Schultz Outlines Five Criteria for Measuring Return on Brand Value

Don E. Schultz, president of Agora Inc. and a professor at the Medill School of Journalism, began his keynote address Nov. 19 at The P-O-P Show in Chicago by addressing a common problem for P-O-P managers: How do you increase brand value, develop brand equity, build brand returns, and drive shareholder value while simultaneously generating sales and showing a positive return on investment?The key to unlocking this question, said Schultz, is to develop a means of measuring the return on investment in marketing activities to help justify marketing budgets to the financial departments. "We simply have to find better measures than we have had -- measures of brand value, not just sales value," said Schultz, during his lecture, "ROI: The Three Most Frightening Letters in the Alphabet."Schultz stressed the idea that "P-O-P managers are the keepers of the brand" and that "P-O-P occurs at the most critical brand contact point, at the time, the purchase decision is being made." He then outlined five criteria needed to measure returns on brand communication.First, Schultz recommended simplifying communication structures and differentiating between P-O-P that addresses sales/incentives, and that which affects the brand/message. This simplification, he said, makes strategic planning easier and helps with financial measures."Brand communication has to have financial value so that means we have to have behavioral data -- what do people do, not just how they think," said Schultz, outlining the second component to measuring brand communication value.Schultz cited the increased availability of databases and more P-O-S data as tools that allow marketers easier access to consumer behavioral information. Furthermore, he suggested combining behavioral data with attitudinal data to better understand not just what consumers did, but also why they did what they did.The third component in Schultz's measurement process, creating a closed-loop system, enables marketers to allocate money into specific marketing plans, promotions or P-O-P. The purpose of the program is to clearly detail the incremental return on investment for a specific marketing plan."Changes in behavior can be related to changes in financial returns and what that allows me to do is to create a closed-loop measuring system," said Schultz. "That allows us to measure incremental returns ... The questions that the accountants are asking is 'If I give you this money how much more will you drive business up?' So we need incremental returns, not just overall returns for the organization."This system, said Schultz, enables marketers to learn from past marketing efforts, identify value customers, determine present and potential income flows, develop marketing strategies, measure changes in income flows, identify levels of customer investment and calculate the return on brand communication investment.Focusing on incremental returns, Schultz described the fourth element of his measuring process: estimating or calculating the return on brand communication. By separating investments in each customer, it becomes apparent which clients represent the best investment and which customers have the greatest potential.Finally, Schultz told attendees how to deal with measurement time frames by adopting financial schedules and translating marketing initiatives into those terms. "You need to come up with time frames that meet the financial time frames, not marketing time frames," said Schultz. "Almost nothing has financial value beyond the current fiscal year."Schultz separated brand communication value into long-term and short-term returns. He identified short-term returns as those that produce returns within the current fiscal year. Long-term returns, he said, are those that show returns beyond the current fiscal year. In P-O-P, that most likely means distinguishing between permanent and temporary displays.Short-term investments generally equate to business building, while long-term builds the brand, he said. Understanding this difference allows marketers a new means of budgeting and allocating for P-O-P and marketing programs. Moreover, this process of business-building marketing can be converted into a variable cost, which can be built into budgetary plans.In closing, Schultz stressed the importance of continual investment in the brand and the value of building consumer advocacy. "Every brand is declining in value every day unless you invest in it," he said. "You're not investing in P-O-P, you're investing in customers."

Schultz Outlines Five Criteria for Measuring Return on Brand Value

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