How to Measure ROI On Branding Projects
Creating a business case for a brand marketing or management project is completely different from doing the same thing for a new construction project or for a new software implementation. Bean counters like myself who may be a little obsessed with quantifying a dollar-for-dollar return on company investment find the task of putting a number on how much money a new branding strategy could make for the company too abstract. I find it easier to figure out how an IT improvement may increase business efficiency. In fact, many people shun the idea altogether. But is this a reasonable approach? How well would your business do without a defined brand?
Here’s an example:
I recently had the privilege of listening to a very distinguished speaker who had decades of experience in management consulting on projects that helped companies to define branding and marketing strategies for a an IT consulting company. He gave a very poignant example of a branding disaster, underscoring the value of understanding how much your brand is worth relative to others. Consider this: in September 2006, after Macy's removed the Marshall Fields sign on the top of the landmark shopping center in Chicago, not only did they have to deal with consumer outrage, but their Chicago sales dropped significantly and a string of news articles on the ill-advised decision was endless. Measuring the difference in value between the Marshall Fields and Macy’s brands, at least in the eyes of the consumer was as easy as reading the before and after same store sales reports.
But there must be a way to begin quantifying the return on an investment of this sort without having to go through what Macy's experienced and from which they are still feeling repercussions at that location. Here are some ideas for putting together an analysis of the value of a brand initiative.
1. Quantify the present value of your existing brand
To do so, realize how much of a premium consumers in your target market would be willing to pay over the same exact product with a different name.
Many shoppers in Chicago would have paid a hefty price to keep the nostalgic Marshall Fields in their hometown instead of relinquishing that premium brand for what they felt was an inferior. Keep in mind though that this worth varies across user and consumer groups. Shoppers in New York would feel very differently about the same divide in brand value so be sure to segment value by target market group so that your numbers are realistic.
2. Understand how your brand drives revenue
How have changes in packaging or advertisements drawn consumers to your product in the past? New colors, advertising campaigns, and the like may have increased or decreased consumer reception. Quantifying specific modifications will help to project just how the changes you intend for your new endeavor will drive sales in the future.
3. Estimate how strong your brand is
Despite fluctuations in consumer purchasing due to seasonal changes or otherwise, how long does your brand maintain its quantified value from step #1? This point is key to understanding how proposed changes will affect its future value and, in turn, customer loyalty and a sustained willingness to pay for your product above others.
For a fact, measuring solid returns on changes to your brand made by an end-to-end project is not easy. But use of historical sales and marketing history will help you define future results. Doing so accurately and convincingly can help you to consolidate meaningful figures for your project's business case.
What other tips do you have on identifying dollar-for-dollar returns on marketing investments?