With the budget review period in full swing boards need to carefully consider the strategy behind their brand portfolio and consider whether it is generating the value it should. For many organisations there is a temptation to not engage with their marketing strategy sufficiently, particularly with the time and effort required to manage financial risk and governance issues. Internal management often sees board influence in this area as unnecessary, but in a changing marketing environment it has never been more vital.
The questions that need to be asked revolve around whether brands that are intrinsically there to create customer value are in fact being used to deliver shareholder value. In an increasingly digital world the old models of advertising and brand building have been challenged and the new paradigms on which most brands operate are very different to those that used to exist.
Sadly not enough companies systematically review the way they ‘do things’ in an effort to adapt to a changing and sophisticated customer. Many marketing departments focus on the internal mechanical aspects of marketing assets, believing that they can create them cheaper internally than using outside service organisations. Sadly few really consider the cost of providing those assets and reporting the same to boards in a manner that recognises that delivering value to shareholders is only achieved by constant re-evaluation of processes and challenging that these are still the most efficient way to deliver. Changing tastes and the increasing polarisation between younger and older audiences with how consumers interact with ‘new media’ and ‘old media’ needs constant attention.
Often I work with companies whose boards have allowed vast internal departments to be built up producing marketing materials, with little acknowledgement of changing trends in their target market that often would dictate quite a different marketing strategy. The tendency to hang on to the ‘established theories’ without key metrics to support is regrettably too common in Australian businesses.
Boards need to focus on four key metrics to ensure their senior management is unlocking the value that exists in their consumer brands.
Financial metrics
General brand equity metrics
Innovation metrics
Employee-based metrics
Most organisations produce financial metrics, but market share, share of voice and share of industry profit need more focus in most board reporting systems. With ‘General Brand Metrics’ the terms that need discussion include familiarity, penetration of active versus intended market, brand perception, customer satisfaction, loyalty and availability through distribution.
The case for more innovation is often put to Australian business, but few boards measure it in terms of being prepared to look at they way they’re companies ‘behave’ and ‘do’ things. The culture of a company and its appetite to learn as well as its ‘courage’ and ‘freedom to fail’ can be measured through innovations that have been tried and their financial impact, including new product launches, and research programs.
Employee based metrics require an alignment of understanding of satisfaction, commitment to corporate goals, and an ability to offer suggestions and improvements to existing processes and practices to deliver greater brand value.
Boards have a growing responsibility for strategy in a world where the old established marketing paradigms are under siege. They need to understand what is important to a brand and how senior management deliver not only customer value, but how those brands will be managed to deliver shareholder value, both in the short and long term.
David Trussler GAICD is a partner in Melbourne based communications and consultancy Faith, with a special interest in brand development and audits.
