Implementing A Brand Scorecard

The tracking of marketing effectiveness and brand performance has reached the top of most marketing director's agendas. In some instances this has occurred willingly, in others it is the result of board pressure for greater clarity of the return generated by marketing investment. Few organisations have a clear idea of how to bridge the gap between traditional marketing and financial measures. The Australian Marketing Institute's marketing metrics initiative is an admirable effort to develop a framework that will encourage better practice in this area. AMI's project has entered its second stage - the development of a marketing metrics toolkit.

In case you still need convincing, I will start with the resulting benefits. Once a coherent and consistently applied brand performance tracking system is in place, management is able to evaluate brand performance over time, between market segments, across a brand portfolio, and against competitors. The benefits to strategic planning and brand management are obvious. As the line of sight between marketing actions and brand performance becomes clearer, decision making improves and the return generated by marketing investment increases.

Linking marketing metrics to value creation makes communicating the commercial impact of marketing actions much easier. CFOs should welcome the use of robust measures of brand equity as these provide greater understanding of one of the key drivers of future revenue. Going one step further, a value-based brand scorecard provides an important source of information for investor communications.

Golden Rules

1. Get started
   It is easy to find reasons for delay - waiting for more data, developing a better understanding of data relationships, or holding out for a moment of inspiration. Agreeing a measurement framework should be the first step as it allows you to determine the ideal measures, current data gaps, and ease of data collection. Remember that effective brand tracking systems are not about more data, but integrating the right data in a format that is easy to access and interpret.
   
   
2. Logic
   A coherent logic that is linked to market performance is essential to achieve cross-functional support. Accountants, economists and engineers are used to using quantitative models that are systematically applied - even if the underlying framework is initially based on a hypothesis. The approach outlined later in this article allows a better understanding of the links within the brand value-chain to be developed as the data history improves.
   
   
3. Buy-in
   Board level support increases the momentum of the project and ensures that you get the cooperation of all data providers. The board will be one of the users of the top-level brand metrics, so their views and requirements need to be gauged early in the development process. We find that a project team that includes both marketing and finance representatives works best. If external consultants are used, they should form part of the team rather than creating a metrics system in isolation.
   
   
4. Consistency
   Tracking performance over time and across a portfolio requires the consistent use of metrics. However, two provisos must be born in mind. In the early stages of implementation some fine-tuning will be necessary as a better understanding of data relationships is developed. There is also a need for some flexibility in the sub-measures used for different market situations. For instance certain measures that are relevant to a newly launched brand will not be important in a mature market. Even if different sub-measures are used, the top-level measures must remain consistent.
   
   
5. Level of detail
   Different users will have different requirements of the brand scorecard. For board level reporting there should only be two or three dominant measures. This facilitates cross portfolio review and highlights problems and opportunities. The dominant measures should be supported by a more detailed array of metrics which are used by brand managers. An issue of detail that needs to be resolved at the outset is the level of segmentation at which the brand scorecard is implemented. For each brand it might be necessary to segment by product, region, channel or customer type. The trade-off is between better market intelligence and data availability.
   
   
6. Pilot study
   This recommendation is simple. Test the measures, calibration and presentation for a single brand in a single market before rolling out the brand scorecard. In some instances it is advisable to carry out a second stage of testing to ensure the scorecard works in a range of different market situations.

The value-based framework links marketing activities, through customer perceptions and behaviour, to market performance and cash flows. The resulting scorecards incorporate measures across the brand value-chain. Categories remain constant, but specific measures of customer perceptions and behaviour vary according to the nature of the market, the maturity of the brand and, pragmatically, the availability of data.

A brand scorecard will typically include a dozen measures that aggregate into two dominant measures - the Brand Equity Index and Brand Value. The former is an aggregation of perceptual measures which we find to be a robust predictor of changes in market performance. The weighting of sub-measures is ideally based on statistical analysis of historic data. If this is not possible, professional judgement provides an adequate starting point. Each perceptual measure remains important to our understanding of changes in the Brand Equity Index and appropriate marketing actions.

Wherever possible it is better to work with the client’s market research agency. If a proprietary brand equity measure has been tracked historically and found to be a good predictor of market performance this will be used in place of the Brand Equity Index, but still supported by several other perceptual measures.

The second diagram shows how the intermediate measures of perception and behaviour link the costs and revenues that are reflected in the profit and loss account.

A top-level summary of a brand scorecard is illustrated below. A manager making comparisons across market segments or across a brand portfolio might look no further than the key measures if the movements in the Brand Equity Index and Brand Value are in line with expectations. If the key measures highlight a problem, further analysis of the sub-measures of brand equity and customer behaviour is required.

Information shown on the face of the scorecard has to be carefully selected to avoid data clutter. A well designed system makes it easy to drill down into any of the measures in order to review the underlying market research and full competitive set. The data history and scoring for a single measure is illustrated in the next table.

The use of a 0 to 10 scale for all non-financial measures simplifies interpretation of data for those who are not familiar with market research. Calibration of the scoring system is important and should be thoroughly tested in the pilot studies. The trends within each measure tell an interesting story. Graphic illustrations of trends and comparisons between the performance of the competitive set against different measures help extract useful insights from the data.

As a data history is compiled statistical analysis can be used to explore the relationship between different measures. In one instance a brand tracking system that we have developed contains 4 year’s data for 5 brands in 50 countries. This provides plenty of opportunity for analysing specific issues that will influence future marketing actions.

Conclusion

A consistent and coherent set of metrics is a fundamental building block for marketing strategy, marketing accountability and financial forecasting. Without it you are shooting in the dark. Although metrics will never remove the need for intelligent marketing decisions, a good measurement system will enable more informed decisions to be made more often.

A final point. Brands influence a range of audiences. The perceptions of staff, investors and other key audiences should also be monitored.

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