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Holistically Measuring Brand Experiences

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Holistically Measuring Brand Experiences

It’s advisable to adopt a holistic approach when measuring brand experiences. This entails obtaining employee, brand and financial metrics before, during and after your brand experiences have been built.

Adopting a holistic approach to measuring brand experiences delivers a number of benefits. Your measurement will have balance because you’ll be collecting short / long term, internal / external and hard / soft measures. It will also help you demonstrate, in no uncertain terms, the value brand experiences deliver to your Organization. By obtaining employee and brand measures you’ll be well placed to take any necessary pre-emptive action before financial performance suffers.

The Dangers Of Focusing On Purely Financial Metrics

Chief Marketing Officers are under relentless pressure to deliver against short-term financial targets such as sales, profit margins, earnings before tax depreciation and amortization. To a large extent this goes with the territory because CEOs need to deliver financial returns that satisfy investors and other stakeholders with a financial interest in the company. But financial metrics are only one piece of the brand experience measurement puzzle.

Very successful companies need to be extremely focused on forward-looking indicators. I often jokingly say that in business we all drive cars where the whole windshield is a rearview mirror. And we have only a small opening somewhere in that mirror surface through which we can look forward. That’s because, in general, we are so focused on the historical numbers that we have little ability to look forward. None of our neighbors, in their right mind, would want to drive such a car, but we run huge businesses with exactly that approach. It doesn’t make any sense! ’ ~ Risto Siilasmaa, Nokia Chairman

Financial Metrics Are Retrospective

We all need to learn from the past but those responsible for brand experiences cannot be guided by history alone. If last quarter’s sales are down you can’t do anything about that now. You can shout, scream, kick and cry but what’s happened as happened.

This contrasts with employee and brand metrics which are forward looking or ‘leading’ metrics. If, during the last quarter, the number of customers willing to pay a 5% price premium decreased by 10%, this will translate into revenue decline during subsequent sales cycles (all other things being equal). Similarly, if employee engagement is dropping it’s likely this will adversely affect financial metrics later down the line (all other things being equal).

But it’s not all bad news. This ‘lag effect’ means brand and employee measures can act as a brand experience crystal ball that can prompt pre-emptive action before financial performance suffers. For example, if a customer’s willingness to pay a 5% price premium slides you may time to change that attitude before they buy again. Or if employees become less engaged you may have a window of opportunity to do something before that translates into an action that has financial repercussions such as being disinterested in a customer enquiry.

‘Typically, brand equity scores take 12 [to] 18 months to really show improvement, sustained improvement… We are beginning to see improvement across most of the brand portfolio. And I think as the quarters go on, you’ll see even more benefit and that will then translate to higher value share … We’re watching this virtuous circle very, very carefully, and making adjustments as we go along.’ ~ Pepsi-CO CEO Indra Nooyi

Financial Metrics Are Short Term

Even with advanced econometric models it is hard to predict performance beyond a few quarters (at best). This perspective is diametrically opposed to the strategic mentality that needs to underpin brand experience building. Building brands takes times. Delivering experiences that bring those brands to life also takes time because it’s a cross functional endeavor. This means brand experiences are not a short-term play, so why measure them with short-term metrics? but as the highly influential research of Les Binet and Peter Field has shown is detrimental to building long-term brand value.

Financial Measures Tend To Have A Return On Investment (ROI) Focus

With a longer-term initiative such as building brand experiences it is difficult to directly attribute return to investment in the way you can with short-term activities such as sales promotion or an email marketing campaign. This is why short-term social campaigns are so popular. They have clear cause and effect. They also require less patience.

The longer time horizons involved in building brand experiences blur the line of sight. If you meet someone that can say for $x brand experience spend you’ll get $y revenue they are a braver person than me.

Obtaining Employee, Brand And Financial Metrics

Instead of concentrating purely on financial metrics, when measuring brand experiences it’s better to obtain a holistic suite of baseline measures which have been agreed to by key members of your team, build brand experiences then continue to measure again at predetermined intervals. Doing this will help you establish, in no uncertain terms, the benefits your brand experience endeavors deliver.

The measurements should span employee, brand and financial metrics. Employee metrics could include employee engagement, advocacy, relative satisfaction or wellbeing. Brand metrics could encompass data on brand salience, relevance or your ability to charge price premiums. Financial metrics include data such as sales or profit margins.

A holistic approach can be considered balanced because it includes:

  • Hard (financial) and soft (brand / employee) metrics.
  • Internal (employee) and external (brand and financial) metrics.
  • Short (financial) and long term (brand / employee) metrics.

Taking a more holistic and balanced approach to brand performance measurement is advocated by leading researchers. I always encourage clients to follow this approach because:

Employee Metrics Drive Brand Metrics And Vice Versa Via Brand Equity And Your Employer Brand

‘Clients do not come first. Employees come first. If you take care of your employees they will take care of your clients.’ ~ Sir Richard Branson, Founder of Virgin Group

If the employee comes first, then they’re happy… A motivated employee treats the customer well. The customer is happy so they keep coming back, which pleases the shareholders.’ ~ Herb Kelleher, Founder South West Airlines

Employee Metrics Drive Financial Metrics

Figure 1 paints an interesting picture for the influence employee metrics have on financial performance.  Even the most die-heard, skeptical CFO would struggle not to be interested in these figures.

Employee Engagment And Financial Performance

Figure 1: Employee engagement and financial performance, Towers Perrins (now Willis Towers Watson, 2009)

Brand Metrics Drive Financial Metrics

The relationships between employee, brand and financial metrics are nuanced and complex. The nature of the industry, Organization size and other factors drive financial performance so when it comes to non-financial metrics one size doesn’t fit all. To start out with you need to identify a small number of key metrics relevant to your organization, explore their relationship with key financial metrics, monitor, learn and iterate where necessary.

However, the underlying principle is clear. If you want to understand how to drive financial performance you need to start with carefully selected employee and brand measures and focus your efforts there. If these improve your financial metrics will also improve. Conversely, if employee and / or brand metrics drop, you have time to rectify the situation before they adversely affect financial performance due to the ‘lag effect’ associated with these metrics. The challenge is to identify the key employee and brand levers for your market, and this is where senior executive experience and external advice comes in.

Obtaining a suite of balanced baseline measurements before you start building brand experiences and then at predetermined intervals is also advisable as part of a holistic approach to measuring brand experiences. Doing this will help you demonstrate, in no uncertain terms, the value your brand experiences deliver. And when it comes to talking with the c-suite, there’s no harm in that.

Contributed to Branding Strategy Insider by: Dr. Darren Coleman, founder and Managing Consultant at Wavelength Marketing. Excerpted from his new book Building Brand Experiences ©2018 with permission from Kogan Page Ltd. Download the first chapter of Building Brand Experiences for free here.

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