The Marketing Strategist:

Featured Research: Brand Awareness: The Power of Size

March 14, 2013

In a consolidating industry, brand awareness matters. Absent a compelling specialty, getting onto the shortlist for large enterprise IT projects requires a strong reputation. Brand awareness pays off directly, in terms of revenue, as well as indirectly, in terms of market capitalization. And to a large extent, brand awareness equates to size. Not necessarily size in financial terms (although that helps), but size in terms of the number of professionals available to take on large-scale projects. As the chart below shows, there’s a strong correlation between unaided brand awareness and a company’s number of employees. As part of ITSMA’s annual Brand Tracking Study, we asked 460 business and IT professionals from five countries, “Which companies come to mind when you think of technology consulting and services?” The executives named 49 companies more than once. We tracked the percentage of mentions that each company received, which ranged from 52% (for IBM) to only one mention (114 companies).
Clearly there’s a power law at work here: A handful of companies with very high brand awareness and a “long tail” of firms that are barely on the radar. But as the chart below shows, this pattern mirrors another dynamic: the fact that there are a few very big IT services companies and many small ones. Perception reflects the underlying reality of company size. (We used number of employees rather than market capitalization because a substantial number of IT services firms are privately held or are divisions of larger companies.) The question for marketers is: How can they help their companies achieve a higher level of brand awareness than their comparably sized peers? Stated another way, given that it helps to be big, what else can help? One factor is simply the number of enterprises a company does business with. When asked, “Have you or your company purchased technology consulting and/or services from these companies in the last two years?” the responses closely mirrored unaided awareness: IBM way out front, then HP, Dell, Deloitte, KPMG, PwC, and Accenture. Having lots of customers correlates with high unaided brand awareness—and a relatively small number of customers is tied to low visibility. For instance, TCS has more employees than any of the companies on the chart except HP and IBM, but is identified less frequently as a vendor, and its unaided awareness is relatively low for its size. One explanation is TCS’s business strategy: target large enterprises, penetrate broadly and deeply, and build recurring revenue though multiyear outsourcing contracts with very satisfied customers. But while a large number of customers may enhance brand awareness, it’s not necessarily the best business model for B2B services companies. B2B services businesses prosper by building deep relationships with key customers. The focus on a set of strategic customers with 95%+ contract renewal rates provides a predictable revenue stream and lower sales costs. Knowledge of those customers creates a barrier to entry by competitors. But the tradeoff is lower brand visibility. Clearly, the ideal situation is to have both deep enterprise relationships and high brand awareness. The way to have both is to invest in the brand. This is exactly what TCS is doing. TCS’s recent “Big Four” initiative, in which an external brand valuation company shows how TCS is comparable to three better-known companies, is one such effort.

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