How To Measure A Brand Story Return On Investment (ROI)
There is a lot of speculation about what the return on investment is with a brand story. Lots of articles and lots of experts sharing advice and saying how important a brand story is and how important great branding is.
A brand story goes into the category branding. It’s brand building. We are building a brand and a brand story, I believe, is one of the most important components. Having said that, it doesn’t mean that the visual identity is not important, quite the opposite. Visuals/designs are very important because if they are not at the highest standard, then people (customers) will not even look.
We can romanticize as much as we want that we have the best pizza in town and that our ingredients are ‘the best’ but humans judge a book by its cover, unfortunately.
You can be doing the best events ever, but if your branding is not spot on, people will not trust you, they will not believe that you have a great product. I’ve seen so many products / events / races that have amazing branding but the product itself is mediocre.
But what is branding really?
Branding is an indispensable tool that creates trust and creates affection and empathy.
Great branding helps create an emotional connection.
But why do we need an emotional connection? Why do we need stories? We need stories to use them as a tool to create an emotional connection with our desired customers. When customers create an emotional connection with the brand, their first choice becomes the brand that they are connected to.
Example: when I need running gear — I don’t think of any other brand rather than Nike. When I need cycling gear — I don’t think of any other brand other than Rapha.
When I need a laptop or a phone, I don’t think of any other brand than Apple.
But branding doesn’t work on me, I hear you say. Well, it works on everyone — even the people that say it doesn’t. There is this fascinating fMRI study that showed that Samsung products stimulated the prefrontal cortex and the Apple product stimulated a part of the brain responsible for liking people.
One interpretation is that Samsung is more a product for the ‘mind’ (logical — I need a phone to answer calls and send emails) and Apple is more of a product that evokes “gut-feelings” — said Prof. Dr Jurgen Gallianat.
That’s why it’s important to focus on our branding and stories if we want to make an impact.
Jerome Bruner, a pioneer in the field of cognitive psychology, discovered that messages delivered as stories can be up to 22x more effective at being memorable than those delivered just as facts.
But how does a strong brand affect the bottom line? Is there a connection? There is a huge connection and there is a study to prove it.
The impact of a strong brand on the bottom line is well documented.
A 14-year study done by McKinsey & Company revealed that top-ranked brands outperformed the world market as measured by return to shareholders by 74%.
To be more precise, having a high-performing brand helped companies achieve the following:
- Overcome commoditization
- Demand a premium price
- Shorten the sales cycle
- Increase sales volume
- Attract and retain top talent
- Build authentic culture
What is the value of increasing BRAND EQUITY?
What is Brand Equity?
Brand equity is simply the perception of the brand quality and desirability determined by consumer’s perception.
We can’t control what other people will say about our brand, but we certainly can influence it. That’s the whole point of branding and brand storytelling. It’s influencing customers’ perception. With branding we aim to influence the perception of our brand; i.e the quality of our service/product and the experience and brand storytelling helps helps us become memorable and create an emotional connection together with our branding.
If our branding is not great, if we don’t have a strong brand, then customers will have an image in their mind that this is just a company that sells a commodity service/product.
When we increase our brand equity, then customers choose our brand over another and pay more for its offerings.
Based on a study done by Millward Brown, strong brands on average achieved triple the sales volume of weaker brands and a 13% price premium. So if this doesn’t prompt making building your brand a priority, I don’t know what will.
But what is a ‘strong brand’ and who decides if it’s a strong brand?
I was in a meeting recently, and the owner of the business said that they are one of the strongest brands in the city. As a previous customer of his business I don’t agree with him as I see his business as a commodity and don’t see that their quality is any better than their competitors. I actually think they are outdated and old-fashioned as their brand visuals are pretty bad (in my opinion).
But let’s have a look at what a ‘strong’ brand is.
When a brand is strong it scores high across three dimensions:
- The brand is relevant and resonant: it meets its customers’ needs and has an emotional connection with them.
- The brand is differentiated: it’s unique in its own way, it leads the way and it sets itself apart from competitors.
- The brand is memorable: it has top-of-mind awareness.
Then we have pricing power. It’s the result of high scores across these dimensions and is a key metric in calculating branding ROI. Millward Brown also identifies three variables that influence pricing power:
- Brand Power: the market share a brand can amass based on customers’ predisposition to purchase from that brand over competitors.
- Brand Premium: the price a brand can charge based on customers’ predisposition to pay more for that brand over competitors.
- Brand Potential: the likelihood that a brand will grow value share in the next 12 months based solely on current customer perceptions.
The key indicator of brand potential is differentiation — how well a brand sets itself apart from competitors. How different are they?
In branding it’s often said that ‘being different is better than being better’ but I would add why not be different and work towards being better? Work on becoming the best version for your clients, put your clients first, put your heart and soul into what you do. This will not only set you apart, this will set you in a totally different position.
Millward Brown breaks down the pricing power and explains why that is. If a brand can create a single point of difference, customers will perceive it more positively and brand potential will rise.
But if one brand knows that they need to be different and strong, what companies need to learn is the strength of their brand.
The following roadmap is for conducting brand equity analysis, it breaks down KPIs into three categories, making the process less daunting. These categories are:
- Brand Behavior
- Brand Perception
- Brand Performance
How do you measure all this?
There are two options: hire a company that specializes in this, or you can do surveys yourself.
For larger brands with bigger budgets, they can afford to invest twelve months into research and know the data. As an example we worked on a story for a client and we finished it last year. It’s been a year since the client has been doing research to see if the story will create the desired results. From all their research (which was done by an external company) showed that the story does exactly what we want it to do. That’s a year of research by an external company.
For smaller companies the best way to do it is by interviewing customers, creating segments and sending surveys to potential customers that are not familiar with the brand.
The real bottom line on branding and storytelling ROI is uncovered in the final KPI category: brand performance. Brands with great branding and great stories perform much better than companies that don’t. Investing in branding is not something you do once you are set off. There is a lot of work to be done, consistency is key.
Let me know your thoughts in the comments below.
