A metric allows you to measure how well your business is performing in a certain area.
Financial services brands can use them, for instance, to find out how valuable their brand is and how much penetration it has achieved into the target market.
The difficult thing about measuring financial branding concerns the elusive nature of branding itself. A “brand” isn’t an easy thing to pin down or define, let alone measure. Yet measuring the value and effectiveness of your financial services brand is one of the most important, and worthwhile, endeavours you can embark upon.
In this article, we define financial branding as how people perceive and experience your company. That includes your visual identity such as your company logo, for instance. However, it is also much wider than that. It refers to your business personality expressed through things like your core values, unique value proposition, and distinct target audience.
With a “bare bones” definition of financial branding now in mind, let’s turn our attention to some of the key metrics you can use to measure the performance of your financial services brand:
#1 Brand Penetration
Brand penetration is all about determining how popular your financial branding is within your target market. On a very simple level, you determine your brand penetration by counting the number of clients who purchased your financial products/services, and then dividing this figure by the total number of people in your target market.
For instance, suppose you are a financial adviser focused on your locale. First of all, you can count up your total client purchases over the past year. Secondly, you could then count up the total number of potential clients in this area. After this, divide the first number by the second and you will get a percentage figure showing your market share.
It might be that your brand penetration is quite low, compared to competitors in the same market. This would suggest that you need to improve your financial marketing campaigns, to encourage people to choose your brand (or switch to it, if they have a current relationship with a competitor).
If your brand penetration is high, however, then this suggests that efforts to continue growing your client base in this market will produce limited results. Instead, you might want to consider expanding your target market to include other areas or industries.
#2 Brand Development Index
Suppose you are a financial adviser who wishes to find out how well your brand is performing in one specific segment of your target market. How do you find that out?
The brand development index can be a useful way forward here. You can use it to determine, for instance, if your business owner segment within your overall market performs better than your pension transfer segment. The equation to determine this data is here:
BDI = (Brand sales to target segment/Population of target segment) /
(Total sales to all segments/population of all segments)
#3 Net Promoter Score
Net Promoter Score (NPS) is sometimes also called the Brand Referral Metric. It determines first of all whether your current clients are likely to refer/recommend your business to other potential clients.
Perhaps the most common way for financial advisers to determine brand sentiment and referral likelihood is via online surveys. For instance, your survey might include a question such as: “Would you recommend our services to a friend, colleague or family member?”
Typically, the question will then include a ten-point scale, where clients can rank the likelihood of their referral (with 1 being the lowest probability, and 10 being the highest). Once you have all of your clients’ scale numbers back, you can then divide your clients into the following groups:
- Promoters (score 9 – 10)
- Passives (score 7 – 8)
- Detractors (score 0 – 6)
From there, you can then determine the overall Net Promoter Score for your financial branding:
NPS = % of respondents who are promoters – % of respondents who are detractors
This should give you a figure somewhere between -100 and 100.
#4 Brand Equity
Figuring out your brand equity is one of the hardest metrics to deal with. As mentioned earlier, your brand comprises multiple elements which can influence your potential clients’ choices, including your logo, promises, brand values and so forth.
Nonetheless, the fact that your financial branding can have such a dramatic influence on your clients’ buying decisions shows that your brand is an immensely powerful asset – albeit a very intangible one. Your branding, for instance, has the power to encourage clients to purchase your services at a premium price, or increase goodwill with business partners and media.
Generally, only large financial services brands are likely to have the means and resources to determine their brand equity. However, it is possible for smaller businesses (e.g. IFAs) to arrive at a fundamental understanding of their brand equity using models including:
- Cost-Based Brand Valuation. This is where you determine the value of your financial brand through the sum of your brand assets’ and liabilities’ individual value and costs. This is an especially useful approach after you have recently concluded a rebranding project, for instance.
- Income-Approach Valuation. Here, you consider the value of future net earnings which can be directly attributed to your financial brand. This can then help you assess how valuable your brand is in its present form.
Remember, your brand equity is a crucial factor in determining your competitive position. So it’s vital that you try and understand the value of your financial branding, as much as possible, in order to exploit this to your advantage.