Brand is not simply a line item on a financial statement. It’s so much more. It’s embedded at every touchpoint of your business and every interaction with your customers. Indelible and cult-like brands know this better than anyone else.
That’s a lesson I learned from Chip Wilson, founder of athletic apparel retaLululemon and author of Little Black Stretchy Pants, who I interviewed on stage at The Gathering conference in Banff, Alberta.
At most companies, the rule of thumb is to allocate 10 per cent of sales to maintaining and growing the brand. These costs are easy for finance departments to wrap their heads around and slot in the right place.
But at Lululemon, the amount was 2 per cent because brand costs were embedded in other departments. Since these costs were spread across the company in different departments rather than in one cost centre, it was easy for financial experts to overlook how Lululemon was investing in brand building.
For Wilson, essential brand costs included:
- 30 per cent of retail leasing costs to locate stores in the right place (for example, near Starbucks, which targets the same customers as Lululemon) to drive brand awareness for e-commerce.
- Developing reusable shopping bags that promoted lululemon’s social stance on health and longevity.
- Hiring and paying highly educated salespeople to become Educators.
- Investing in high-quality material so they last several years. Lululemon has patented 45 materials and has trademark registrations for several of its products, fabric names, and images. By doing so, the company differentiates itself as a brand and protects themselves from competitors.
- Choosing to hire and train inexperienced executives who were athletes over experienced executives who were non-athletic.
- Hiring executives six months before they started full-time and having them work part-time in the store. Brand value is created as the company evaluates the hire to ensure a cultural fit.
- Stores designed for speed of shopping, not for fashion outfitting. This values Guests’ time and subconsciously attaches a value to the brand.
- Transformation development and ongoing goal-setting training of employees.
But given the number of different branding costs, how did he know if his efforts were truly paying off? What was the ROI?
Wilson says he measured it all — community, branding, and marketing initiatives, etc. — against two things.
The first is whether people would talk about it. “We spent money on marketing and branding only if people would go to coffee and talk about what we did,” he says.
The second is quality feedback from the ultimate customer: an athlete. He says: “We believed the best return on investment was to give a pair of pants to an athlete and then budget time and money to follow up with the athlete to obtain feedback to give that feedback directly to design. A high-end athlete who is part of the solution is very inexpensive and 100 percent authentic. If it cost us $200 to reach one person who influenced two hundred others, then the return was unbeatable.”
About The Gathering
Organizers of The Gathering consistently outdo themselves: bigger brands and personalities, more content and dual-track sessions, and ramped up music and entertainment value. But as it grows, the level of access to the hearts and minds of the biggest brand leaders remains unchanged, keeping The Gathering on the calendar of smart marketers across North America year after year.
For more information, visit www.cultgathering.com