Many businesses view "brand" as something important, but somewhat elusive when it comes to trying to measure its performance. The fact is that what is not measured is not managed - and as a result, organizations too often let the elusive value of brand slip right through their fingers.
Brand metrics help companies strategically grow their brands by
- Providing decision criteria to move them through a transition or architecture process;
- Providing an ongoing understanding of how a brand is performing both internally and externally;
- Helping to sustain organizational focus and communications;
- Helping to allocate resources more effectively on an ongoing basis.
Utilizing a well thought-out and balanced set of metrics drives objective decision-making and aids in the development of brand over time.
Laying the Foundation
Before brand metrics can be effectively applied it's crucial that management buys in and strongly supports the concept that brand should have a leading seat at the strategy table. Therefore, corporate strategy is driven or, at a minimum, heavily informed by the brand - from the sales process, to pricing decisions, and across all delivery and customer touchpoints of the company.
While this may seem like a tall order, a simple question can quickly illustrate this concept: "What are all of the ways that one of our customers or potential customers can form an impression of our brand, our company or our products/services?"
Once this question has been posed to management, there should be universal agreement that the brand must play a driving role in almost all functional areas of the business. Further, this process cannot be a quarter-by-quarter initiative. Management needs to endorse and set the direction of the brand to demonstrate that brand will be an ongoing priority. Tight linkage between the performance objectives of the organization and the performance of the brand will ensure that the brand is considered at the strategic levels of the organization.
Another key to successfully utilizing brand metrics is to establish standards and ensure consistency in gathering metrics. Potential standards include quantitative vs. qualitative methods, semi-annual reporting, minimum sample sizes, minimum confidence rates, and consistency in methodology across regions and stakeholder groups.
Characteristics of Effective Brand Metrics
One of the most commonly used, but highly subjective metrics is brand valuation. This metric creates a "snapshot" of the value of the brand at one particular moment in time, but falls short in its ability to assist with the ongoing management of the brand and the business. While it can provide some measure of worth that can be used as leverage in negotiations, it fails to meet the simple requirements of effective, SMART brand metrics:
- Strategic Alignment - Brand metrics must be aligned with the strategic objectives of the organization.
- Market-Driven - Understanding the root cause of a measure is necessary through the market's eyes, not the company's internal lens.
- Actionable - If a metric does not offer an answer to an action, don't use it. For a measure to be valuable to an organization, guidance for action must be provided.
- Repeatable and Consistent - If a metric cannot be easily replicated; it probably won't be. Therefore, a simple, repeatable metric provides the necessary consistency to create ongoing benchmarks and valuable measures.
- Touchpoints - Metrics should cover all aspects of the customer experience. The brand should take into account all of its touchpoints.
Smart organizations realize that they need to develop a much broader view of brand performance than brand valuation. They see the value in a set of metrics that measures everything from brand-driven loyalty to the brand's financial value, rather than relying solely on the valuation formula. Effective, SMART metrics enable companies to better manage their brands.
Examples of Effective Brand Metrics
Brand metrics can be split into two categories: brand image and brand impact. Brand image metrics measure the overall awareness of the brand; how important and meaningful it is; whether it is delivering upon what stakeholders value; and increasing a customer's purchase intent. Brand impact metrics are business measures that are an indication of the brand's role in driving the overall health of the business.
There are numerous types of brand image metrics, ranging from brand awareness and recognition to brand positioning understanding, to brand relevance and brand preference.
Each metric has a specific purpose and is tracked by asking specific questions of a target audience. The purpose of the brand preference metric, for example, is to measure stakeholders' preference for your brand relative to other brands and the degree to which they are willing to refer others to your brand or even become an advocate. Typical questions that a company may ask to track this metric include "How likely are you to continue to use brand x?" and "Given a choice, which of these three brands would you prefer?" and "Have you ever expressed how much you like brand x without being asked?" The answers to these questions as well as the other brand image metrics help companies develop rich profiles of stakeholders and their current perceptions of the brand, thus enabling them to tailor customer touch points accordingly.
While brand image metrics tend to be qualitative in nature, brand impact metrics are more quantitative. Sample brand impact metrics include market share: the percentage of total market dollars accounted for by your brand; price premium: the average incremental amount (percentage) your brand can charge over its nearest competitors; and share of wallet: the average number of your products/services your average customer buys relative to his/her total category spending. These metrics often speak most directly to management because there is a direct relationship between the measures and the bottom line.
Once a company has gone through the process of developing a set of brand metrics, it is useful to develop a brand scorecard. The scorecard synthesizes all of the selected metrics into one visual tool. This tool then serves as the dashboard by which to manage the brand. The value of this tool is that a company is able to quickly identify trouble spots and pinpoint actions to correct the situation.
The scorecard allows for correlation between the dollar-driving brand impact metrics and the softer market-driven impacts of brand image. For example, imagine a scorecard that features price premium as well as brand relevance. If the price advantage once owned by the brand is beginning to be eroded, what could be the cause? Check the relevance measure to identify if the brand is still valued and differentiated in the marketplace. If the value of the brand is no longer relevant, the price will surely suffer. This information helps provide marching orders for those responsible for delivering the brand to the customer.
The smartest companies today understand that a strong brand boosts revenues in a variety of ways, whether in creating a premium that allows for greater margins or in enhancing the public's acceptance of new product or service offerings.
These companies recognize that the brand is a strategic asset of the business and must be managed over the long term. If they fail to manage this asset carefully, the performance of the business will clearly suffer.
Brand metrics help management identify areas for improvement and detail the appropriate actions to get back on track. With the right set of metrics in place, an organization can focus on brand growth, measuring the brand's performance against the strategic plan, and more effectively allocating resources for short and long-term business impact. With brands performing at their peak, companies will discover that the organization as a whole is healthier and delivers more to the bottom line.