Whilst the measures for evaluating what a brand is worth are well established, those for quantifying a brand’s potential seem less so. In general, brands are valued on their residual equity (what they are associated with and the depth and competitiveness of that association), their competitive performance and how much they are assessed to be worth.
Those metrics provide a snapshot of what the brand is worth now – and, with tracking, it is possible to spot trends over time – but they do not necessarily work to quantify the potential for a brand looking ahead. These are the measures I use to assess where a brand could go, and whether there is a business case for further investment.
How franchisable is the brand association? Brands generate value through the emotions they stir in consumers. There is some debate as to how we should treat the various aspects of brand association (as one thing or as a series of elements) but overall emotion is a lynchpin of a brand’s ability to compete. The question I like to ask is – where could the brand go on that emotion? What’s the feeling worth – and where?
Nike used the concepts of athleticism and democracy (Just do it) to expand their business into a powerful sports and lifestyle brand. And the emotion was so lucrative because it was universal. There were no impediments culturally to the acceptance of those ideals anywhere. Where could the associations that are the cornerstones of your brand take the brand and how big is the market for that? More importantly, is that aspirational market just bigger or is it actually more valuable?
How much is the brand talked about? Brands need to be buzzworthy, but there also needs to be correlation between awareness and return, and that equation often gets missed. The metrics of visits and likes are secondary to the overall favourability that the brand attracts (especially in sectors where reviews are highly influential) and to intensity of the ownership that consumers have for the brand. The critical translation though is how that talk and awareness at the open end of the sales funnel translates to conversion and profit.
In the light of this, it’s important to assess the talkability of your plans. Why will what’s being planned be exciting to consumers? How and why will they pick up the news and share it? Why will they want to be part of it? (rather than just how is the company going to promote it?) Who will the brand reach that it doesn’t reach now? And how will that change the conversation for the better and to your advantage?
Where is the brand seen? Who wants to be seen with your brand, and what are they prepared to pay for that? It’s easy to be flattered when a huge distributor bats their eyelids at you and says they would like to stock you – but if they are only prepared to do so at prices that work for them, you have gained reach at the expense of return. And if they are a volume operator, then the conversation you are going to have with them is always going to pivot around efficiencies. On the other hand, if your brand is too closely held, that may limit your ability to expand your customer base.
The important question here is – where would you like to be seen, and do their plans correlate with yours in terms of growth and desired perceptions? I always look for distribution arrangements where the parties have similar ambitions and paces of change. Can you go with them as they expand or will you be left behind?
How will the brand perform? At one level this is about the numbers everyone talks about already – market share, top-line sales, return on capital … but the fundamental questions in assessing the potential of brand performance are more comparative. They focus on what has fuelled the brand’s performance up until now and the conclusions that can be drawn for how it will perform in the months ahead.
There are two critical questions. The first: to what extent does the company’s performance exceed organic growth? If your company has grown at the same rate as everyone around it, then it has met the market – but that’s all it has done. You have succeeded through presence and participation rather than through the strength of your brand, because a strong brand should exceed what the market naturally delivers.
Second question: to what extent has your brand resisted market dynamics? Every brand commoditises in value over time – as technology changes, competitors react and new ideas take hold. The extent to which your brand can resist the downward spiral is a strong indicator of the performance of your brand. Does your brand enable you to successfully maintain pricing that exceeds the market average? If the only way you could grow was to downgrade your price, then your brand is not an above-market performer. If you grew and keep prices steady at a time when everyone else lost margin, then your brand has above-market strength and that augurs well for future performance.
How intensely is your brand owned by consumers? Brands love or die on their ability to become habits in consumers’ lives. A critical assessment for me in quantifying potential is how embedded the brand is now in the lives of those who loyally buy and the level of capacity for that to expand. This question links with the one about brand association: it’s about evaluating your brand’s ability to grab a greater portion of what Millward Brown describes as “share of life” and the speed at which you can realise and maintain that at the expense of your competitors.
I often ask a very simple question – how much of their time do you want? Simple it may be, but this line of enquiry goes to the heart of your potential to grow as a brand. Will they spend more time with what you offer now (if so, why?) or will you introduce new lines to grab more of their attention? What will they pay for those, why will they choose to do so and how will those new product lines redefine you as a brand?
How intensely is your brand owned by your own people? (HT Hilton Barbour) Every brand is only as strong as the people that believe in it and drive it from the inside out. If your own people are not evangelists for your brand, then chances are your organisation will lack initiative and momentum. A powerful purpose, clear values, a suggestion-focused culture, a market leadership mentality and an environment that promotes teamwork and rewards participation and results – these are the five makers of brand potential from the inside-out.
It’s easy to simply throw “targets” at a brand and hope they stick. A more thorough assessment of your brand’s potential for growth may not be as exciting from a presentation point of view, but from a resources point of view, it will enable you to direct budgets more succinctly and effectively at brands with substantiated performance. When the business strategy is overlaid, clear priorities for where you should be expending energy, effort, money and comms should emerge.