Ray Baird is President of RiechesBaird

Do you know what predicts your brand’s success?  Most marketing metrics only measure what has happened, using what could be called “lagging indicators.” But imagine the effectiveness of your marketing program if you could identify the “leading indicators” for your brand; the activities, buyer behaviors, and measurements that actually lead to sales and profits.

Progressive marketers and their agencies are exploring this brave new frontier.  Instead of just looking in the rear view mirror at historical measurements like sales and market share, they are attempting to look ahead at predictive measures that are the actual precursors of business success. Most “leading indicators” never appear on a financial statement, but they can – and should – be identified, tested, and tracked.

Identifying the real causes of brand health is vital to successful brand management.  For example, most brands with call centers, which includes a lot of B2B brands, commonly measure such things as time on hold and minutes per call.  But these metrics don’t measure or predict real customer satisfaction.  Research by Convergys shows that customer satisfaction is predicted by two things: 1) Is the customer service representative knowledgeable? and 2) Is the problem resolved on the first call? (Convergys 2008 U.S. Customer Scorecard.)

An important difference

Lagging indicators are simply a measurement.  Leading indicators are a measurement tied to a hypothesis, which can be tested and refined, in order to explain or predict behavior.  Imagine six friends getting together every Friday night to play poker.  Over the course of a year, on person wins 60% of the time – the other players win much less often.  These statistics are all lagging indicators; they tell us what has happened.  But they don’t tell us why.  You might be inclined to think the 60% winner cheats, but in fact he wins so often because everybody else in the group has such a poor poker face.  The point is that you learn nothing by observing the result – only by understanding the process that leads to the result.

For example, If you reverse engineer most successful marketing programs, you’ll find that they center around a hypothesis based on a powerful insight into buyer behavior. That hypothesis can almost always be considered a leading indicator.

All measures are not created equal

While predictive is better than historical, this isn’t to say there isn’t a place for lagging indicators in marketing measurement. Some lagging indicators – such as incremental profits generated from a campaign – are important and relevant measures of marketing success.  The same is true with lagging indicators like brand penetration and average price per unit.

But many traditional measures of success are the result of historical practices rather than a careful study of cause and effect.  Correlation is not the same thing as causation.

For example, while sales is the most common “hard” metric of success, campaigns that focus on reducing price sensitivity are more effective than those that focus on building volume or market share.  In other words, we’ve learned that value share more important than volume share.

As Einstein said, “Not everything that counts can be counted, and not everything that can be counted counts.”

Brand health as human health

It’s critically important to measure B2B brand success using a combination of both leading and lagging indicators.  You can think of the health of a brand in the same way we think about the health of a human body.  A physician would never attempt to diagnose a serious problem merely based on a few outward symptoms.  He or she would also likely measure temperature, blood pressure, organ functions, and other things that would give a more complete picture of health.  Diagnosing and monitoring the health of a brand involves the same dynamics.  Sales and market share alone only tell us the brand is healthy or sick, but don’t tell us why.

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Two Different Kinds of Indicators of B2B Brand Success

At a time when marketers are looking to prove the value of every marketing dollar spent, their agencies have an opportunity to provide an immensely important new dimension of value by helping their clients develop and test leading indicators of brand success.  Far too many agency-client relationships begin only with a “scope of work” instead of an understanding of “scope of value,” a clear distillation of the desired outcomes that combines both lagging and leading success metrics.

Knowing the metrics that matter should be part of the intellectual capital an agency brings to the relationship it has with its clients. By measuring what matters, brands can make limited marketing dollars go much further in these economically challenging times.

Ray Baird is President of RiechesBaird

Originally posted on B2BBrandDebate

If you were asked to randomly search 15-20 B2B technology brands online, you’d probably come to the same conclusion. Most are boring. But why? You’d think innovative companies would breathe innovation into their brands. But that’s not the case. Here’s my conclusion and most importantly a few ideas for technology executives and marketers to explore.

Peter Drucker said it best: “Because the purpose of business is to create a customer, the business enterprise has two, and only two, basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Well, most successful technology companies get the innovation part down, but struggle with understanding the role and expectation of marketing/branding. Let’s be real, technology companies only really start thinking about branding and marketing when they have to. And it’s very difficult to educate a technologist on the importance of branding and marketing. I can’t tell you how many times I’ve heard, “the leaders of the company don’t get it and don’t know what it costs.” The result: boring brands and uninteresting branding. So, what can we do about it? Here are a few things to consider:

1. Know your audience. Talk in their language.
First of all, you’re not selling branding, you’re selling hope and future business success. So, you need to find the hot buttons of the sponsor you are trying to educate. Start by identifying the benefits. CEOs need to hear about maximizing the corporate value (get the category and story right for increased profits). CMOs want to demonstrate preference for increased pricing (smart branding can drive market share). COOs need to understand how internal branding can align the organization (increased performance). And smart CFOs need to know how brand strategy can help during M&A (eliminate risk and maximize investment).

2. Demonstrate versus complicate.
Another way to help executives understand what great brands are made of is to find relevant examples that allow them to visualize themselves. For example, if you are in the B2B midmarket software space, go find examples of outstanding work they can relate to. But make sure you link it back to a clear business strategy/brand strategy and examples of fresh marketing. Excite you audience with what’s possible. Set the bar high.

3. Have a process. Get buy-in for the deliverables.
Two quick points here: follow a proven best practice process and make sure everyone has a clear understating of the deliverables. It’s critical to have your executives on board before the creation phase begins. Building a world class B2B brand starts at the top. Don’t think you create it in isolation and expect them to buy off. This just does not work. Remember you’re selling hope and imagination.

4. Be courageous.
Lastly, great brands are created by people with courage to try new things. Don’t resort to mimicking safe strategies. Find greatness and promote it fearlessly. Remember your job is to inspire and create. And if you do it right, you’ll be rewarded for the efforts and leave a wonderful legacy.

But that’s just my point of view. What’s yours?