5 common mistakes in setting brand KPIs

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Key performance indicators (KPIs), have become common parlance in both the business and marketing worlds, as the practice has become increasingly data driven.  They are used to define the success of an initiative, or, as is often the case lately, the ongoing performance of a team, ultimately impacting team member incentives.  A common struggle for many clients is determining the right KPIs and methodology for tracking performance of initiatives and/or teams.

In the branding profession, KPIs are even more difficult to identify and measure. As a naturally nebulous field, the standard practices for measuring success don’t apply here. There is no distinct way, for instance, to measure just how well a rebrand resonates with consumers. What are the constraints of traditional KPIs in branding and how can you avoid these pitfalls going forward? Here’s some factors to consider:

1. Not covering the whole range of a brand’s audiences

When it comes to brand health, the first audience that comes to marketers’ minds is the market itself: how well is my brand performing versus competitors in the marketplace? While this is obviously an important audience to examine, two other audiences are just as key. One is the brand’s customers who base their views of the brand on actual experiences, rather than solely marketing communications. The other is employees who are the ambassadors of the brand in all that they say and do. If they are not understanding and committed to what the brand stands for, external perceptions will likely not be aligned or healthy.

2. Picking the wrong metric

A few years ago, a client informed us that they had not only been using unaided awareness, but first mention unaided awareness as the one metric that the whole marketing team was assessed and rewarded against. While at first glance this can seem a valid idea, unaided awareness is actually not a good metric to assess whether you are practicing successful brand marketing, as it is primarily dependent on advertising spend, not quality of the marketing.

If a competitor outspends you significantly in a given period, they will likely get higher first mention unaided awareness: this is not something that you have any control over, nor is it the strongest predictor as to whether you ultimately beat them in the consideration set. So you would not want to set a KPI that your competitors have greater control over than you. Rather, focus on metrics that reflect the impact and quality of brand marketing, such as the conversion rate from familiarity to consideration in the marketplace or the strength of loyalty among customers. Competitive unaided awareness is important to track, to inform budgeting decisions, but not to set as a KPI or use as the basis for allocating contingent compensation.

3. Simplifying the wrong way

A common urge, as in the example above, is to simplify at all costs so that the brand KPI is reduced to a single metric. However, constructing a single KPI using a complex algorithm from a gamut of metrics does not result in an effective (or simple) KPI.  It is more effective to start off granularly, defining the purpose and intended impact of a given initiative, team or individual and identifying the metrics most indicative of success for that particular situation. The roll-up is then typically more an exercise in information hierarchy than devising complex algorithms: who needs to know what and what is the simplest, most effective way to communicate that information.

For example, instead of rolling everything up to a single metric, assign different metrics to different functions or a set of metrics as the indicators. The ultimate KPI can then be reported on in a simple to understand fashion, such as red light, yellow light, green light. Some within the organization will only need to focus on those three dimensions, while others will need the granularity of the actual metrics, with specific goals set for each metric and rules as to how to account for ultimate success.

4. Setting the wrong goals

Setting goals for brand KPIs is tough. You need to be cognizant of both what you can realistically achieve given means and what an ambitious future state would look like, metric-wise.  If not thought through, you can either set a goal that is far overreached or that is impossible to achieve.  This is where benchmark data is useful.  For example, in helping a client set brand champion goals that a brand team was incentivized to hit, we looked at existing brand engagement research and determined the correlation between internal communications and training exposure to the increase in brand champions. This enabled us to calculate realistic goals given the budget and anticipated further communications and training activities.

5. Not making KPIs actionable

Finally, the biggest issue that can arise, due to many of the mistakes above, is landing on a KPI that one does not know how to affect. This can most often be the case with constructed metrics that are hard to unpack into their component parts.  Special care should be given in thinking through the expected implications of a KPI not being reached. Is the data/assessment framework set up to determine what the underlying issue is?  While planning for success is obviously the natural inclination, in this case, it is more effective to plan for failure.  Keeping metrics simple and easy to understand from a real world perspective helps. Familiarity and consideration are clear and common concepts; brand bonding or brand power are constructs that are harder to relate to business situations.

KPIs can be a great tool to ensure a brand is managed effectively and marketing teams are assessed fairly and in alignment with other business functions.  However, knowledge of all the dynamics of how brands decisions are influenced and get made are key to setting the right and most effective KPIs for brand health.

 Brian Rafferty is the global director at Siegel+Gale. 

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