Branding KPI's: 5 metrics to measure your brand equity
It’s a question that we, in the impervious and un-calculable world of branding, are asked regularly: “how do I measure the strength and value of my brand?” To be clear, this is a logical question. Every brand owner is eager to make reasoned choices, to make decisions based on crystal-clear figures and to bet on a particular strategy without gambling. But branding is not accounting and even less is it an exact science. Building and maintaining a strong brand is – to the regret of those who would prefer otherwise – often a matter of gut feeling, intuition and understanding customer relationships.
Unfortunately, measuring a brand in an objective way is virtually impossible. Not only do endless variables come into play, but the subjective and unpredictable thinking of the target audience and the often very specific context of a company and the sector in which it operates make objective and academic measurement challenging. However, this does not necessarily mean that there are no metrics or key performance indicators to keep an eye on as a brand. A range of methods and tools do exist, from simple to very complex, to quantify how well your brand is doing in certain sub-aspects such as marketing effectiveness, brand awareness, ambassadorship readiness and return on investment. We will walk through some interesting metrics and get you straight to the tools to help you measuring and monitoring.
Awareness and consideration
Brand awareness (whether helped or not) and consideration (willingness to buy) are two classic marketing metrics that are interesting to gauge how your brand is performing. The first KPI looks at how well-known a brand is by questioning how easily a target audience spontaneously mentions it when asked about a particular sector, service or product. There is also the aided variant, which asks the opposite question and probes for familiarity and associations with a brand and any direct competitors. Awareness is best measured in a classic, quantitative survey with a large, representative group of respondents.
When polling for consideration, this type of survey can also be used as a measuring method, but as this is about gathering insights into people’s willingness to buy (and thus their motives to do so), a small-scale qualitative study is often just as interesting. A focus study, for example, can offer in-depth insights into why people make decisions and create preferences. Feel free to contact us to find out how you can relevantly survey your target audience using surveys and focus studies.
pro's for this KPI
Surveying your customers (preferably on a constant basis), both quantitatively and qualitatively, can only be encouraged. By regularly sounding out the opinions and motives of your target audience, your brand keeps its finger on the pulse and can spot trends that may be important for customer experience and satisfaction.
cons for this KPI
Market research should always be taken with a grain of salt. Respondents sometimes respond in a socially desirable way, take part for the sake of an incentive even though they are not representative or sometimes do not know exactly why they feel the way they do. There is also sometimes bias on the researcher's side; after all, you can always prove everything with numbers.
NPS - Net Promotor Score
An NPS or Net Promoter Score can be used to measure how inclined customers are to recommend a brand to others. NPS is known to be quite a strict KPI, given that only scores of 9 and 10 on a scale of 10 are considered good. Scores of 7 or 8 are considered “passive” and thus unlikely to be ambassadors for a brand. Scores of 6 and below are described as critical and thus at risk of poor word-of-mouth marketing.
You calculate an NPS for your brand by asking a representative group of customers how willing they would be, on a scale of 1 to 10, to recommend your brand to those around them; and then subtracting the number of critics (score of 6 or lower) from the number of promoters (score of 9 or 10). You can easily calculate your NPS by filling in the collected scores in this calculator.
pro's for this KPI
Basically, you can easily get a sharp and cutting assessment of how satisfied people are with your brand, based on their willingness to recommend it to others.
cons for this KPI
Given scores are highly subjective, and the NPS system is not very forgiving considering only scores of 9 and 10 are considered promoters and therefore positive, while someone scoring an 8 can also be perfectly satisfied. As a result, many brands push or even manipulate their customers to give a maximum score, sometimes in exchange for an incentive.
CPA - Cost Per Acquisition
CPA is the KPI to measure how much marketing budget a brand has to spend to turn a prospect into a customer. A new customer must be guided through a series of touch points and thus a marketing funnel, where budget must be invested to convince that customer to buy. Think of the cost of ads, point of sale efforts, price promotions and other efforts to nudge people towards a purchase. You calculate the CPA by adding up the cost of certain marketing campaigns for a given period and dividing it by the number of new customers. For online transactions, for instance, this is easy to measure via tools such as Google Analytics; for more wide-ranging campaigns, there is some math involved, with or without the help of a calculator. In addition, the ACR or Average Conversion Rate can also be calculated, i.e. the average revenue of a (new) customer.
pro's for this KPI
In itself, the CPA shines a light on the effectiveness of your marketing efforts, mainly the return of your deployed budget. Especially for online campaigns, it is very easy to measure whether your marketing is paying off.
cons for this KPI
The focus is very much on marketing with "buying" as a goal, while for a brand it is at least as important (if not more important) to establish a relationship based on shared values and experiences.
Brand engagement
For brands, engagement is crucial in any form. After all, every brand wants not only to be known but also trigger an action, such as the purchase of a product, the request for a quote, a subscription to a newsletter or even just a like or share on social media. In terms of branding, engagement is therefore much more important than awareness, because it says something about the willingness to interact with a brand. Through dashboards on social media of all kinds, or tools like Buffer or Hootsuite, engagement on these channels can be measured. With free Google Alerts, you can keep an eye on which websites and articles your brand appears on. In turn, GoPress can be used to measure how often a brand appears in the media or is mentioned. Finally, with BuzzSumo you can discover which content generates the most engagement via different social media.
pro's for this KPI
Using this KPI, you can see whether your brand is being talked about and whether relevant interactions follow, such as further sharing of this information or people's willingness to take on an ambassadorial role (whether consciously or not).
cons for this KPI
Brand engagement should not become a so-called vanity metric, where all engagement is considered successful as such, even if it does not yield anything.
Customer perceived value
Customer perceived value represents the perceived value that your target audience attaches to your products and services and is an important indication of how trustworthy people rate your brand. For an unbranded cup of coffee, consumers may be willing to put down 2 euros, while a cup of coffee from a brand like Starbucks may easily cost them 5 euros or more – even though there is little intrinsic difference between the two products. You measure this KPI by asking people what they are willing to pay for a particular product or service, where the weighted averages should not be lower than the actual cost. If they do, then your price is too high or the added value of the offer or brand is not clear enough to justify the price.
pro's for this KPI
Customer perceived value gives a good indication of the state of your brand, as people are willing to pay more for strong brands and experiences - after all, they link it to crucial emotional motives that outweigh rational buying motives.
cons for this KPI
People are often unsure what something is worth to them, and furthermore, they are likely to compare their answer to a personal context. A €300 pair of headphones may be cheap for a music lover, but ridiculously expensive for someone who doesn't listen to music much. Moreover, when explicitly asked about it, people are more critical about prices than when they actually have to make a purchase decision.
Measuring your brand provides interesting insights into the behaviour of your target audience and the strength of your brand. At the same time, it is advisable not to become all too dependant on numbers and not let your decisions rely solely on data. In my (Dutch) book Brandhacking, I explain in detail why market research is not foolproof and demonstrate with well-known cases why you sometimes have to make choices based on intuition and common sense. We are happy to help you with concrete questions about the state of your brand.
