Knowing the difference can have a big valuation impact when you sell your business
If I asked you to name the brand names that come immediately to mind when I mention commercial airlines, you might reply with American, United, Delta and Southwest. In this answer, you “recalled” these brand names as they were top of mind for you. Then if I asked, have you heard of Alaska, Frontier or Allegiant, you might say yes, which means you “recognize” these brands but they weren’t top of mind. Building your company brand to be “recalled” can be the difference between an ok exit event one day versus achieving a euphoric one.
So ask yourself, if someone asked a target customer in my market sector about the brands that they “recall” pertaining to the products and services we provide, would they recall ours? If no, would they “recognize” it when our brand is brought to their attention? If you are unsure, might be an opportunity to do some market homework about your brand. If the answer is yes, discuss with your team how to protect and nurture this great brand position you’ve built in the market. If the answer to being “recalled” is no, brainstorm with your team how to address this.
Ask any third party acquirer if they generally see more value in “recalled” brands versus “recognized” and the answer will be a resounding YES. This is because a recalled brand has invested successfully in capturing the heart/mind of a target customer and that will benefit future growth. Now of course the built-in assumption here is that the customer’s recall is a positive image of your business and if not, this also gives you an idea of identifying steps your team should be taking to leverage the good news of being recalled, but improving the image.
This is a great topic to discuss with your team. The difference between recall and recognize can be very impactful to the valuation you might receive one day from a third-party acquirer. Use time as a friend to know where your company/brand stands in this regard and begin taking steps to either protect it or build it.
