Having a strong brand is a driving force of revenue
- The Prophet Brand Relevance Index reveals that the revenue growth of the most relevant brands have outperformed the S&P 500 average by 28% over the last decade.
- Size and familiarity aren't enough: More than a billion people may use Facebook and Twitter, but those brands mean little to them. Pinterest, though, is seen as intensely relevant.
- Amazon is rated No. 1 in "Makes my life easier."
When it comes to measuring how strong a brand is, revenue does not always tell the whole story. Neither does having strong name recognition. While they are important, it doesn't necessarily guarantee future success, especially in the face of ever-changing consumer expectations. What really matters is relevance and if your brand is important to people in their daily lives.
For the last four years, Prophet has studied what makes a brand relevant. Those special brands that consistently make smart, bold moves that amaze customers, push competitors out of consideration, and sometimes define entirely new categories and markets. And they do it while remaining unwaveringly authentic to who they are.
Our annual Prophet Brand Relevance Index® (BRI) quantifies how they achieve this. It is the only brand ranking based solely on feedback from tens of thousands of consumers around the world, rating thousands of brands. We created the BRI to help business and brand leaders measure how central their brands are to consumers' lives, providing them with a practical framework to become more relevant and to unlock new sources of growth. In the U.S., Apple is the most relevant brand in our Index and has been for all four years. This year, Amazon, Pinterest and Netflix follow right behind.
The Index has shown clear links between relevance and business success: The top 10 brands in this year's ranking, including Alphabet-owned Android and Google; Samsung; Whirlpool-owned KitchenAid; Spotify and Nike, account for just 0.1 percent of all U.S. stock listings. Yet they make up 10 percent of their $26 trillion in market value.
In looking at 2017 data, comparing publicly-traded companies that comprised our top 50 most relevant brands with those in the broader S&P 500, we found that the relevant brands saw 10-year revenue growth increase 2.8 times faster than the S&P, with profits (EBIT) rising 205 times more quickly.
What drives relevance
To measure relevance and growth drivers, we ask respondents to rate only brands they are familiar with on 16 attributes, which we categorize into four (equally important) drivers of relevance: Customer obsession, ruthless pragmatism, distinctive inspiration and pervasive innovation.
We can then identify how relevant brands are leading and following consumers and unlocking new paths to growth. We have found that these companies distinguish themselves in three ways:
- They center brands on a strategic purpose to create shared value. This purpose sets brands like Pinterest, Etsy and LEGO apart from competitors.
- They engage customers through living brand experiences. From Apple Music to the Nike Plus, brands achieve relevance by creating real-life ecosystems, reaching beyond their single brand.
- They power growth from the inside out, through culture, capabilities and engagement. Amazon and Google find new ways to engage us almost daily. Non-digital brands excel, too: The 100-year-old KitchenAid gets high marks for "I can't imagine my life without it." While, more people say they trust Band-Aid than any other brand.
What the BRI data has shown us is how quickly disruption can happen and how fast one can move from leader to a laggard (or completely disappear). Take Facebook, a brand with large recognition and reach, but is only number 205 in this year's Index. A recent CNBC article stated that 44 percent of users ages 18 to 29 have deleted the app from their phones in the past year. Facebook has lost its connection with consumers. Although some would argue it never had it: the brand has always fared poorly in our ranking. People have an inherent distrust in the brand; something they haven't been able to combat. (Twitter is even less relevant.)
Ultimately, we believe brands that commit to building and maintaining relevance as part of their mission will achieve greater growth and become ever more valuable to their customers.
Jesse Purewal is an Associate Partner in Prophet's San Francisco office. His focus is on leading Prophet's multidisciplinary teams to develop business strategies, brand strategies, and customer experiences to drive inspired, actionable growth.