The right key performance indicators (KPIs) can give an early warning on performance and can help cut through the complex world of marketing, say Paul Dyson and Katherine Munford.
Writing for WARC, two of the co-founders of marketing effectiveness company accelero address the problem many marketers face in that there are too many KPIs to choose from.
“There is a need to identify a manageable and relevant set of metrics across the business,” they note.
With decades of experience in this field, they feel they have successfully identified a concise and relevant set of brand KPIs that can provide a management team with a good all-round view of brand health.
What they have done is to analyse historical data of candidate KPIs against business performance and use lead-lag analysis to identify which metrics really are KPIs. “For example, which variables predict a short- (or long-) term uplift in sales; or which metrics give an early indication of campaign return on investment (ROI).”
While it’s difficult to give exact metrics – these will vary by category and objective and will also differ for a launch brand vs an established market leader – they identify five clear areas of brand health that need to be monitored by all marketers.
“The most useful brand strength indicators should go beyond understanding brand associations and encompass how they convert to the financial worth of a brand,” Dyson and Munford suggest.
One such metric is price premium – often defined as the additional price that a brand could charge compared to own label, or above and beyond a close competitor.
“Brands that have a strong price premium relative to competitors have a clear advantage in terms of supporting improved financial ratios and profit margins,” they report.
More specifically, a benchmark is a price rise of 1% generates an 8% increase in operating profits (provided volumes remain stable).
“Brands that use price premium as a key metric will also be well placed to realise potential margin opportunities and react quickly in response to a decline in price positioning” they add.
Read more details in the full article by Paul Dyson and Katherine Munford: Top five business metrics to track the strength of your brand.
Sourced from WARC