A brand is ... an asset, an emotion, a promise, a business. 

Yes, we all GET it, however I think we can easily FORGET it! If you are not adding financial value to your brand then the game is lost.  

In this blog, whether you’re in brand comms or brand marketing, you’re a brand owner. I just want you to stop for second and think, “is all this ‘stuff’ we’re doing really directed towards adding financial value to the brand to which we’ve been entrusted?”

My Conclusion:

Unless you can with some confidence say that your team’s activities are adding new users, more usage, finding new uses, trading-up, switching into, or contributing towards better margins, for now or in the long term, then stop and reassess. Brand owners have a mandate to leave a brand better off that what we inherited and if we strive for metrics that have impact on top & bottom line, your credibility with the MD, CEO or CFO’s will also improve. It’s a call to be commercial marketers.

What I Found Out

I know that there are lots of metrics around brand equity. The Brand Asset Valuator (Y&R), Interbrand’s Brand Valuation Model, or your own bespoke methods can be helpful tools, but if a brand is an asset, just like your house, then financial growth is of paramount importance – no one likes a depreciating asset, especially the Finance team and you shouldn't need complex research methodologies to work it out.

I also that get that different markets have different metrics. So if you are in B2C vs. B2B or an impulse purchase vs. a considered purchase, goods vs. services, the metrics you measure will be different. But in the end all need to drive towards improving revenue and profit margins for now and the long-term. Many marketers I talked to are using net sales growth or market share (value or volume depending on their industry) as foundational objectives, very few are using “contribution margin” and “margin %”, and increasingly, we see more softer metrics around “engagement”, “followers” and “likes”. I contend that, unless a metric can be positively linked to financial performance, don’t measure it. Furthermore, I think that they need to be impactful in the short term without ruining the long term.

I understand there are lead indicators, and that sales and margin outcomes often have multiple causal factors and that consumer behaviour is not fully measurable, but if we are to be taken seriously, then we should try to put some diligence around selecting those indicators that do have a positive impact on financial performance. It also goes without saying that brand growth can be bought in the short-term - incentives, price discounting and the like, can drive immediate metrics – so I’m not talking about the quick-fix. Such tactics may play a strategic role, but to be sustainable, long term value cannot be simply bought; it needs to be built and earned.

Here are some ideas from my conversations that may be worthy of consideration:

  • Look for measures that track customers through the key touch-points of the path to purchase, from consideration through the decision/buying process, right through to sales conversion if possible. By doing so, you may be able to identify which part of the process needs most marketing investment for the best return.
  • Trial and repeat data is gold helping you understand if your investment needs to drive greater users or usage. This could include penetration into new or expanded channels. Ask yourself, what activities can I undertake to gain new distribution slots or new ranging? How can we get customers to buy one more? With some good assumptions behind these questions, marketing cases can be built.
  • Switching analysis. Are you sourcing from near competitors or competitors satisfying a similar need? Ask, as Clay Christensen (from Harvard Business School in his ‘milkshake marketing’ article ) suggests, “Is my product or service doing the job it was hired to do?” Does my product or service offer need to adapt?
  • Conduct trend/normative analysis. Looking for past activity, or current activity to see what specific or suite of activities have out-performed against the norm, and if you don’t know find out.
  • Activate your brand using test or control markets where the ‘noisy’ variables are equally accounted for and the real value return of your activities can be better evaluated.
  • Conduct marketing mix modelling or testing to see which elements of spend generate the best returns.

Quite possibly you may need to fight on a couple of fronts, so prioritisation is called for. Sometimes you may need to engage these activities just to maintain brand value, but whatever you do (and I’m sure you know more than I have listed above) look for compelling rationale that suggests, if marketing funds are invested, a positive financial return will result and the brand will be better off.

In my 20 years’ experience, it’s actually not surprising that Marketing and Finance metrics should work together. The stage & gate process for NPD and Innovation product/service launches is founded on marketers understanding finance and working cross-functionally. Solid projections, good research, cost and pricing assumptions, strategy and collective intuition, all make for a rigorous process. Crikey, we even get to talk about Net Present Value! Great questions are asked and answered during this process. I don’t think it’s acceptable to say that Product X’s sales will be $1M without articulating and being transparent regarding the assumptions on which that projection is made. I personally think Finance folk ask good, helpful questions and yes, there will be gaps and grey areas where Marketers engage instinct or past learning, and that’s OK, just be clear about it, defend it and show leadership for change. Equally, I should say that Finance would be wrong to say, “No, we can’t afford it”, or, “that won’t work” without looking at some solid evidence presented by their Marketers and being prepared to make decisions on the balance of probabilities.  So let’s not take off the finance hat post the stage & gate processes, rather, as products and brands move through their lifecycle, let’s continue being accountable for growing the brand franchise.

So what?

  • Measure and chase metrics that you are reasonably confident will be additive to brand/category value.
  • If your key brand reporting measures cannot be linked to financial performance, change them; don’t let spurious non value-adding measure determine your brand investment.
  • If you’re not sure what drives the financial engine, conduct tests, trials, research, or mine internal information sources to find linkages that give the confidence you and your leadership team require.
  • Once identified, spend  against these value-adding metrics, not ‘soft’ metrics.

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