The Power Of Goodwill: Why You Need To Invest In Your Brand In 2020

The Power Of Goodwill Why You Need To Invest In Your Brand

They say the best defense is a good offense.

But in today’s business world, we are not sure that is entirely accurate.

Instead, we would say:

The best defense is a good brand.

That is why, today, we are going to be talking about goodwill.

Specifically, we will discuss:

  • What goodwill is (and why it is important)
  • How goodwill shaped one of the world’s most valuable companies
  • Why you need to invest in goodwill in 2020
  • How to harness the power of goodwill for your organization

Let’s get started:


What Is Goodwill (And Why Is It Important)?

Goodwill refers to the monetary value of a company’s brand: it is a way we can attempt to put a tangible value on an intangible asset.

Goodwill is calculated by taking into account several elements. These include (but are not limited to) a company’s:

  • Brand name
  • Brand awareness
  • Customer base
  • Customer relationships
  • Employee satisfaction
  • Patents or intellectual property

We typically discuss Goodwill in the context of purchasing another company.

For example:

When Amazon purchased Twitch for $970 million, they would have calculated the value of Twitch’s wider brand. Amazon has since taken measures to protect this goodwill.

In 2018 they took a Canadian spammer to court for creating a spambot, claiming he had: “caused injury to Twitch’s brand, goodwill, reputation and customer relationships.”

However, goodwill extends beyond the buying and selling of companies. Calculating goodwill has positive benefits for organizations that do not wish to be bought and sold. Why?

Because goodwill (or a brand’s awareness and influence) has a direct impact on:

  • Your balance sheet
  • Your income statement

We will explore this later in the article. But, for now, let’s take a look at goodwill in action and view this concept in a bit more context.


Goodwill In Action: What Makes Coca-Cola So Valuable?

Coca-Cola is one of the world’s most valuable companies.

Their products are sold in all but two countries in the world. You would be hard-pressed to find someone who has never tried one of their products!

the power of goodwill coca cola

But, what has helped them to become such a business behemoth?

Well, there are several contributing factors. We need to consider their:

There is no doubt they have the power and quality to provide for customers on a worldwide scale. They can force their way onto store shelves almost anywhere they want.

However:

Many other less successful companies can boast the same. So, what was Coca-Cola’s difference-maker?

Well, we would argue it was their brand.

They have created an instantly recognizable brand. Whether you like their product or not, you could quite easily sit there right now and:

  • Quote a slogan.
  • Talk about a recent campaign.
  • Describe their branding.
  • Estimate how much their product costs.

The brand has even influenced modern culture, like cementing the red-and-white appearance of Santa Claus. People in the UK even use their trucks to mark the start of the festive period.

the power of goodwill coca cola santa claus

This has created an army of people who want to drink their products.

Better still, their brand consistency has made them a safe bet in the beverage world. If you need to choose between Coca-Cola or a lesser-known brand, you likely choose Coke.

Let’s take a quick look at that in action:


Coke vs. Pepsi: Why Brands (Not Tastebuds) Matter

Pepsi is Coca-Cola’s biggest competitor.

They have been running a taste-test marketing campaign since 1975.

It is a blind test where subjects are asked to take a sip from two unmarked glasses; one contains Pepsi, the other Coke.

Often, participants prefer the taste of Pepsi to Coke:

There are some biases to this test. But stay with us.

Coca-Cola has 43% of the US market share. It stands to reason that some of those people would actually prefer the taste of Pepsi. Scientists have found as much.

But the more interesting finding is the impact product labels (and their associated brands) have on people. 

Researchers found that when Pepsi was placed in a Coke bottle (and vice versa), participants chose the brand they preferred. Even when the contents were not correct.

As such:

Coca-Cola’s brand has a tangible impact on their customers. It creates a positive association and a quasi-tribe around them.

On a larger scale, this directly influences their:

  • Cost of acquisition: it makes it easier and cheaper for Coca-Cola to convert customers, through channels like word of mouth
  • Revenue: customers are likely to purchase repeatedly and be less sensitive to price

Goodwill, then, represents the effectiveness of a company’s brand on impacting these metrics.

Now, with a little more context, let’s revisit what Goodwill is and why it is important for your brand in 2020.


Why You Need To Invest In Goodwill In 2020

One of our 2020 marketing predictions is that branding will become non-negotiable.

This is because:

  • The barriers to starting a business have never been lower
  • The amount of competition has never been higher
  • It’s easier for newcomers to replicate and emulate your products

Your brand, then, is the biggest and most important differentiating factor.

It acts as a moat around your business, protecting all of the assets inside.

the power of goodwill concept of moat

When customers are faced with a choice between your product and your competitors, it will be the best and most resonant brand that wins out.

This will, in turn, have a direct impact on your: 

  1. Cost of acquisition: the stronger your brand, the fewer marketing dollars you will need to spend to acquire customers
  2. Revenue: the stronger your brand, the higher your potential revenue and growth will be

In the next section, we will look at how you can begin to harness goodwill for your company.


How To Harness The Power Of Goodwill

There are six ways to begin building your brand — and the all-important goodwill — that have been proven, time and time again, to be effective.

They are:

  1. Get everybody involved
  2. Craft a powerful brand story
  3. Consistently create high-quality content
  4. Connect with your audience
  5. Understand what your audience want
  6. Review, review, review

Let’s dive into each of them.


1. Get Everybody Involved

harness the power of goodwill get everyone involved

The first step is to bring the people who work for your organization together. Depending on your size, this could be:

  • All of your colleagues (or employees) from each department
  • Key stakeholders from each department

However you do this, you will want to have people from all relevant teams represented, like:

  • Product
  • Sales
  • Customer service
  • Customer success
  • Marketing

Your aim is to draw on the ideas and experiences of these people to understand what kind of brand you currently are and create a vision of who you want to be.

These people will have a wide range of different perspectives that will give you a deeper understanding of your potential brand. They help you view your business from all angles.

Get these ideas down on paper and look for the key elements that really matter.

Once you have collected them, it is time to start storytelling.


2. Craft A Powerful Brand Story

harness the power of goodwill get everyone involved

Brand storytelling is powerful.

It creates a deep human connection and emotional response.

According to industry research, customers see this as more important than their overall satisfaction. Why?

Because it makes the brand relevant to their lives. They can project themselves onto the story and associate with it.

To tell a brand story, you need four elements:

  • Your why: the reason your brand exists
  • Your Hero: the champion of the story
  • Your words: a specific way to tell the story
  • Your audience: the people the story will resonate with

Crafting a brand story is a little beyond the scope of this article. But, do not worry. You can learn exactly how to do it here in our brand storytelling guide.


3. Consistently Publish High-Quality Content

Consistently Publish High-Quality Content

Brand consistency creates trust.

By continually showing up and sharing the same relevant message, brands can become the go-to choice in their industry.

As you have already seen, this is why Coca-Cola continually takes more of the market share than Pepsi. But it is also why people:

  • Choose McDonald’s in foreign countries
  • Buy iPhones when there are lots of great (and cheaper) alternatives
  • Drink Starbucks coffee instead of independent brands

One of the best ways to deliver this consistent message if through content marketing. You can do it by using:

  • Social media
  • Blog posts
  • Newsletters
  • Videos
  • Podcasts
  • Other rich media

Basically, any medium that is relevant, accessible, and helpful to your audience.

You can learn more about brand consistency in our ultimate guide.


4. Connect With Your Audience

Consistently Publish High-Quality Content

Brands with high levels of goodwill tend to be responsive.

You know, the ones that:

  • Connect with their audience.
  • Respond to messages.
  • Work positively with feedback.

In today’s marketplace, people want to connect with brands who care.

Some of the most common reasons for brand switching are that customers feel disconnected, or under-valued, by their chosen brands. So, avoid this trap.

Be sure to:

  • Always respond to customer communications.
  • Listen to (and empower customers to leave) feedback.
  • Make customers feel like their dollars matter to you.

Having connection and responsiveness as pillars of your brand will go a long way to developing high levels of goodwill.


5. Understand What Your Audience Wants

harness the power of goodwill know what your audience wants

Brand intelligence is paramount for brand building.

In short:

It is the process of listening to your customers’ online conversations to understand their sentiment towards you.

You do this by:

  • Using listening tools: such as Google Alerts or Mention
  • Gathering quantitative data: the numerical information
  • Gathering qualitative data: the written sentiment of your audience
  • Gathering real-time data: looking at what people are saying right now
  • Monitoring competitors: what are people saying about your competition?

You can learn more about how brand intelligence works, and how to implement it, in our definitive guide.


6. Review The Feedback

harness the power of goodwill know what your audience wants

The final stage here is to review.

Brands that want to build Goodwill must:

  • Have a clear understanding of goals and benchmarks
  • Gather analytical data
  • Interpret that data against what you set out to do
  • Update your strategy
  • Repeat the process regularly

This applies to both the micro and the macro of brand building. You need a review process for your entire brand-building strategy, and for all the elements that make it up.

While this may not be “fancy” work, it is in the review and adaptation process that truly incredible brands are built.

This is one of the many reasons we are so taken by the process of agile marketing. You can learn more in our guide to agile marketing here.


Goodwill In A Nutshell

Goodwill is the monetary value of a brand. It is typically calculated for the buying and selling of companies. But, understanding goodwill can be powerful for all organizations.

Coca-Cola’s brand, and the goodwill that comes with it, has a direct impact on their:

  • Ability to fend off the competition
  • Customer acquisition costs
  • Marketing budgets
  • Overall revenue

There are six ways you can build a brand and harness the power of goodwill:

  1. Get everybody involved
  2. Craft a powerful brand story
  3. Consistently create high-quality content
  4. Connect with your audience
  5. Understand what your audience wants
  6. Review, review, review
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