Does a Good Brand Really Make Dollars and Sense?

By Laurie Donohue

Brand can be a “squishy” subject — it’s not concrete like product or overhead. With those you can attribute a certain cost and a definite return on investment. If you hire a new producer in an insurance agency, you know you’ll have overhead, but you expect that producer to bring in enough new business to cover the costs, and more. If you offer a product, you know what you’ll make in commissions.

With brand, you can see some of the costs — training, marketing, advertising, etc., but it’s often hard to quantify the impact on your bottom line.

We’ve all seen how a negative blow to a brand can impact the profitability of brands — just think Toyota, Tylenol or BP. But to the typical insurance agency, it can sometimes be hard to see the value.

Here’s something to think about: According to Hales & Company, a leading advisor in insurance merger and acquisition (M&A) services, a strong brand increases the agency valuation multiple by 100 basis points or more than an agency without a brand.

That means that if you’re looking to sell your agency, its value is significantly higher with a strong brand. The potential buyer is willing to pay more because your agency is more profitable and has a brighter long-term outlook.

Strong brands aren’t just the domain of large corporations. They directly impact Main Street businesses as well. What are you doing to improve your brand positioning?