The role of the CMO has and will continue to change substantially. As McKinsey put it in their Quarterly newsletter entitled, The Evolving Role of the CMO:
“As the forces of marketing proliferation gather strength, what’s actually required is a broadening of the CMO’s role. This expansion will encompass both a redefinition of the way the marketing function performs its critical tasks and the CMO’s assumption of a larger role as the ‘voice of the customer’ across the company as it responds to significant changes in the marketplace.”
An expansion of the CMO role is tied to, not just executing on a strategic and targeted tactical marketing plan, but the outcomes associated with such, i.e. engagement data, attribution metrics, and sales conversions. Key performance indictors (KPIs) is a broad term, so it’s critical to look at how we view the question posed in this article’s title, which can include:
- branding KPIs (awareness, recognition, attitudes, recall),
- marketing KPIs (qualified leads, CPC, foot traffic, GRPs),
- sales KPIs (signed contracts, net sales),
- customer KPIs (new, retained, LTV),
- and financial KPIs (gross revenue, net profit).
So, to answer the question in which as an agency we hear a lot: does improving your branding KPIs really increase revenue?
Yes, But Why?
If a prospective customer has no awareness or recognition of your brand, then obviously you’re not even in the consideration set. If they don’t know what you stand for and don’t see your value, then you’re not even on first base. But, let’s dig deeper.
Promotions tend to be temporary drivers. New products get introduced and old ones fall out of favor. Pricing can fluctuate based on demand, and demand can impact placement. Trends come and go. Supply chains get reinvented or disrupted. So, one could say that the 4 Ps don’t really hold a sustainable advantage with customers in a highly competitive landscape like they once did. Loyalty to a brand is both a rational (logic) and emotional (limbic system of the brain tied to emotion and memory) connection to your value proposition beyond the 4 Ps. It’s an attitudinal connection in which consumers see and associate with your brand. If bought into by a customer and top-of-mind, this creates constant engagement, and conversely, a revenue stream—one that typically generates WOM (word-of-mouth) or WOW (word-of-web), i.e. free publicity and advertising in a time when cost and ROI are examined daily.
Brand presence alone won’t cut it. A distinguished product or service with a differentiated value proposition tied to an exceptional customer experience creates a true customer impact that drives branding KPIs (leading to revenue).
“We found that the details and feelings customers retain at least three months after their most recent interaction with the company, are the ones most likely to influence their future loyalty behaviors. Salient experiences (interaction experience, product experience, brand perception and price), then are the foundation for building a CX strategy that will increase customer loyalty, drive competitive differentiation and deliver a high business impact.”– Gartner 2019, Creating a High-Impact Customer Experience Strategy study
This recognizes that the value you choose to attribute to a brand and the value I choose may be very different, but that’s what makes it a KPI worth pursuing if you’ve created a value-add that’s attractive and meaningful to a customer segment. One may argue that logic limits your revenue to a select base and therein limits growth. It is true that value exists as a perception (mindset of a customer) and not always with everyone.
However, as Michael E. Porter put it in his Harvard Business Review article What Is Strategy? “Strategic positions emerge from three distinct sources, which are not mutually exclusive and often overlap.”
In the end, one could show evidence that the importance of ‘brand’ over the years has moved beyond the marketing realm of ‘intangible,’ and is seen as critical to organizations of all sizes. For example, ‘brand valuation’ has become part of the due diligence in many mergers and acquisitions and ‘brand equity’ has become a line item on the balance sheet and in annual reports as a quantifiable dollar figure.
Brand Strategy in a Good & Bad Times
Your brand strategy, if clearly differentiated such that you can own it and it meets a need, will create a sustainable competitive advantage and therein should not change or vary upon circumstances unforeseen or real.
Let’s look at a simple example of leveraging a brand strategy and how staying on-point (even in times of crisis) can impact a business, their relationship with customers, and ultimately revenue. What better example than the unprecedented times we are now living in.
This is a story about a local pizza chain that strategically positions themselves as a family establishment—family-owned and operated, caterers to families with children, participates and supports kids’ activities, sports and arts programs, etc. They offer both dine-in and take-out, but the bulk of their business comes from dine-in and usually as a family gathering. Like many restaurants today, they are substantially impacted as people are staying home, either by choice or State requirement. The smart and prudent move is to look at finances, operations, and employee dynamics to mitigate and curb losses and expenses – agreed – but many organizations also drop their strategy in the midst of ‘taking action.’ And sure; there are definitely tactical initiatives everyone immediately needs to do for customers in regard to communications and notifications, menu adjustments, take-out hours, delivery options, etc.
Yet, if your strategy surrounds ‘family,’ how are you addressing your challenges while keeping an eye on the customers that have generated your revenue and have seen value in your brand? How are you helping the families (yours and your customer’s families) in the crisis that is both reflective of your strategy, but touches the loyalty factor in the customer’s mind within the context of this crisis? What if you leverage your strategy in the face of the ‘new normal’? For example, this business has customer data on each customer (the family and their birthdays), and the new norm is requiring social distancing, and using Skype, Zoom, and Go-to-Meeting as the mode of communication. Therein, possibilities might exist to sponsor families that are doing Zoom birthday parties with free delivery to keep revenue flowing and in turn support the strategy that delivers on your brand promise in the eyes of the customer.
A recent example is Netflix which has a reputation of providing exciting new shows that people talk about online and by the water-cooler. The company now has taken that same brand dimension and created a ‘party’ button to allow groups of people to binge watch the same show (virtually) together.
Another example involves a regional bank. They have positioned themselves as a local ‘community’ bank and cater to small to mediums sized businesses and personal banking accounts. In this moment of crisis, possibilities exist to reinforce their stance by giving back to the community, helping those on the front lines in their community, or providing financial advice to the community at large.
Opportunities to not only stay on strategy exists in every situation, but these are also the times to play your hand and come out ahead of your competitors by truly living up to and delivering on your value proposition.
Back to Our Question
If a brand delivers on its strategy and core value proposition, along with keeping the brand top-of-mind, does it payoff in subsequent KPIs (marketing, sales, customers, financials)?
One view might question this stance. As David Aaker, Vice Chairman at Prophet said during his recent Webinar entitled: Owning Game-Changing Subcategories: Uncommon Growth in the Digital Age, “It’s not my brand doing better than your brand.” Rather, one of the four means to grow is to create subcategories like Dollar Shave Club, AirBnB, and Tesla. Or can it be both: stand by your brand strategy, plus innovate and develop new subcategories, as his third means to grow was expressed as having an ‘Exemplar Brand – Position the Subcategory’? “The brand that has the power to manage that subcategory so that it wins.” A prime example might be Keurig’s Drinkworks Home Bar, a strong brand with a customer-focused value proposition, driving into a new sub-category of home cocktail pods.
According to a 2018 report: An eCommerce Year in Review: Jumpshot Reveals Retail Winners, Losers and Amazon Data Report, “Amazon is facing growing competition from digitally native brands like Chewy, which specializes in pet food and supplies. In 2017, Amazon sold twice as much pet food as Chewy. By July 2019, Amazon and Chewy were selling approximately the same amount. According to Jumpshot, Chewy’s success is based on strong offline branding and effective paid search campaigns.”
Never-Ending Rule: Stay Focused on Customers
As with many things in marketing, there isn’t just one view or one right answer or action. Avoid getting caught-up in the latest shiny widget and adhere to and deliver on your brand strategy, as it has and will continually drive KPIs and in turn impact revenue.
As supported by a Harvard Business Review article: How to Market in a Downturn:
“During recessions it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth. Marketing isn’t optional—it’s a ‘good cost,’ essential to bringing in revenues from these key customers and others. When sales start to decline, companies shouldn’t panic and alter a brand’s fundamental proposition or positioning. Marketers that drift away from their established base may attract some new customers in the near term but find themselves in a weaker position when the recession ends.”