Myth #7: There’s no way to see a return on your investment in branding.
True, branding isn’t like direct mail, where you can count the responses you get from a flier you mailed. It has a longer-term, more subtle payback.
“It’s an increase in sales over time,” McKay says. “Or, if it’s a commodity product, then it’s an increase in loyalty. Are they choosing your product or service over someone else? Is it new customers or clients? If they are new to you, how did they find out about you? If you are doing it properly, you should notice an uptick.”
Measuring the ROI for branding work is still both an art and a science, Schermer says. The key indicator is brand equity—how much value the brand has intrinsically. It can be measured through studies of consumer preference and loyalty. These things don’t necessarily translate, in and of themselves, to sales. But there is a strong correlation across the board.
Measuring brand equity is becoming less problematic over time, Keller says. Some large business publications have started listing the top 100 brands and the asset values of those brands. “It’s not on the books inside the company, but it is out there as something that you can measure against,” he says. “In time, the formula [for those calculations] will become more widely available, and smaller companies will be able to do it. There’s actually talk of the asset value of a brand showing up on the books from an accounting perspective.”
Larsen says you may also see the result of brand efforts when a company is sold. “A number of years ago, we were working for a technology company that wanted to sell one of its most successful divisions,” he recalls. “The initial offers were far below what the company believed to be the division’s real value, so they hired Larsen to re-create the division as a separate brand. One year later, with its own name, identity, and communications support, the same entity selling the same products was sold for twice the price of what was first offered.”
Sarnoski sums it up: “The money and the attention that you spend on managing that consumer experience—at the end of the day, that’s what delivers your revenue and your market share.”
