no more, no less;
3. Reluctant Compliance: The reluctance to go beyond just doing the minimum;
4. Apathy: An attitude of indifference towards the organisation and clients;
5. Terminal Apathy: Involvement in destructive behaviopur, such as sabotage, theft and fraud.
Research at over 1,500 corporate companies representing more than four million employees has shown employee commitment to average at 3.4 – between reluctant compliance and apathy. The averages vary between countries, with Israel topping the list and, surprisingly, Japan residing at the bottom of the log out of 21 countries. However, the message is clear – after decades of cost cutting and downsizing, amidst a global lack of inspirational leadership, employee commitment at corporate organisations is cause for serious concern. The question is, how serious?
Why Clients Quit a Brand
In order to answer this question, IBM conducted a survey of 2,400 clients on the reverse drivers of brand loyalty, by posing a single question: “Why do clients quit a brand?” In other words, why would you decide to purchase a BMW when you have always driven a Mercedes? The findings were astonishing:
Neither price (9%) nor quality of service (14%) were the main reasons cited as to why clients leave a brand, but rather "the attitude of indifference displayed by an employee".
Say for instance that you took your car for service and the attendant clearly did not care about yourself, so much so that you left the brand infuriated and vowed never to return. This is the link between lack of employee commitment versus brand loyalty and market share.
What exactly is a Brand?
“As products and services are converging, clients are now looking for a sense of meaning and identity – a brand image in every experience they encounter with your company” (Institute for Brand Leadership).
So, what exactly is a brand? In order to arrive at the very core of what constitutes a brand, it is important to dispel some myths about what a brand is not. Says branding expert Herman Schoonbee: "A Brand used to be your logo, product or corporate stationary. However, these are only the peripherals of your brand. At the heart and core of a brand is what constitutes any human relationship - a promise. A brand is a promise."
Hannah Arendt, a well known 20th century philosopher, calls promises “islands of certainty in the sea of uncertainty that the future is” . Through promises we manage and control the uncertainty, whilst trust is the attitude required by authentic promise-making. This is why leading brands often command a market share of 50% or higher, as well as price premiums of up to 40% more than generic brands.
The New Dimension of Marketing
“It is not just above or below the line that creates the real differentiator in the market. It is behind the line where everything starts and too often stops. We see a new order in leading organisations where increasingly the responsibility and budgets for the internal client are driven by marketing, in partnership with HR” (Business Day, Management Review).
1st Dimension: Above-the-line (TV, Radio, Print Media)
2nd Dimension: Below-the-Line (Direct Marketing)
3rd Dimension: Through-the-Line (Combination of the above)
4th Dimension: Behind-the-Line (Internal Branding)
This correlates with the Evolution of Marketing over the past four decades which shows a shift from product focus (features and benefits) to brand experience and socio-economic identification.
The Cost of Non-Commitment
This is why, according to Dr Nikolaus Eberl, "the cost of non-commitment is the biggest hidden cost in any business - at reluctant compliance, which is many cases the industry average in developed countries, the cost of non-commitment is as high as 15 to 25 percent of sales revenue - not the 3 to 7 percent many CEO's believe it to be."
The Role of Internal Branding
Nothing kills a poor product faster than good advertising. Retaining clients over time requires not only that they have a positive experience with the brand, but also that they can identify with the brand character – this being the people in the company and the degree to which they can be trusted to deliver the brand promise.
The Janus Effect of Internal Branding
Clearly, a company’s brand promise and its brand character must be linked and compatible. There is a phenomenon in organizations that can be termed the ‘Janus Effect.’ Janus was the Roman god of initiation and closure. As such, he was seen as a god of the doorway and depicted with two faces, one facing out and one facing in.
The Janus Effect in organizations represents a simple but profound proposition: The face a company presents to its customers and the general public is in large part a reflection of the face it presents to its employees. Thus, the way customers view the company is significantly enhanced, or diminished, by the way employees view the company.
Measuring Brand Strength
The strength of a brand is built both through communication and the experience with the brand. Brand strength initially depends on the Hygiene Factors, i.e. awareness and consideration, which are driven by communication and influenced by acquisition drivers such as functionality.
Strengthening or weakening the brand then depends on the Differentiating Factors, i.e. brand preference and brand loyalty, which are formed from the client’s experience with the brand and influenced by the retention drivers.
Measuring Brand Value
If your brand is listed on the stock exchange, the answer is easy – your market capitalisation less assets. In the case of the world’s leading brand, Coca-Cola, the brand value exceeds the asset value by nearly 150%.
As Richard Branson put it at his recent visit to South Africa, “the brand is everything. If the brand is well-respected and trusted, people will give it a try.” The Virgin Brand is a classic example of brand value exceeding the asset base by far. In fact, the Virgin brand has now become so valuable that Branson has recently ventured into space. In September 2004, he announced that Virgin had signed a deal to offer the world's first commercial flights to space under the brand ‘Virgin Galactic’.