Our last blog talked about the need to streamline the KPIs your business measures to cut out the overwhelming noise of data and make communicating insights across your business less complicated. So, what is the best KPI to measure and communicate to help keep things simple and maximise impact?
Nail the right KPI
At Nepa, we believe it is essential to measure Willingness To Pay (WTP) over alternative KPIs to gain attention from senior internal audiences – and achieve business growth. Whatever brands, the media or most market research consultants say, there is no “one size fits all” KPI. One measurement system will never answer every question that you have about your brand’s performance. For example, in certain industries, WTP is not the most effective measurement as it can be too abstract for respondents. In these cases, we have an analysis process to identify which KPIs to use to drive sales volume and pricing power. WTP, however, provides key information and talks the language of the C-suite because it is clearly tied into your brand’s financial performance.
A KPI focused on growth
Using an equity 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. The Willingness to Pay KPI evaluates consumers’ willingness to pay a higher price for a product or service versus the competition. It quantifies brand and business into one holistic measure. By using this approach, sales are related to market share, guiding and validating all brand building efforts directly to business growth. It is often beneficial to complement the WTP KPI with a more sales-oriented KPI, such as market share, to also measure short term financial effects of communication.
A KPI that gets insights teams heard
Moreover, using a financial measure will help to gain engagement internally, particularly with the C-suite. Our previous blog discussed the importance of using a single KPI to increase C-suite engagement, but their attention will be captured even further if the single KPI you use is linked to the financial performance and growth of the business. Using a financial KPI ensures you’re talking the language of senior management and positions the insights team as an essential component of important business conversations about the future of the organisation. When insights teams are increasingly fighting for opportunities to drive real change in the business, you can’t afford to ignore this fast track to influencing senior figures in the business.
KPIs that don’t always paint the full picture
Alternative top line measures such as Net Promoter Scores and awareness metrics provide valuable information, but they don’t show how increasing recommendations or conversations about your brand directly link to the financial performance of the business. This means they’re less relevant to senior directors who want to see that vital connection between marketing activities and revenue. Net Promoter Scores, for example, provide businesses with a simple score from 0-10 of how likely a customer is to recommend a product or service. The ability to track how enthusiastic customers are overtime is useful – it can help identify areas in which services or products can be improved. However, used as a single stand-alone metric, this score has little value. It doesn’t explain how an increase or decrease in number of recommendations will directly impact business growth.
Likewise, brand awareness scores mean very little when taken on their own. The data might show that very few people are talking about your brand, either because you have low brand awareness, or because your company sells a product like washing-up gloves, which are not a common topic of conversation among consumers online. To put brand awareness metrics into industry context, share of voice metrics are key. These measure the proportion of a conversation that your company is dominating, compared to your competitors. This should be a KPI that your insights team considers tracking, but it’s not the KPI that will deliver the most meaning to the broader business on its own.
It’s easy to feel under pressure to report on every metric available to you. But business impact does not result from flooding your organisation with data. While it’s important for the insights team to measure a variety of metrics to gain a holistic view of the business, the C-suite will benefit from only hearing the most important information to support informed business decisions. By cutting straight to Willingness to Pay – a KPI linked to brand equity and hence financial performance – the C-suite will receive an important reminder of the value the insights team brings.
By Robert Beatus, Head of R&D Nepa
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