Keats’ Negative Capability has no place in the modern world of brands… ’you can only manage what you can measure’ and the ‘bean counters upstairs’ that Linds Redding referred to in his ‘Short Lesson in Perspective’ have found that a strong brand adds ‘tangible’ value to the bottom line of their balance sheets…but:
How do you measure a brand’s value and strength? Are they the same?
How do you know if you’re doing it right?
This is the final post in a trilogy:
- The first post discussed: What a brand is and its importance to the growth of your business?
- The second: Building brand associations in the mind of your audience and now we will discuss how to measure your success
This post will discuss various methods of measuring brand strength according to the different lenses we might view a brand through: Financial, Consumer, ESG (Environmental, Social & Governance) & Meaning. This is not an exhaustive list but captures some of the traditional and more recent brand measurement points of view.
Strong quantitative results from the list below give an indication of a healthy brand from a financial point of view.
- Market share
- Price sensitivity
- Marketing investments
- Growth rate
- Cost to acquire new customers
- Cost to retain customers
How else can we understand a brand’s strength?
In previous articles we have established that a way of defining a brand is ‘the collection of associations in the mind of your customer/target audience,’ so it makes sense to try and understand what associations they hold through measuring:
- Awareness and knowledge of the brand
- Social engagement
- Reach & Influence…amongst many other customer focused metrics
Ethics and provenance
Customers are becoming more thoughtful about the provenance of their purchases…
“50% regularly factor in the ethics of a company before making a purchase, 31% are happy to spend more to do so” Via @GlobalTolerance
However, it’s not all about the customer and shareholders any more you’re accountable to a larger stakeholder group.
Environmental, Social & Corporate Governance
The FTSE4GOOD index:
The FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. In the race to establish dominance in the ESG measurement standards war FTSE have developed their tool for measuring a company’s progress against Environmental, Social & Corporate Governance goals. Also this does not measure what the customer/employee/partner/client actually thinks of a brand…the results of a measurement tool like this must be clearly and succinctly communicated to stakeholders to be able the measure the ‘brand.’ A great tool for measuring quantitative facts but perhaps not applicable to the more ‘grey’ elements of a brand – meaningfulness and purpose.
Meaning and Purpose are becoming progressively more important concepts for us as individuals and therefore brands. In a world of consumerism and ‘stuff’ we are looking to brands to provide us with less tangible benefits such as education, motivation and emotional benefits. Havas Media define a Meaningful Brand as one that ‘focuses on improving society and on making our lives easier and healthier.’
Havas Media have created their own index for measuring brand strength based on this precise concept. It measures the potential business benefits gained by a brand when it is seen to improve our wellbeing and quality of life. The Meaningful Brand Index.
They have spoken to over 300,000 people in over 36 markets to reveal that:
- Meaningful brands on average gain a 46% share of wallet
- Meaningful brands outperform the stock market by 133%
- Meaningful brands deliver 100% more KPI outcomes
They rate the brands in three categories:
What is the brand doing for me?
What is the brand doing for the community that surrounds me?
Despite what looks on the surface as a great indicator for measuring a forward thinking, social and meaningful brand there is a lack of transparency and accuracy around the definition of a ‘Meaningful Brand’ and unfortunately again since the study is based on consumer perception it is perhaps not the best indication of a truly meaningful brand. A brand might be truly meaningful but poorly communicating the effects of their actions hence leading to a poor and undeserved score.
Havas say that their meaningful brand index is created as follows:
- It is our core metric that gathers together the results from the overall framework
- It measures brand strength in terms of meaningfulness and measures the quality of the outcomes people perceive each brand is delivering
- It contains all the drivers (market outputs, personal outcomes, collective outcomes) that contribute to explain a brand’s meaningfulness
- It considers 13 dimensions (one is marketplace and the other 12 are wellbeing (7 personal, 5 collective) all weighted equally
Unfortunately since the study is consumer based it lacks the weight that the FTSE4GOOD index has as an external, objective standard. Brand reputations are transient being based on subjective opinion and media portrayal. An index based on a transient set of ‘criteria’ is perhaps not the best model on which to ratify the meaningfulness of a brand.
Also the model does not take into account the perception of employees or of suppliers, partners or clients…Employees’ perceptions are a hugely important indication of a brand’s strength and in our humble opinion a key indicator of not only the meaningfulness of a brand but a brand’s value.
However if we define a brand as solely the collection of associations in the mind of a customer or potential customer this might plausibly be a good measure of a brand’s strength…
So what does this all mean?
Defining the roles and responsibilities of companies is an ever evolving process and the ‘newness’ of this discipline means that there will be iterations of models before we get to a place where we can define what a meaningful brand is.
How you measure a brand’s strength is highly dependent on what your purpose is for measuring it in the first place. Are you trying to understand its monetary value? Are you trying to understand performance aligned to a certain set of social/environmental criteria and within that, whose criteria are you measuring against? Is your brand confined to associations in a customer’s mind or does it extend to financial worth, lines on a spreadsheet or your responsibilities as a globally minded business?
Brands need to think beyond increasing shareholder value and customer satisfaction, they must take a lead in determining the standards and then embed behaviours throughout their operations that result in meaningful, measurable outcomes.
Aspiring to a perfect set of criteria may not be possible or plausible but in my opinion Patagonia have an honest and striving approach to becoming a valuable and strong brand. Read more about their approach here