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10.06.03
 By
Ray George
Many companies acknowledge the importance of brands as assets that
hold leverageable value and can build and sustain competitive advantage.
But in the current challenging economic environment, investments require
careful consideration – and measurable proof of return. If brands
are to be considered assets, they should be held to the same standards
of performance and measurements as other assets, such as real estate
or financial investments.
Yet few brands are measured against performance measures
that gauge the success or failure of these investments. Fewer still
can demonstrate the link between brand performance and business impact.
Hotel companies dedicate significant financial and human resources
to create, grow and enhance their brand equity without fully understanding
the potential impact on their business’s bottom line. Brand metrics
can help hotel executives not only measure the effectiveness of their
brand investments, but also ultimately guide business decision-making.
In order to be successful, brand measurement systems must overcome
a number of obstacles, including: |
Focusing exclusively on "soft" metrics
One of the most common criticisms of brand strategy development and
implementation is that it seeks to manage a set of intangible associations.
And brand managers do themselves a disservice by focusing exclusively
on brand measures such as awareness, which continue to reinforce these
notions of intangibility. In order for brand managers to elevate brands
and brand management to a strategic consideration with executives,
brand managers must seek to link their efforts not only to more tangible
business results, but also to the strategic objectives of the company.
Focusing on too many measures
A former employer of mine used to measure business unit performance
at a qualitative level, with few tangible measures for employees to
understand how they made an impact. Then, in one year, this company
implemented an elaborate balanced scorecard along six dimensions,
with each dimension consisting of at least three component measures.
While the concrete nature of these metrics was a welcome change from
the lack of guidance, this measurement initiative collapsed under
the weight of its own management. Similarly, while brand metrics should
be tangible, they should focus on a few key things that matter to
the company and that can be maintained without creating a separate
organization to support it.
Inconsistent metric tracking
One of the dangers of a complex measurement structure is the increased
likelihood of abandonment. As measurements become difficult to maintain
and sustain, they may be discontinued. Without a sense of consistency
to gauge progress and impact, brand metrics become too easy to dismiss
and discredit, inhibiting a manager’s ability to guide business decisions
over the long term.
Valuation
The most visible and widely cited brand metric today is brand valuation,
in which a percentage of a company’s market value is attributed to
its brand. Brand valuation can be a very effective tool to impress
upon executives the financial value and subsequent importance of brands
and brand management. But valuation is a benchmark, not an actionable
metric. For example, the Hertz brand decreased in value from $3.6
billion to $3.4 billion from 2001 to 2002. What actions should Hertz
take to reverse this 7% decline? What is the root cause and how should
Hertz address relevant issues? If the valuation had increased, what
actions are attributable to this increase (and how can they make sure
to keep repeating these actions)? These questions remain unanswered
when reviewing brand valuations.
Successful brand metrics enable companies to monitor as well as manage
the health and stability of their business over time. A simple guide
for brand metric development is represented by the acronym SMART.
Brand metrics should be:
- Simple – The more complex the metric, the more time spent on
measuring the brand than managing it
- Meaningful – There must be a direct link to brand-building efforts
and business results
- Actionable – Business decisions and objectives must be aligned
with brand metrics
- Repeatable – Consistent, repeatable application of a metric
is necessary to demonstrate progress and drive business action
- Touchpoint-oriented – Deft orchestration of customer touchpoints
is the key to effective and efficient brand delivery; metrics
should capture success or failure at mission-critical touchpoints
Brand metrics can be divided into two categories: performance metrics
and perception metrics. Performance metrics diagnose the brand’s impact
on business performance and range from price premium to loyalty to
lifetime value of a customer. Perception metrics diagnose how the
brand is perceived by customers and key stakeholders and include brand
relevance, awareness, and preference, among others.
So how should your hotel company identify, prioritize and track the
right set of brand metrics? Below is a guide to developing the right
brand metrics to steer effective business decisions.
1. Start at the top
To start, brand managers must align metrics to the strategic imperatives
for the organization as a whole. Are the business’s goals focused
on revenue gains, franchise growth, or geographic expansion? How will
the CEO measure the success of achieving these business imperatives?
The success of any brand strategy initiative lies in its ability to
demonstrate impact on what keeps executives awake at night.
2. Link brand performance metrics to the business goals
If the businesses goal is to increase revenues, one key brand performance
metric may be increased hotel customer retention and loyalty. By linking
the business goals to the brand, brand managers can bring clarity
and action to corporate priorities.
3. Identify brand perception metrics that influence brand performance
Determining which perception metrics are leading indicators of brand
performance is an important step in this process. For example, if
greater consistency in the brand experience is a key to customer retention
and loyalty, then hotel employees’ understanding of how they represent
the brand to customers will be an important element to monitor. Therefore,
brand perception metrics such as internal brand understanding may
be well suited to gauge progress against business and brand goals.
While this is an example of an internally focused metric, the power
of ensuring internal understanding and alignment should not be underestimated.
4. Establish ongoing process and responsibilities
Finally, in order to ensure the successful implementation and use
of these brand metrics, hotel organizations must ensure that the proper
processes and responsibilities are establish to track and maintain
these metrics. First, look for existing measures that can be leveraged
– not all metrics need to be developed from scratch. Second, assign
explicit responsibility for the tracking and analytics of these metrics
– without accountability, many brand efforts falter. Finally, find
opportunities to include brand metrics into establish scorecards and
measurement systems. By demonstrating the support/linkage to business
objectives, brand investment and return can gain internal credibility
and stature.
Brand investments will continue to draw scrutiny and skepticism in
organizations – particularly these days. So it’s becoming increasingly
important for organizations to establish brand measurement programs
to tangibly demonstrate brand’s role in helping to build and sustain
a competitive advantage in the marketplace. Choosing SMART brand metrics
will give your company the tools it needs to successfully measure
the effectiveness of brand investments and in turn brand’s overall
impact on the business.
About the Author:
Ray George is a Director in the New York office of Prophet (http://www.prophet.com),
a management consultancy that helps clients achieve competitive advantage
by creating and implementing integrated business, brand and marketing
strategies. Prophet works with companies from strategy to execution
to develop, grow, and protect one of their most valuable assets: their
brand. Prophet has offices in Chicago, London, New York, San Francisco
and Tokyo. Ray can be reached at rgeorge@prophet.com.
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