Advising / Consulting / Family Business / Family Enterprise / Issues in the Family Enterprise / Law / Marketing

Tout the Family Ties as Part of the Brand

The Practitioner

Myth: Family businesses are small businesses run by the seat of their pants. As such, they should do their best to keep that fact hidden, not promote it, and certainly not incorporate it into their brand.

Reality: A family business is a business run by real people who care about their customers and employees. It should be aggressively promoted and built into a brand.

The Importance of Brands

For family enterprise advisors to understand why “family business” should be built into the company’s brand, we must first understand the importance of brands in general.

According to The Economist, brands account for 30% of the stock market value of companies in the S&P 500 index. Think about it, how much would you really pay for a nice shirt without the small polo pony and rider stitched into the chest? You can buy a no-name computer, but do you have the confidence that it will work and that the company will stand behind it? At McDonalds, if you are not happy with your meal for any reason they will give you another for free. Brands help us distinguish between companies and the quality of their services and products. Brands matter. Moreover, in a growing commoditized world, with big super-stores becoming the norm, having a strong brand is critically important.

Paul Hague with B2B International puts it this way: “We frequently refer to ‘brand values’ as if everyone knows what we mean. It is assumed that there is a general understanding that a brand stands for something and what it stands for must have a value. These values can be critically important or small inconsequential things, but above all they are the things which give the brand its worth and differentiate it from all others. Through these brand values a product or service is enhanced beyond its functional purpose. In this context the brand provides the consumer with more value and this is why they are prepared to pay a premium to acquire it.”

Brand Awareness

To further understand the importance of brands, let’s look at a “Brand Awareness” initiative executed in the UK a few years ago. There was a series of public service television “adverts” that showed a customer shopping at a supermarket, struggling to choose a product from a range of brands. Strangely, all of the products were colored white and only had numbers. They were all cans of chicken soup, but the only way to differentiate them was by numbers 1-10. Another series had a group of breakfast cereals, but again, just white boxes with numbers on them. The point of the ad was that brands matter to the consumer in trying to decide which product to choose. Brands help us discern which products we like and trust. Generally those products with brands, especially strong brands, charge a premium for their products. There is something emotive about the design and brand of a product, service or company that helps us decide.

This is not to say that people always buy the more expensive branded product. There are certainly lesser known brands and generics, which are cheaper, but provide sufficient customer satisfaction for the price. While this can be difficult terrain to defend from competition, it is a product positioning strategy.

Brand Consistency

In understanding the value of brands, it is important to understand the importance of consistency in communicating what the brand stands for.

As a personal example, let me share my branding experience at IBM. I spent a number of years working for IBM – the third most valuable brand in the world, valued at an estimated $100 Billion. That’s Billion with a “B”. Just for the name. When I was working there, IBM had a strategy of leveraging its brand to many different products. Third party suppliers would approach IBM and make a deal to use the IBM brand on their products, and the company would give IBM a piece of the profit, just for allowing them to use the IBM brand. Easy money no doubt. However, Lou Gerstner walked into a drug store one time, so the rumor goes, and saw a power strip for sale that was dusty, old, and a little bit torn up, and …had the IBM logo on it. He quickly realized that there was a bit of a contradiction in asking large global banks to pay tens of millions of dollars to IBM for a technology solution and also offering dingy IBM power strips at the local drug store.

The advisor’s role is to help the family understand the process that goes into building a brand. A brand that is recognizable and conveys the message the family is looking for is certainly not easy or cheap. A decision needs to be made about what the brand stands for…and it must be a characteristic that the company can execute on over time. To truly build a brand requires spending some money. And of course to make the brand known it requires some advertising. It is estimated that about 80% of all dollars spent on building a brand go towards advertising. But in the end the family has to understand that it is worth it.

Why Might a Family Considering Incorporating the Family into the Business Brand?

I give presentations around the country to various professional groups. As a part of my presentation, I will highlight that family businesses outperform non-family businesses on a number of financial metrics. There are many reasons why this is true. However, some of the most common reasons are:

  • Because it is their business, they care more about it.
  • Since their name is on the marquee, they have a lot to lose personally by messing up.
  • They take the long-term view.
  • Because there is a strong level of trust, the business runs more efficiently and effectively.

My first job as a kid was working for my family’s business, Olan Mills, named after my grandfather. Each studio across the country had the name Olan Mills emblazoned across the front of the studio, and each photograph had the words Olan Mills etched in gold in the bottom corner. When people purchased an Olan Mills portrait, they weren’t buying it from a faceless corporation. They bought it from my grandfather, or my uncle Olan Mills II. And in essence from me.

There are many businesses in the world that either are family businesses or had their origins as a family business. Indeed, IBM started out as a family business. A recent Forbes magazine dedicated an issue to America’s Richest Families. Interestingly, this list was a virtual Who’s Who of family businesses.

Four Examples

While there are many businesses that are known as family businesses, there are four family businesses that come to my mind that highly leverage the fact that they are a family business: SC Johnson, Paradies Shops, Mars, and Chick-fil-A.

  • SC Johnson calls itself, “SC Johnson, a Family Company.” If you pull up the website, the first thing it says is that ‘It is a family company, in its fifth generation, and makes such everyday household products as Pledge, Glade, Windex, and OFF!”
  • Paradies Stores has more than 550 stores in more than 75 airports and hotels across the country. If you travel by plane at all, chances are you’ve been in a Paradies Store. Their brand is “Paradies, A Family Business.” There is a placard in the store, it is on the bag they give you, and it is front and center on their website.
  • Mars leverages its family business roots in a little different manner. Mars has some of the most recognized product brands in the world with Snickers, M&Ms, and Wrigley’s, and thus does not push too hard externally on the fact that it is a family business, although it is a well-known fact. But it does play the family business card internally. According to a new Mars employee, the company stresses the “Five Principles” which come from the family: Quality, Responsibility, Mutuality, Efficiency, and Freedom.
  • Chick-fil-A gained notoriety by controversially bucking the fast-food trend when it closed stores on Sundays. Why? Because the values of the family business owners dictate that Sunday is a day of rest. While I may miss my grilled chicken sandwich on the seventh day, I can’t help but appreciate that there are real people who own this business, and that they place their personal values above making some more money.

Should Your Family Business Clients Build Their Brand? If so, how?

The answer to the first question is an unequivocal YES! And one easy way for your clients to build their brand is to communicate that they are a family business. Questions for the client include:

  • Do you include the fact that you are a family business front and center on your website?
  • Do you include these words in the advertising that you do?
  • Have you ever put it on your marquee or front door?
  • Do you exert your personal values throughout the business?

People like doing business with real people, not faceless corporations and unknown shareholders. People care about people. Corporations care about profit. Getting the word out that the firm is a family business means to customers that they are dealing with real people who live in and care about the local community, and who are in the business long-term. Identifying as a family business enables your clients to quickly and easily differentiate their business from the corporate goliaths.

Most of all, the words ‘family business” quickly, effectively, and positively cut through the information overload, clutter, and lack of attention that a Facebook, Twitter, Instagram, CNN, Fox News world creates. The world is awash in information, and smart phones are turning us into the sound bite, instant gratification generation. In this world, to get your point across, less is much, much more. The smart phone video app Vine would have us believe there are only 6 seconds of attention. What better message to send than that a family business cares and is run by a family — a family with a real name and actual family members. And the family business is here to stay — previous generations, this generation, and the next generation.

And just like at Mars, there are internal benefits to having a family business brand as well. Employees like knowing they are working for a family business. It means that the business cares about each of them as a person, is thinking about its employees long-term, and that the rules are determined by people, not some esoteric corporate office.

Back to the Myth and the Reality

The myth of family business is that many people, when they hear the term “family business,” think it means “small business.” And the term “small business,” to many people, connotes not enough resources to be reliable. And even if “family business” does not mean small, the myth would have us believe it means managed at the whims and fancy of a family, not by a group of professional managers. As such, family businesses can be reluctant to let the word out that they are a family business, much less promote it through their brand, for fear of feeding this myth.

The advisor should stress the reality that in today’s age of large and distant corporations, consumers like and trust family businesses. Moreover, getting a message through to customers, much less a positive one, is profoundly difficult in our information overloaded world. Brands enable customers to quickly understand who the business is and what it stands for. For advisors, working with a family business on creating brand awareness can be a complicated project, involving many constituencies. However, tying the concept of a family business to a brand drives a good message through the clutter and takes the image of the business to a place where the big box boys and faceless corporations simply cannot go.

About the contributor:

Henry HutchesonHenry Hutcheson is president of Family Business USA in Chapel Hill, NC. He holds the FFI Certificate in Family Business Advising (CFBA) and can be reached at henry@familybusinessusa.com.