The US Engineer W. Edwards Deming once said, “just because you can measure everything, doesn’t mean you should”. In other words, if you’re training to run a marathon you would be interested in measuring your time and resistance, and not in how much you can bench press. Only by knowing what metrics are relevant to track your improvement, can you define an effective workout and reach your goals.
The same goes for brands. If you want to be able to improve your brand strength, you need to know what to measure and how to measure it. This is what we call finding the right KPIs. Most companies we meet struggle with choosing the right brand measures. They often rely on too many metrics (falling into the trap W. Edwards cited) and end up having too much data without a clear direction.
So how do you identify which are the right metrics for your brand? Let us guide you through four different approaches which brands can use to identify which KPIs are truly relevant for them to drive growth.
1. The core metric
Through brand tracking we can identify one or a few core KPIs; among the most common Salience, NPS, Affinity, Preference. There are several frameworks that can be used when selecting these KPIs – such as Aaker’s, Keller’s, or Sharp’s – but the main criteria is to evaluate external effectiveness and internal actionability. You need to know that improving the selected KPI will give you the benefits to business you desire and the required actions to improve it.
Relying on one selected KPI based on brand tracking has multiple benefits. Nailing your core measurement system provides clarity to the business and a direction for progression in the future, on top of that measuring too many operational KPIs has a cost. By using fewer KPIs insights teams can invest their time in showing the value of the data and insights they generate. Fewer KPIs reduces operational costs, meaning budgets can be reallocated across the business to drive action based on findings.
This is the most straightforward approach. However, its simple nature only focuses on one part of the picture and might not provide you with a holistic view.
2. The ultimate metric
This is an aggregated approach where multiple measurements are combined into one index. Through this approach you can identify one brand index based on several brand tracking metrics – such as centrality and distinctiveness – that can be used across markets and categories. These indexes are based on a combination of different KPIs and provide a holistic concept, supporting one common view of development.
If identified correctly, the same index can be used across markets and functions. Attentions will automatically be focused on the weakest metric, for each market to get the best effect on the total index, which often leads to the correct priorities.
3. The growth metric
American business magnate Warren Buffett once said that pricing power is “the single most important decision in evaluating a business”. Using an equity based KPI allows you to understand how your business’ activities connect to financial performance, a connection which is essential for making business decisions that drive growth. Our third approach measures pricing power as Willingness to Pay, which evaluates consumers’ willingness to pay a higher price for a product or service versus the competition through Choice Based Conjoint. By using WTP, sales are related to market share, guiding, and validating all brand building efforts directly to business growth.
It’s easy to connect this KPI within the organization. It is often beneficial to complement the WTP KPI with a more sales oriented KPI, such as market share, to measure short term financial effects of communication as well.
4. The engagement metric
Engagement can be based on different variables: word of mouth, mentions, likes, follows, shares, comments, click-throughs, organic search, website visits and so on. By tracking and combining these different elements you can obtain your engagement KPI.
This approach gives you direct access to consumers and immediate feedback. However, it isn’t the most accurate KPI as it’s based on so many channels, so it is best used in combination with other KPIs. At Nepa, we’re developing a Brand Health index using Primary Dynamic Factor Analysis, which can identify the underlying pattern of change in several measurements, removing the “noise” in the data to uncover actual brand development.
Ultimately, if you pick the wrong KPI for your brand objectives or too many KPIs to keep track of, you won’t be able to measure whether your strategy is effective or not. You won’t see the result that you’re expecting to see. But by training the right “brand muscle” and keeping track of your improvements you will be able to reach your end goal.
By Robert Beatus, Head of R&D at Nepa
Want to know more? Contact us today and our brand experts will help you!