The Rising Impact of Brand
This episode might reference ProfitWell and ProfitWell Recur, which following the acquisition by Paddle is now Paddle Studios. Some information may be out of date.
Originally published: April 26th, 2018
A great brand absolutely increases the willingness to pay and retention amongst customers. As the data suggests, brand just might be your new secret weapon.
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Brand Drives Higher Willingness to Pay
We coded respondents perception of a company’s brand before measuring their willingness to pay.
Those customers who perceived a company’s brand positively had between a 16% and 41% higher willingness to pay than the median.
Those on the negative perception side had 15-33% lower willingness to pay. Neutral respondents were willing to pay about 6-15% less than the median. Based on this data, brand not only drives higher willingness to pay, but also can very much detract from your ability to sell to your customers at the level necessary to succeed.
Interestingly enough when we start to break this data out across ARPU and industry, the narrative remains the same.
High and low ARPU consumers with positive brand perception see between 14 and 35% higher willingness to pay.
B2B and B2C breakouts are eerily similar, both on the positive and negative sides of perception.
Brand Drives Higher Retention
Digging even further, retention tells a similar story, as those folks with a positive perception of brand have roughly 11-18% better net retention and those customers with poor perceptions of brand seeing about 12-15% worse retention.
Brand and other intangibles continue to grow in importance
The bottom line is - as more and more features get built, competition remains on the rise, and the function aspect of software becomes less differentiable, these formerly intangible pieces of your product - brand, design, and even support - will continue to become more and more important.
Want to learn more? Check out our recent episode: Localization Benchmarks and subscribe to the show to get new episodes.
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You've got the questions
and we have the data.
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Each week, we dive deep on benchmarks
of the subscription economy that
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you just can't get anywhere
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else.
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This is the ProfitWell Report.
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Hi. My name is Lydia Newton,
and I'm the CMO of binder.
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We help our customers all over
the world to build and maintain
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a consistent brand,
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and we all know a strong
brand when we see it.
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But my question is,
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to what extent does this affect
the purchasing decision and
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willingness to pay?
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Great question, Lydia.
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Time and time again,
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founders and marketers think
that brand is just something
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fluffy for b to c companies
in the world of fashion.
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You know, with customer acquisition
cost continuing to increase and
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willingness to pay
continuing to drop,
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data suggests that brand just
might be your new secret weapon.
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To answer Lydia's question,
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we looked at nearly three
thousand different companies in
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over a million different
consumer transactions.
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Here's what we found.
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First up, to get a direct
answer out of the way,
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a great brand absolutely
increases the willingness to
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pay and retention
amongst customers.
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We coded respondents'
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perception of a company's
brand before measuring their
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willingness to pay,
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and those consumers who had a
positive perception of a brand
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actually had an increased
willingness to pay of sixteen
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to forty one percent
than the median.
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Those on the negative
perception side had fifteen to
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thirty three percent
lower willingness to pay,
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and neutral respondents were
willing to pay about six to
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fifteen percent less.
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Based on this data,
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brand not only drives
higher willingness to pay,
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but also can very much detract
from your ability to sell to
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your customers at the level
that is necessary for success.
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High and low ARPU consumers
with positive brand perception
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see between fourteen and thirty five
percent higher willingness to pay.
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B to b and b to c breakouts
are eerily similar both on the
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positive and negative
sides of perception.
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Thinking even further,
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retention tells a similar story
as those folks on the positive
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perception of brand have
roughly eleven to eighteen
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percent higher retention,
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while those on the negative
are seeing twelve to fifteen
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percent lower retention.
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The bottom line is as more
and more features get built,
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competition remains on the
rise and the function aspect of
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software becomes
less differentiable,
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these formerly intangible pieces of
building a product, brand, design,
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and even support will continue to
become more and more important.
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Well, that's all for now.
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If you have a question,
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shoot me an email or video
to p c at profitable dot com.
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And let's also thank Lydia
for sparking this research by
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clicking on the link below
to give her a shout out.
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We'll We'll see you next week.
