Taking action before it’s too late is the animating principle of the entire climate tech industry. So why is it that so many climate tech companies put off branding until they’re already way behind the 8-ball? The truth is that while waiting to invest in your brand might seem like a great way to save time and money early on, there are actually major opportunity costs for putting off this essential element of your business.
Stand Out With Your Brand Out
Climate tech is a unique market, simultaneously crowded and complex. The basic insight for every brand is straightforward–enter a high-emission business with a low-emission alternative at an attractive price. But this simple principle applies across every sector of the fossil-fueled economy, and there are multiple approaches to each sector. And because climate tech is inherently a new way of doing things, all those approaches have to introduce novel ideas to relatively unsophisticated consumers.
So how do you gain an edge in a tech-forward category that has to change behaviors? You give your customer something the behavior can stick to, a differentiated brand that stands out in the category. Thanks to the consistent imagery and dense, technical copy, so common in climate tech, a distinctive brand makes a company more recognizable and attractive—a welcome sight in a sea of sameness.
If your customer can’t remember you, they’re not going to buy from you. Data shows that branding–or lack thereof–has a significant impact on competitive advantage. Trying to scale a business without a brand is a bit like trying to paddle a canoe with your hands—you’re just not going to get very far.
Paying Attention, With Interest
It’s not just that putting off brand development costs you attention–a.k.a. the single most valuable resource there is–in the present. It costs you attention in the future, too–when everyone who knows your business but isn’t already in your CRM audience, misses your rebrand. Best case scenario you get a great agency, nail the PR campaign, and gain far more brand awareness than you lost. But it’s also possible to alienate current customers who love the old brand, or just take a hit to brand loyalty. The sooner you get your brand buttoned up, the sooner you’re ready for the spotlight.
There’s also the simple question of scale–a more established business often needs a more complex, more expensive rebrand. Think about it–the more white papers you’ve published, the more built out your site is, the more there is to re-do. In essence, you’re paying to have the same design work done a second time. If you take care of branding early on, you can build out your entire customer experience more confidently, with the knowledge that it’s grounded in a solid foundation that was made to last.
While the Iron’s Hot
So how do you know if this is the right time to invest in your brand? It seems like a complex question, but there’s a simple formula that makes it easy to calculate the opportunity cost of delay. First, you determine the potential return from investing in the best choice you’re not moving forward with, a.k.a. the Foregone Option (FO). Then figure out the likely return from the scenario you did select, a.k.a. the Chosen Option (CO). When you subtract CO from FO, the difference is your opportunity cost!
Here’s an example of how that plays out with nice round numbers. You do the math and determine that with brand totally dialed in, your business is likely to deliver $100K in revenue–which means FO is $100k. Without a great brand, you’re looking at more like $70k–so we set CO to $70K. That gives us the equation $100K – $70K = an opportunity cost of $30K. It’s that easy! And it tells you that if you can nail branding for less than that opportunity cost, it’s a great investment.
Calculating Your FO & CO
Nice round numbers make it look easy, but the realities of business are obviously much more complex than that. The exact math will differ for every company, but there are two important factors to keep in mind as you’re doing these calculations. First, make sure you’re considering both tangible and intangible costs. Specific deals and hard numbers don’t tell the whole story—you need to include less concrete assets like your overall brand equity and how customers’ perceive the brand.
You also need to evaluate how both options play out in the long-term, not just the immediate future. As mentioned above, the returns on a smart brand investment compound over time; if you only look at the short-term implications of each option, you’ll end up with an inaccurate opportunity cost.
Stand by Your Brand
The goal of any business is to grow, and there is no growth without change. A strong brand lets your company root itself in a stable identity even as new objectives and strategies branch out over time. Continually evaluating the factors and formula outlined in this piece ensures you’ll have a clear picture of what it costs to not establish a clear, distinctive brand identity. If you want to know what a brand does cost? We know an agency with a lot of expertise in the climate tech space. Let us know if you’d like an introduction. 😉
