Better metrics can bridge performance vs brand-building divide

A composite metric of brand equity could help marketers better quantify the combined impact of brand-building and performance-marketing investments.

Why it matters

Writing in the Harvard Business Review, Jim Stengel, Cait Lamberton, and Ken Favaro argue that the creation of such a metric can then be linked to specific financial outcomes (eg revenue, shareholder value, return on investment) and deployed as a KPI for both performance and brand-building investments.

Four key elements 

The authors recommend measuring brand equity as a composite of four key elements: 

• familiarity, the degree to which consumers feel they know and understand a brand, beyond just being aware of its existence; 
• regard, how much consumers like and respect a brand; 
• meaning, the relevance that consumers perceive a brand has to their lives; and
• uniqueness, the differentiation that consumers see in a brand.

Why FRMU? 

These four elements, they suggest, evoke the emotions which drive the majority of consumer decision-making. And each of these measures can be ranked by percentile against a curated universe of brands – not just competitors in the immediate category (eg QSR v food delivery app v meal kit v freezer meal). 

Further, each FRMU element is refreshed regularly, depending on what is happening within the business itself and externally, and can be measured by customer type (loyal, lapsed, switchers, etc).

The big idea 

Measuring a brand’s familiarity, regard, meaning, and uniqueness is not a new idea. What’s different is rolling up those metrics into one composite measure of brand equity.

The full article, How Brand Building and Performance Marketing Can Work Together, explores in greater depth the linkage between brand positioning, activation, brand equity and financial metrics, and explains how three companies were able to streamline and standardize their brand measurement systems across multiple brands and countries, while also reducing costs by discarding metrics that were expensive to track but which didn’t demonstrably improve financial performance.

Sourced from Harvard Business Review