Our version of a brand strength scorecard is what we call the Brand Strength Index ™ . The Brand Strength Index is a scorecard of metrics that underpin a brand's strength. At its core it measures the perceptions that drive choice – Knowledge, Credibility and Appeal – and the customer behaviours those perceptions produce – Brand Selection, Price Acceptance and Advocacy. The marketing inputs that build those perceptions (marketing spend, awareness-building activity, reputation, service and the like) are diagnosed separately in a companion Brand Inputs Index. This allows us to understand the relative strength of the brand in the market, which plays a crucial role in turn in calculating the value of a brand.
Brand Strength Index™ benefits, and its roots in the brand value chain
Analytical rigour and transparency are at the heart of our approach to brand measurement at Brand Finance. This demands responsiveness to key best practices and empirical evidence, which we pull from academic theory. In the spirit of academia, we also open our doors to peer review. We do use specific methods in our measurement, but we don’t restrict others from using them either. This means we never have black boxes in our approach, and instead rely on the quality of our research data, and the skill of our team, to identify and improve brand value.
One area of academic theory that we have both influenced and been influenced by has been the idea of the ‘Brand Value Chain’, popularised by Kevin Lane Keller in the 2003 article “How do brands create value?” in Marketing Management. As with any good idea, it was influenced by previous theories and it was in practice already at the time, including in our own approach – Brand Finance having been set up in 1996.
We have visualised the stages of brand value development here:
Source: Brand Finance (adapted from Keller, 2003)
This process starts with:
- Strong, well-managed investment leading to changes in -
- Customer perceptions, which in turn lead to improved -
- Business performance and therefore shareholder value.
In the Brand Strength Framework, we call these stages:
- Brand Inputs (measured through the “Brand Inputs Index”)
- Brand Perceptions
- Customer Behaviours
The structure of the Brand Strength Index™ is designed to mirror the brand-building process:
Source: Brand Finance
It naturally follows, that if you invest in your brand, you expect to see a return in brand equity, and ultimately an uptick in business performance. What's more, by maximising the performance across the chain, the owner or manager of a brand can maximise its positive impact on business performance and therefore its overall brand value.
Creating a Brand Strength Scorecard: The Brand Strength Index
To manage the ‘Brand Value Chain’ process effectively we suggest creating and using a “Brand Strength Index”. This index is essentially a modified Balanced Scorecard split between the two core pillars: Brand Perceptions and Customer Behaviours.
Source: Brand Finance
Brand evaluation using a Brand Strength Index, is primarily a quantitative analysis, where scores for the independent measures are informed by market research. Through extensive research and analysis, we have identified the metrics above as the most predictive of revenue share and the most universal metrics across markets and sectors – allowing for comparability and benchmarking. These are therefore the core metrics to be studied, although their importance needs to be analysed and used to weight the metrics when preparing indices across different sectors and even countries. A brand strength index for a luxury apparel brand will differ in weighting from an index designed for a telecommunications brand.
In addition, it is important to incorporate diagnostic metrics and qualitative research and interviews to ensure that the brand strength index provides instructive, detailed guidance on what elements of a brands offer could be strengthened. We often call this analysis the “Brand Inputs Index”, particularly when using quantitative methods.
Brand Inputs are therefore generally the final step in the creation of a Brand Strength Framework since they are selected on the basis of impact on Brand Equity. The attributes included need to represent all of the levers that a business can pull in order to influence brand equity. These may include:
- Advertising spend
- Sponsorship spend
- Earned media coverage (including word of mouth and social media)
- CSR spend
- Visual identity quality
- Customer service quality
- Product investment and innovation
- Distribution quality
- Value for money.
The attributes should be grouped between their impact on familiarity versus attitudes (Credibility and Appeal) improvements and each group should be weighted according to the importance of each side of the brand equity pillar.
The Brand Strength Index as a Measurement Tool
We typically advise that these models can be point-in-time – giving a snapshot, perhaps biannually, of brand strength – or they can be dynamic scorecards – regularly updated to give real-time results from changes in spend or strategy.
In all cases, it is usually good practice to provide summary results as an average over a longer period in order to provide a view of long-term brand strength rather than reveal fleeting changes that have little long-term effect on the business.
The core reasons for using Brand Strength Index as a measurement tool are:
- Summarising brand KPIs: Many teams have large numbers of data points that they struggle to bring them together to see whether things are getting better or worse. By summarising as a coherent single figure, the BSI allows brands to do that.
- Clearly comparing competitors: It is important to benchmarking how you are performing against your competitors along the same key measures. Our database of over 10,000 brands yearly also allows comparison within category and without. A clear structure enables new brands to be incorporated too as necessary.
- Tracking over time: Whether there is a big change to strategy or simply a need to monitor performance, setting a Brand Strength baseline and tracking from that can help management take decisive action.
- Diagnosing issues in the Brand Value Chain: The Brand Strength Index scorecard benchmarks brands on various attributes in order to standardise units of measurement across them. As a result, underperformance of certain attributes both against competitors and against other of the brand’s own scores can be identified and addressed.
Source: Brand Finance
The Brand Strength Index as a Management tool
By having this dashboard, trackable over time, against competitors and against different business-relevant attributes, business managers can use the Brand Strength Index to manage their brands more effectively.
To do this, it is important to make sure that these scorecards are made at as granular a level as possible. For example, focussing on a business division within a country or even at a customer segment level. This provides the specificity to align marketing, service and other actions with the attributes within the Brand Strength Index.
As a result – and after reviewing current capabilities, staff resources and marketing investment available – management teams can make reasonable targets for different attributes matched with specific actions. For example, these actions might include changing marketing mix, new communications activities, product improvements or other types of investments or strategies.
These targets can be made even more relevant and reasonable by comparing against the performance of similar brands in our database and calibrating a growth rate that seems reasonable. Provided that the attributes are well selected and weighted according to their importance, the effects of these changes in attributes on financial value can be found and an ROI calculated.
However, it is not only incremental changes to activities that can be tracked or planned for. Similarly, changes in strategy like removing a brand and changing brand architecture or updating a brand’s positioning can be reviewed through a brand strength framework. This identifies potential improvements in performance and value compared against a base case explaining whether it is worthwhile to pursue the change in strategy.