How to measure your branding ROI

Many CEOs and CFOs have told me that the return-on-investment (ROI) of branding can’t be measured. I don’t blame them because the consulting industry has come up with complicated measures of branding success or nothing at all. Branding ROI can actually be measured but that requires you to first understand what a brand is.

We define a brand as an idea that exists in the minds of people. Companies exist in the real world but brands exist only in the mind. What is the Mercedes-Benz brand? What is the idea that Mercedes-Benz owns in the mind? Prestige. 3M? Innovation. Air Asia? Budget airlines. Xerox? Photocopiers. Ya Kun? Kaya toast. Caterpillar? Construction machines. Viagra? Many would associate Viagra with ‘performance’.

How strong a brand is depends on how strongly it is associated with an idea. One idea. Not two. Not ten. Not a hundred. One powerful idea. To measure how successful your branding project is, you need to take a before-and-after snapshot of your brand and the idea that it is associated with. These are the five steps that companies typically take to build a strong brand.

Step 1: Perception Audit
This is the before picture. A Perception Audit is undertaken to determine what your customers (and other important stakeholders) perceive your brand to be. Perception is reality. Your brand is whatever other people perceive it to be, not what you say it is. Usually there is a gap between what management perceives the brand to be and how customers perceive it. You need to find out what idea your brand already owns in the mind or if it owns any idea at all. You can’t build a strong brand if your brand doesn’t stand for anything in the mind.

Step 2: Differentiate
Branding is all about differentiation. It did originate 4,000 years ago to differentiate cows and it is still around today to differentiate cows. Branding is what you do to differentiate your cows from your competitors’ cows. If you are not differentiated, you can’t build a strong brand. I have co-written a book with my colleague, Wilson Chew, called Killer Differentiators that talks about the 13 strategies that any company can use to differentiate itself. Finding this differentiating idea is hard work because you need to be different with a great idea, not a stupid one. Being different is easy. Being different smart is hard work.

Step 3: Dramatize
A differentiating idea in its raw form is useless unless it is dramatized. Dramatization means that you try to exaggerate that differentiating idea. 3M put US$50,000 into a bus shelter advertisement display that is sandwiched by the 3M Security Glass to dramatize its toughness. Many people tried to break the glass to take the money but without success. Dramatization is even harder work.

Jacky Tai, Principal Consultant, StrategiCom

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