Fifty-three percent of the 153 senior corporate executives who were recently surveyed by Fortune Magazine Marketing said their principal name-or brand-was worth over $1 billion to the company. The median value placed on the brands was $5.3 billion.
To create a corporate brand is to create a perception, a perception that leads the customer to believe that a company-and the products and services it offers-are worth more than its competitors.
And, though creating a new brand is a monumental challenge, American companies continue to do it with increased frequency. In 1994, there were 11% more corporate name changes than in 1993, with 56% occurring from mergers. And 1995 seems on track to beat that record, with financial services, communications and my industry, healthcare, leading the pack.
Why healthcare? First, industry consolidation in pharmaceuticals, managed care and hospital systems is creating a need to quickly establish a new and powerful marketplace identity that positions the merged organization to grow at an accelerated pace, without losing the equity that existed prior to the transaction.
Second, and particular to managed care, many entrepreneurial companies that grew very quickly in the "go-go" period from 1985 to 1993 had not paid much attention to their corporate brand, and find it lacking as a competitive weapon in today's tough environment.
Third, the trend to joint ventures and alliances between two or more partners has necessitated the creation of new brands.
There's little disagreement that a strong corporate brand helps customers, employees and consumers understand and relate to a company's mission. But how do you successfully manage a corporate brand change to get maximum value with acceptable risk? Based on my experiences in handling this process for a newly merged managed care company, I believe there are seven keys to success:
Foremost is the need to clearly communicate the reasons for the change and the benefits it will offer to customers and other external audiences, not just the company. It's not enough to say you will now have more offices in more places and an expanded line of products and services. You must make a compelling case for value added, and do it in terms customers and prospects will relate to direct benefits.
The new corporate brand must be joined at the hip with a distinct positioning that captures your company's attributes clearly and effectively. Easier said than done, I recognize, but essential in a complex, cluttered market. It's nice to talk about a health plan that offers choices; it's more convincing to show consumers how you'll help them make the right choice for their individual situation.
The cultural implications of a brand change must be addressed, even if it means challenging long held beliefs and affiliations. At our company, we are bringing together an entrepreneurial managed care business with a more traditional group benefits company, and using a new brand, called NYLCare. To succeed, we must meld entrepreneurial spirit and stability into a new $2.5 billion entity, and communicate it persuasively to the outside world. We have learned that bridging internal barriers is imperative if you are to make your employees true ambassadors for the new corporate brand.
Seize the opportunity to bring about a larger sense of change. A new corporate brand is a sure signal of transformation. In communicating it, you must use the opportunity to achieve positive organizational progress quickly-the kind of progress that's required to deliver on the company's new promise to customers and the marketplace.
You must move quickly and decisively if the new corporate brand is to succeed. The window of opportunity will stay open no longer than six to 12 months before first impressions become firm opinions. During this period, it's important to remember that the owners of the world's best-managed brands focus on building the brand, not promoting the individual products or services. As much as possible, you should do the same thing during the introductory period for a new corporate brand.
It is critical that you use the interest generated by the name change to establish, re-establish and cement relationships with your key audiences. A new corporate brand is an excellent opportunity to communicate consistently and face-to-face with customers, prospects, regulators and others, and create a dialogue.
Make certain management understands the cost of creating and supporting a new corporate brand. In managed care, the bar is being raised each year as health plan marketers invest heavily. The top 10 national players spent $103 million in measured media alone in 1994, a 50% increase over the prior year, and roughly 65% of total managed care category spending. The lesson: Don't try to build a new corporate brand if you don't have the resources to protect your existing equity and build a new position.
Creating a new corporate brand is an enormous task that cannot be accomplished in isolation, or overnight. Success demands a coordinated and carefully implemented plan that unfolds over time. But the rewards-a real understanding of the company's culture and mission-are well worth the effort.
Mr. Rosen is senior VP and chief marketing officer of New York Life/Sanus, a health benefits subsidiary of New York Life Insurance Co. The company is in the process of changing its name to NYLCare in 1996.