Marketing academics and practitioners promote plenty of convoluted definitions of brand equity. For the sake of this discussion, brand
equity is best defined as the sum total of market perceptions, customer
loyalty and employee engagement. If those three factors drive a
company’s revenue, then building and protecting brand equity must
be a strategic priority, particularly when the enterprise undergoes any
change or event that may negatively influence those factors.
Brand equity has always mattered to companies. What has
changed over the past decade, primarily as a result of the internet, is
a company’s loss of control over information related to its brand and
the democratization of influence. A company’s senior management
and traditional media sources no longer have exclusive or primary
control over brand equity. Anyone with Facebook, a Twitter account or
a blog — including employees, customers, competitors, short sellers or
dedicated troublemakers — can erode (or bolster) brand perceptions.
Restructurings provide perfect opportunities for those opinions to be
heard and considered.
Preparing A Game Plan
During a restructuring, it is critical that preserving a company’s brand
receives the same level of attention by senior management as financial
and legal considerations.
Anything short of that commitment can signal to employees,
customers, business partners and other key stakeholders that their
interests and concerns will take a back seat to the personal agendas
of the corporate owners. Post-restructuring, the rebuilding of trust and
confidence with audiences that shape a company’s brand equity is far
more difficult (and expensive) to achieve, because negative and incor-
rect facts and opinions have online visibility that can last for many
years. As the classic FRAM oil filter commercial suggested: “You can
pay me now…or you can pay me (much more) later.”
With an upfront commitment in place, most of the heavy lifting in
creating a game plan to protect a company’s brand equity in a restruc-
turing is front-loaded: strategic planning, delegation of responsibilities
and a sense of urgency are the critical success factors.
With rare exception, companies assign very little planning or resources to proactively managingtheeffects ofarestructuringonits
brand equity. While financial and legal considerations
will always be the primary focus, a tangible
sophistication gap has long existed between workout arrangement
skills, compared with what’s required to preserve a
company’s goodwill among internal and external audiences during a corporate restructuring.
Brand communication is considered a fuzzy
management science by many legal and financial
professionals and can be discounted by the C-suite as
well. However, in our digital age, rumor and misinformation can incur permanent damage to a company’s reputation with lightning speed. A communications strategy
largely consisting of press releases or cryptic statements
from management falls far short of what is required to
protect an enterprise’s most valuable asset — its brand.
Why Brand Equity Matters
A brand is the promise a company makes to its customers.
Brands help customers understand what a company
knows, what it stands for, what it will deliver and why
they should trust it. Brands involve far more than a firm’s
name, logo or website. Simply put, marketing is what a
company does to promote its brand. Brand equity is
what people believe the company is.
Preserving Brand Equity in a Turnaround:
Six Steps to Preserving a Company’s Reputation
BY GORDON ANDREWS
A company’s brand is a powerful if unappreciated asset. During the intense process of turning a company
around financially, little thought is given to protecting its brand. Gordon Andrews explains why brand
equity matters and provides steps to protect and enhance a brand during a turnaround.
In our digital age rumor and misinformation can incur permanent
damage to a company’s reputation with lightning speed. A
communications strategy largely consisting of press releases or
cryptic statements from management falls far short of what is
required to protect an enterprise’s most valuable asset — its brand.
GORDON ANDRE WS