Intangible Assets are More Valuable Than Tangible Ones, or Why Beer’s Better Than Coffee

“You’re insane, Mark,” my old schoolmate and multi-millionaire buddy told me. “I’m a successful businessman and you can’t convince me that intangible assets are more valuable than tangible ones. I’ll take real estate, equipment, inventory, and cash over ideas, experiences and influence any day! You’ve been living in California too long. Your brain’s starting to fry.”

Tired of reading already? Click here- LISTEN TO THIS ARTICLE. Now when Mike spoke, most people in New Jersey listened. He owned and operated the Budweiser distributorship for the state. To those unaware of the power of an exclusive alcohol distributor, let’s just say it’s a tad more profitable than being able to print your own money.

What makes my buddy’s success even more exasperating for me is that he wanted me to be his partner after high school. But Noooooo not me. I had to go to college and be the “smart” guy. Yet, despite our economic disparity, we are still pals.

“Ok Mike!” I asked him, “what do you suppose is the ratio of tangible vs. intangible assets for say or Yahoo or even Microsoft?”

He looked annoyed now. “Alright techno-nerd, maybe you have a point with those cyber companies, but what about in the real world?”

“Go ahead and name a company,” I asked.

“Here’s one you Californians know and love. How about Starbucks,” he challenged.

“Ok, they have lots of prime real estate as well as equipment, inventory and cash. But what do you think is worth more to them: these tangible assets, or their customer traffic? Or how about the ideas for leveraging that traffic in order to launch nearly intangible products like the latest obscure coffee concoctions they dream-up? Or the ability for customers to make their own CDs with the new Hear Music kiosks or the wireless high speed Internet connectivity? Isn’t Starbucks really selling an experience, ideas for a cool new lifestyle, a place where people can influence and be influenced? Isn’t it more about the “experience” than just the coffee?”

“Alright, alright, coffee’s for wimps anyway. Have a beer,” Mike goaded me as he handed me a Bud long neck. He still knew how to win an argument.

Carving Out a Piece of Your Life
Maybe you’re like Mike. Not yet ready to believe that the age of market share has past. Perhaps you think that it’s all about mind share. That is how aware people are of your company, product, or service.

Let me remind you that Starbucks isn’t vying for more of the coffee market. Nor do they care if you remember their name. As long as you dig the “experience” in the store. As long as you and your friends like to meet and hangout there. That’s what they’re really after. When that happens, they’ve won more than a greater share of the coffee market. They’ve gone beyond raising their top-of mind awareness. They’ve infiltrated your life. They have literally motivated you to carve out a piece of your life for THEM! They have gained greater heart share.

Today winning “share of heart” is far more critical than winning share of market or share of mind. “Market share” has been described as the proportion of industry sales that is controlled by a company. “Mind share” on the other hand is a measure of how people perceive the product, service, or company as compared to the competition.

“Heart Share” is the measure of the extent to which we make ourselves more desirable to the people that are most critical to our success. Not by the quality or even the economic value of the products or services but rather in the “way” we provide them. Market share focuses on the size of the market. Mind share focuses on the perception of the brand. Heart share focuses on the intangibles in the relationship.

Posted in Relationship Management, Uncategorized.

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