The Economics of Branding

The Economics of Branding

September 13, 2023

I often tell clients that what I really sell is clarity and perspective. Their response is usually something along the lines of Yeah, that’s nice. But how do I make money?


You need clarity about who you are (beliefs, values, fears and aspirations), what change you seek to make in the world (cause, vision, purpose), and what unique contribution you want to make to advance your cause (mission and brand promise).

Next, you need perspective to escape your egocentric trap because most businesses are a means to satisfy our ego. Some of us are seeking more money, bigger houses and faster cars. Others seek more freedom, more responsibility, or more autonomy. Even among the few who want to effect change in the world, most have a hero complex-- a longing for significance, recognition or a lasting legacy.

Personal ambitions and selfish interests are valid reasons to start a business. In fact, you could argue that without that personal pull, we would never start anything. But for our businesses to succeed, we have to escape our ecocentric trap because people don’t buy from us to fulfill our needs and aspirations. They buy to fulfill their own.

My work also focuses on helping companies intimately understand those they seek to serve (their ideal customer). They need to know their customers’ demographics (age, gender, income, geographical markers, etc). More importantly, they need to know their psychographics (beliefs, values, needs, aspirations, fears, insecurities, etc), because in an interconnected world, people no longer fit neatly in the same boxes marketers used to put them in.

With more clarity and perspective, the veil of competition is also lifted. Business ceases to be a zero-sum game. My clients come to realize that every company, like each individual, is unique. The need for differentiation, therefore, isn’t a search. It’s a realization.


Without competition as a distraction, companies realize that there are fundamentally two main criteria for success. First, you need a large enough group of people to want what you offer (product-market fit). Second, your business model should enable you to monetize your customers at a higher rate than you can acquire them (Customer Acquisition Cost).

Your CAC is the ratio between your marketing/sales costs and the number of customers you acquired in a specific time period. Without going into great details, to accurately understand your CAC it’s important to know three things:

  • The costs associated with acquiring a new customer—including salaries.
  • Your conversion rate: the ratio of new leads that become paying customers.
  • The amount of money each customer generates in a year—customer lifetime value.

infographic courtesy of
infographic courtesy of

Branding can not only help you achieve product-market fit, but it also helps you improve your Customer Acquisition Cost (CAC).

Customer Acquisition

When a company is clear about who they are and who they seek to serve, they are able to earn the attention of the right potential customers by speaking directly to their needs and aspirations. This kind of attention usually translates into lower advertising costs, shorter sales cycles and higher conversion rates-- all of which contribute directly to improving your sales and your CAC.

Customer Retention

When your company finds its soul, you are able to attract the right prospects and repeatedly deliver on your brand promise, which makes customers happy. And happy customers turn into repeat sales. As customers keep coming back, revenue increases and the acquisition cost for those existing customers is zero.

Customer Advocacy

The ultimate prize of branding is customer loyalty. Loyalty yields repeat sales, but it also means advocacy. Loyal customers leave glowing reviews and share testimonials that help convert potential customers better than the most skilled salespeople. Furthermore, your most loyal customers tell their friends, who in turn become customers. Lastly, customers acquired through referrals also cost close to zero dollars for the company, thus considerably improving your CAC and your bottom line.

Ultimately, when we escape our egocentric trap, we realize that the purpose of every company is to improve the lives of those we seek to serve. Success in that endeavor hinges on earning three things from those whose lives we seek to transform: attention, trust and loyalty. And money? Well, it’s proportional to the value you create in the world.

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