The Top 10 mistakes spinouts make about their brand
Don’t fall into these common traps on the way to spinout growth
How important is having a clear and compelling brand when building a spinout? Organisations at this critical growth stage often need to improve the role brand plays. But instead, it’s easy to believe brand isn’t a priority for now when telling more people about that product feels like the most important job to focus on.
This logic is flawed. As a founding team or supporting organisation, what makes the spinout unique and interesting is clear. But others are unlikely to perceive you with the same burning clarity. Their interest and engagement levels are inevitably much lower than yours. What takes up most of your waking hours is just less important to them.
You only need to look at the average investor memorandum or funding pitch to see this has costly repercussions. Investors know that to grow at scale means investing in building a brand. They’re looking for evidence that prospective investments have their brand sorted and a plan for driving it forward. Unfortunately, that evidence often isn’t there. It’s a huge missed opportunity.
So, where do many spinouts get it wrong? Here are the top 10 mistakes we’ve seen in action when it comes to their thinking about brand:
Believing logo and name are the only real brand essentials.
Your logo and name are brand assets, not your brand fundamentals. A strong brand is rooted in the purpose of the spinout. Building a visionary company means articulating a core ideology. It powers your business from the inside and helps you communicate your strengths relative to your competition. The sooner you do this, the better.
Overlooking brand communications in the early days.
Some experts believe that spending on brand advertising too soon is a sign of a weak business idea. In reality, it’s more likely that early advertising spend is propping up a bad spinout. If you have a strong business idea, investing in brand communications will help you grow faster.
Continuing to deploy what’s worked for early adopters as a business scales.
Your early adopter audience is savvy and motivated to translate your product features into a benefit they need. But once this audience has been exhausted, you’ll need to tap into a more mainstream audience who are more risk-averse and less engaged. That means switching from product features to becoming known principally for the problem you solve. If you wait until you notice a sales plateau, you’ll have eaten into the valuable time and budget available to fix it.
Focussing on a too-tightly defined audience.
Most businesses gain initial traction by targeting a particular segment of their category. But this can only ever work short-term. Once you’re trying to reach a wider audience, your prospective buyers will be category buyers. Spending your budget lightly targeting the whole category rather than a sub-segment more frequently is better.
Underestimating the entire competitive set because of a stand-apart innovation.
Having a unique widget rarely means you’ve created a new category. You’re competing on problems, not products, which means your competition is anyone who also solves that problem, no matter how they do it. That’s not an easy mental shift when you’ve spent your early days honing your product to be the best it can be. But it’s vital if you want to compete for attention.
Solving one customer problem brilliantly to build long-term traction.
Humans look for solutions to problems. So the more problems you are known for solving, the more easily your brand will come to mind. And the more ‘entry points’ you associate with your brand, the more likely you are to grow. That’s one of the reasons why defining your purpose early is important. Purpose sits above everything: over time, you can have multiple ways your spinout achieves it.
Increasing the value of existing customers to drive exponential growth.
The proven secret to brand growth is acquiring new customers, not driving repeat purchases from existing ones, as tempting as that might seem. Growth is a numbers game, and that means investing in communicating with as many potential new customers as possible. If your share of voice is greater than your market share, your brand is highly likely to grow. Fact.
Using product-focussed messages in brand channels.
Good brand advertising creates fame and works emotionally, as so much IPA research over the years has shown. So save your rational product messages for the roughly 40% of your budget you should be spending on activation communications. For brand building, character and story drive memorability and talkability.
Treating brand assets with flexibility.
Your brand must be flexible to tell your story in different ways and work across many channels. But that doesn’t mean your brand assets should be. Brands are memory structures that need refreshing in people’s minds. Your brand assets - your colours, slogans, characters etc. - must be distinctly and consistently you. They act as a shorthand for your brand, increasing the effectiveness of your brand recognition and attribution. So vary them at your peril.
Downplaying the role of brand internally.
Articulating what your brand means internally isn’t just for corporates. The belief and values that tie you together, energise you and give you focus are arguably even more important for a young brand in a rapid phase of growth - as the team grows and as the pressures and targets mount. Taking time to uncover and express these unspoken foundations of how the spinout operates ensures their preservation into the future, underpinning your ongoing success.
If you’re leading or supporting a spinout, make sure these mistakes aren’t underpinning your growth strategy. You may be holding back potential with investors and customers or misdirecting precious budget and resources. Your brand will reward you for giving it the attention, careful nurture and passion you’ve demonstrated in building your business to date.
And if you’re keen to understand more about the theory behind the brand approach to spinout growth, drop us a line.
Photo by Austin Distel on Unsplash