Get ahead – get a logo

What is the value of a successful brand? Try $48bn, because that is the worth one recent Financial World survey placed on Coca-Cola, undoubtedly the best-known product name in the world. By contrast, what is the price of (albeit comparative) failure? Two years ago, Pepsi spent $600m changing its entire livery to blue but lost […]

What is the value of a successful brand? Try $48bn, because that is the worth one recent Financial World survey placed on Coca-Cola, undoubtedly the best-known product name in the world.

By contrast, what is the price of (albeit comparative) failure? Two years ago, Pepsi spent $600m changing its entire livery to blue but lost rather than gained market share because the strategy was not clear. The same survey consequently rated Pepsi at $9.3bn. That is still a huge figure and puts the company comfortably in the global top 20, but it also stresses why ‘Coke is it’ and Pepsi is second.

Look also at how much value a brand can sometimes add. A football club’s replica kit can controversially retail at about £40 for an adult shirt, but costs only £8 to produce. With retailers taking £8 in margin, and £7 for the taxman, that leaves £17 for the club and manufacturer to divide up after production costs. It is not bad business given that some might consider that the only things really differentiating the product from a coloured polyester T-shirt are a badge and the sponsor’s logo.

In the consumer world, brands matter. Consider how much automotive firms invest researching names such as Ka or Avensis (and rejecting many more) or the images that Rolls-Royce and Mercedes-Benz immediately conjure up.

But in business-to-business sectors particularly such ‘concrete’ areas as specialist manufacturing and engineering many executives find it hard to see how to translate or exploit brand power. Indeed, some people argue rebranding might soften their industrial images, upsetting the holy trinity of quality, service and price. Even revisiting and updating existing names are treated with suspicion, partly because the cost of replacing stationery and business cards can appear daunting for smaller firms.

However, this trend is beginning to reverse, as more industrial companies of all shapes and sizes find the process can pay dividends.

The crucial caveat, according to Aidan Kirby, a director with corporate identity and branding specialist Wolff Olins, is that there must be a clear business objective underpinning the change: a new logo is not an end in itself.

He says: ‘The first question you have to ask yourselves is what idea you want to get across. And it has to be more than Let’s merge and be big or Damn, the competitor has got a new logo, we’d better get one too. Unless you have got that different story, we would say, Well let’s talk again in six months , or We’ll spend six months working with you to develop that story.

‘Ultimately coming up with a new name or some squiggly lines is almost irrelevant. Most people see our work as that line or a dot or whatever, but the real work is in what has been developed behind that.’

Kirby cites his company’s work with ICI and its former chairman Sir John Harvey-Jones as an example of the hidden process.

‘When we worked with ICI, the image went from ICI with two squiggly lines to ICI with two different squiggly lines and Sir John then spent £2m just repainting all the trucks. Now, he’s an intelligent man, so why on earth would he spend an arm and a leg doing something that made, on the face of it, a marginal difference?’ asks Kirby.

The reality, he continues, is that the new logo ‘became something that he could pin on to the company to demonstrate the structural changes that had been made, something that would help to highlight those changes to the shareholders, and thus make the company more transparent in terms of its attraction on the stock market’.

Those changes included the hiving off of the Zeneca pharmaceutical side and a thorough review of both the paints and chemicals sides and, says Kirby, it was these discussions rather than those over the image that took up most of Wolff Olins’ time.

Of course, companies such as ICI, Shell, and British Airways with its psychedelic tail fins can easily afford to do this. Indeed, as FT-SE 100 companies, it is almost expected of them.

But smaller firms with clear strategies can also earn rewards, and that, perhaps, marks the latest area of development for branding and identity.

A few years ago, Systems Solutions was a small company generating 90% of its business providing engineering test equipment to clients near its home base in Carrickfergus, Northern Ireland. Most jobs were secured through word-of-mouth recommendation. However, using its expertise providing bespoke solutions, the company saw the possibility to expand by producing standardised, low-cost automatic test systems for the wider market.

Alan Watts, one of the two founding directors, takes up the story. ‘In one year, we changed completely and became a company that was doing 90% of its business in England and overseas. We were being reasonably successful, to say the least, but we came across two significant problems.

‘First, we discovered that having entered the new market, there were other companies with names very similar to ours, like Test Solutions. At this point, you see that the acid test is what happens when you ring somebody up and say I sent you some information, did you get it? Our potential clients were vague. They were coming back with Oh, I get a lot of information sent to me. So we realised there was a problem with the brand,’ says Watts.

The second difficulty emerged during a review of sales and marketing techniques. ‘At the beginning, we identified a number of companies that we wanted to target and approached them. But as we got bigger, the number of companies we were dealing with grew as well and our sales team couldn’t cope. We had to find a way of getting companies to come to us.

‘So we asked ourselves: Why do companies come to companies? and the answer, again, was that they’ve got a name, a well-known name, the automatic names you think of,’ explains Watts. ‘We decided that we needed to be like that.’

The result of a consultation with Belfast-based consultant Triplicate Isis was radical. In March 1996, Systems Solutions became Yelo.

‘They suggested both a typical electronics name and Yelo. What we liked about Yelo was not just that it appeared distinctive and memorable, but that it was also something that could feed directly into all our marketing and literature. Our brochures, therefore, take the yellow. Our advertising uses the theme recently we have been playing on Men in Yelo. It was interesting because the name became the logo,’ says Watts.

‘And getting back to that acid test, when I or one of our sales engineers now rings up a customer and asks Did you receive our literature? they get one answer and, without hesitation, that answer is Yes. They may not like the name, they may say they think it is a strange name for an electronics company, but the key point is that the contact has been strengthened.’

Another important part of the process was that for two months before the new name was introduced, Yelo contacted the existing customer base to explain what was happening, and stress that ‘it was not about us being taken over, or having gone bust and entered some new reincarnation’.

The big question, though, concerns whether the costs and benefits are in balance for a company like this, with 35 employees in a niche market, as opposed to an industrial behemoth. Watts has no doubts that they are.

Although the cost of name changes are difficult to assess, he estimates the price tag for consultancy fees, a new exhibition stand, printing new literature and updating existing stationery at £20,000. Offsetting that against the 15% to 20% growth Yelo has achieved in the two years since the change, compared with effectively static performance immediately before, Watts believes that payback was achieved at the end of the first 12 months.

‘In about another year, we will probably revisit the style sheet, but that doesn’t become a question of changing the name again. It is about giving that necessary impetus to the marketing,’ he adds. ‘But things like this can work if you have the idea and follow the process fully.’

Kirby echoes the same point in terms of how he views this kind of activity, and outlines Wolff Olins’ main model. ‘You have to imagine a circle in the centre with the world IDEA in it. Then draw a square around that, split it into four, and label each of those segments Products and services , Environments , Communications and Behaviour. If what you are doing does not address at least part if not all of that, it becomes pointless.’