How To Measure the True ROI of Branding

In today's competitive business environment, brand owners often need to see numbers when it comes to investing in new projects or initiatives. One area where this is especially true is branding, which can sometimes be difficult to measure in terms of ROI. After all, how can you quantify the true value that a strong brand brings to your company?

Well, it's not a simple question, but fortunately you've got our expertise at hand. There are actually some key metrics that you can use to measure the ROI of your branding efforts.

In this handy guide, we'll take a look at why it matters to measure the return on your brand investment, before diving into exactly how to measure the ROI of branding, and some tips on how you can incorporate this data into your decision-making process.

Yes, your branding value matters

First things first, let's talk about branding value. As the old saying goes, if you build it, they will come. And this adage holds true for brands and their customers alike – with the right branding initiatives, businesses can build valuable, lasting relationships with existing customers and attract new ones that are more likely to be loyal over time.

And with first-class branding, you can achieve a better bottom line brand value, attract partners and clients, employ and retain top talent and investors, impress stakeholders, win awards and much more. Developing your brand efforts can also:

• Increase awareness of your brand: Having branding that people recognize and trust can help you stand out from your competitors. As 46% of consumers say that they would pay more to purchase from brands they can trust, this can make it easier for you to reach new customers and build lasting, profitable relationships with existing ones. You can even level up your branding here with a well-designed cash receipt.
• Create brand associations and boost your perceived value: Your branding can help people to associate your company with certain brand values, such as quality products or services, reliability, innovation, and more. This can help you increase the perceived value of your brand in the eyes of consumers and position yourself as a thought leader in your industry.
• Build long-term relationships with key stakeholders: Having strong branding can help you build relationships with the right influencers and key stakeholders, such as investors, customers, employees, suppliers, and others. This can enable you to cultivate goodwill among these groups and make it more difficult for your competitors to win them over.
• Encourage brand loyalty, generate sales and drive revenue: Brands that inspire trust and admiration can drive customer loyalty, boosting individual customer lifetime value and sales volume. This can help you outperform your competitors in terms of revenue and profitability over the long term, building brand equity.

Branding & business growth: a match made in heaven?

As stated by Harvard Business Review: “Brand is everything, and everything is brand.”

And this isn't just a fun play on words, but rather a vital lesson for business leaders to take on board. What we mean by this is that branding plays a crucial role in driving business growth, through an increased ability to attract new customers, boost revenue and establish long-term relationships with key stakeholders.

However, measuring ROI can sometimes be difficult when it comes to branding. So how do you assess the true return on investment of branding? Let's dive in.

How to measure branding ROI in your organization

As we briefly touched on, there are some core metrics that you can use to strategically measure the ROI of branding in your organization. In each of the sections below, we'll explore why the metric matters and how you can measure it, providing an overarching picture of the ROI you can expect to see from brand building.

1. Customer loyalty

Studies have shown that customers who feel a strong connection with a brand are more likely to stay loyal, and will often be willing to spend more money on products from that company. In fact, one study reports that when customers feel connected to brands, more than half of consumers (57%) will increase their spending with that brand and 76% will buy from them over a competitor.

How to measure:

A good metric to track here is customer retention rates, or the percentage of customers who return over a given period of time, both before and after branding efforts. Measuring this on an ongoing basis and comparing it against prior periods can help you determine the impact that branding has had on retaining your existing customers.

Revenue growth

Another key measure of ROI for businesses looking to invest in branding initiatives is revenue growth. With strong branding, businesses are likely to see an increase in sales and revenue compared to those that do not commit to brand management, as we covered with our key statistics above.

How to measure:

One option is to look at your overall sales figures over time and measure the impact that branding has had on increasing those numbers. By setting time-based benchmarks, you can track your progress and determine whether your efforts are paying off. Remember to also factor in the other metrics listed in this guide, as they will all play a role in determining your branding ROI.

Brand reputation

"A solid brand reputation works for all businesses but is especially distinguishing for service businesses. Besides being the edge you’ll need in competitive situations, it will also help you get no-compete business simply because of your reputation." — Forbes

Branding drives brand reputation. It's that simple. When you see the Golden Arches peeking out from the drive-thru, you know exactly what to expect from that company – fast, tasty food, reliable service, and a positive overall experience.

And with more natural brand awareness, these qualities become deeply ingrained in the perception of your brand over time, making your target audience always want to keep coming back for more.

How to measure:

Again, there are several key metrics to track and assess here: customer acquisition rates, online reviews (benefits of replying to reviews are many when handled right), word-of-mouth referrals, and customer satisfaction ratings can all paint a picture of your brand's performance.

By measuring these on an ongoing basis and comparing them against previous periods, you can get a clear picture of how branding efforts are affecting your company's reputation.

Website traffic

A great brand will have consistency across its content channels, so your branding should appear in marketing campaigns, on your website, through social media, in print materials, and more. Visual content is more effective for marketing your brand so create clips related to your brand about who you are, your values, and your future goals.

As such, great branding can directly impact your marketing effectiveness, meaning you can expect to see increases in traffic to your website when it is well-branded throughout your marketing strategy.

How to measure:

The first step here is to set benchmarks for yourself: how many visitors do you get each week/month before branding? How does this compare to the numbers you're seeing now? You can also measure customer acquisition rates through your website traffic by tracking the customer journey and comparing with your company's brand building timeline.

As with the others on this list, it's also wise to factor in a range of metrics like engagement and conversion rates while measuring website traffic, as they are key components of a strong ROI on branding efforts.

In addition, it's essential that you don't rely on your online attrition alone to determine the ROI of your branding effectiveness. As shown in the image  below only 18% of the total impact of branding on sales is measurable by online attribution, so you need to look at the wider picture, too.

What is the ROI of branding?

According to a study by Millward Brown, strong brands on average achieved triple the sales volume of weaker brands and a 13% price premium. However, traditionally, brand-building ROI has been measured by merely subtracting the cost from profit and dividing it by total value, which doesn't provide the full picture.

It's important to note that there are no set rules or guidelines when it comes to calculating the ROI of branding, and, as we've outlined in this article, the true value of a brand depends on many factors. This can also impact the industry you're in, your target market and customer base, and your specific business goals.

Ultimately, the only way to truly measure the ROI of branding is to use the key metrics outlined above and any more you can think of to measure as you go. And as more marketers begin to adopt this approach and the market gets more competitive, the average ROI of branding is sure to increase over time.

How to use this data in key leadership decisions

As you can see, there are several key metrics that businesses can use to measure the ROI of their branding strategies and initiatives. Your branding return-on-investment (ROI) doesn't just cover your bottom line – it is influenced by a number of other factors, including customer retention, revenue growth, brand reputation, and website traffic/attrition.

By tracking these KPIs over time and assessing their impact on your business performance, you can clearly see the ROI of your brand building efforts and make data-informed decisions about how to further invest in your brand moving forward.

To utilize this data, create a case for branding initiatives, or make decisions about ongoing branding efforts, you should consider the following:

1. Review all of your key metrics over time and look for trends that indicate the positive impact of branding on your business performance.
2. Set targets based on previous benchmarks and discuss these with relevant stakeholders to get buy-in for future investments in branding.
3. Use the ROI of branding data to inform your strategy for building and maintaining a strong brand, including engagement on social media, marketing campaigns, website content and more.

Whether you're making decisions about ongoing investments or just starting out with branding initiatives, it is essential that you have access to accurate information about how your business is performing and how branding is affecting this performance. By tracking the ROI of branding, you can make data-driven decisions that will lead to increased profitability and market success.

Looking for truly expert branding support?

At Huddle, we provide a range of creative branding services for businesses at all stages, from startups to well-established companies. We specialize in helping our clients to develop highly effective brand strategies that reflect their unique goals, values and audiences: transforming them from great businesses into unforgettable brands.

If you're looking for help with your branding initiatives, get in touch with us today. We'd love to hear more about your business, offer you a free brand audit and discuss how we can help you to build a strong, successful brand that will drive growth and success for years to come.

Submit a brief today to get started!

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