The worth in designing a professional logo

By August 4, 2014Articles

“I think it’s time for a new logo.”

How many times have you considered that while planning new marketing initiatives? Too often it is followed by a typical response, “I don’t think it’s worth it.”

Some people might say determining the worth of a professional logo is impossible, but 33 years in branding and thousands of logo designs later, I can assure you there is a return, and I think you will be astounded.

Let’s take a fictitious company with annual revenues of $1M. By the end, you’ll see the monetary value of a professional brand.

1.  Brand Recognition.  The more times a logo registers in your brain, the stronger relationship and association you have to purchase that brand. Poor logos often get a lower rate of association, which means more money needs to be spent to gain the same level of brand awareness.

 Results: A typical marketing budget is 7% ($70,000 of our $1M company). If you are able to trim 1% from your marketing budget by having a recognizable logo, this would result in $10,000 savings.

 2.  Higher Perceived Value.  As much as we try not to judge a book by its cover, doing so is ingrained into our psychological being. A brand that exudes quality creates an immediate association of quality. This means when you have a great logo, you can charge more.

Results: If the average ticket price is $100, and you are able to charge 2% more ($2) by having a professional logo, this would result in $20,000 additional revenue.

3.  Confidence.  A University of California study was conducted to determine if looks alone could sway a vote. Led by political scientist Shawn W. Rosenberg, the study proved that looks do make a difference. Two identical flyers were distributed, except one featured a tweaked photo of a person that looked like he had more integrity, competence, and leadership ability. The flyer with the tweaked photo received 12% more votes.

If the same metrics hold true in business as politics, a logo that instills integrity, competence, and leadership has the ability to convert 12% more business. Confidence also attracts employees, retains staff, and strengthen sales teams, who now have the confidence to close more sales at higher prices.

 Results: We’ll be conservative and estimate a 3% increase. Closing 3% more business results in additional revenues of $30,000 plus the savings from reduced staff turnover.

4. Pride.  Customers who are proud of brands tell more people, which generates more referrals. Pride also impacts your staff, resulting in more effort being put into their jobs.

Results: Proud employees come to work earlier, try harder, and stay later. In an 8-hour shift, if they each work 10 minutes harder or smarter, that translates to a 2% boost in productivity, which is $20,000 in additional revenue. In addition, if one out of every 100 customers refers someone, that equals 1% more business and an additional $10,000.

5. Brand Equity.  One way to get maximum value for your business when it sells is to build up goodwill, which arises when one company acquires another but pays more than the fair market value of the net assets.

Goodwill is made up of three things: brand, customers, and intellectual capital.

Here are some examples of how much a brand can be worth. In 2002 Interbrand and JP Morgan conducted a study of top brands. They looked at the dollar value of each brand as well as the percentage of share value attributed to brand. Their results showed that in 2002 Coke’s brand value was $69.6 billion, 51% of its total share value. That meant if you had shares in Coke in 2002, 51% of the value of your holdings was a direct result of tha brand. That same year McDonald’s brand value was recorded as $26.4 billion—71% of shareholder value.

Results: Brand will have a huge impact when it’s time to sell.

What Is a Professional Logo Worth?  Not just big brands can benefit from a professional logo. Based on the above, a $1M company can gain $70,000 or more per year from its brand—not including the goodwill!

StimulusBrand has developed thousands of logos as part of overall corporate identity and marketing programs for business-to-business and consumer goods companies. Learn also about the importance of Truth in Branding and view samples of logos from our portfolio.