Measuring How Well Your Brand Performs: Using the BDI

It is a given that every product or service your organization offers does NOT appeal to everyone. In fact, it is likely that there are specific customer groups that are more interested in particular offerings than others. In today’s Metric Monday, I am going to explain how to do a Brand Development Index which will help you identify strong and weak segments (usually by demographics or geographics) for a particular product/service or type of products/services.

The application of this awareness can help you determine if there are pockets within your customer community that tend to purchase specific things more often than others, or why some pockets are under-purchasing compared to their peers. Ultimately, this will help you to create targeted communication strategies to encourage more usage/buying, or to create a product improvement plan to fill in any value gaps.

A Brand Development Index is a pretty straightforward calculation. Again, it is an measurement of how well a product/service performs within a given market group of customers, relative to its performance in the market as a whole. To begin with, you need to be able to specifically identify a target group. The more homogenous that group is the more likely it is your data can be acted upon with confidence. For example, choosing to select only by women may not give you the same confidence as selecting women who are frequent users and who have children in the home between ages 1-9. (NOTE: Whatever criteria you choose by should be linked to your overall research goal.)

Okay, once you have this group identified add up all the sales for a particular product/service by that target group and divide it by the total number of people in that group (you can also divide by households if you don’t have individual data). Hold on to this number. Now, in a separate calculation divide the total product/service sales by the total persons/households. Take your first number and divide it by this new number.

Your calculation should look something like this:

Because your BDI is a measurement of sales by a particular product/service per person (or per household) within a specific demographic group, compared with the average sales per person/ household in the market as a whole, you’re able to quantitatively see how parts of your customer community are buying what you’re offering.

Bottom line: Measuring the total sales, registrations, etc for a product, service, or event is sufficient if you’re needing only a top line number to work with. But if you are interested in creating specific strategies for groups within your community, you need to understand how they’re using your products and services. And because you’re creating an index number that can be benchmarked, now you can test to see if specific marketing messages or campaigns are making an impact.

-- David Kinard, PCM

5 Steps to Great Market Research

The use of market research has made a significant shift during the past 20 years. In the past, smaller companies generally did not make significant use of market research and let the big companies spend the big dollars to uncover marketplace trends, consumer opinions and behaviors.

However, today nearly every organization has a plethora of market research available to them because of social media technologies and the Web. This means there really is no excuse if your organization is not becoming more aware of its industry, market, and served communities.

To begin with, it is worthwhile to note there is a difference between marketing research and market research. Although they are closely related, marketing research is typically referred to as the design, collection and analysis, and reporting of data and findings relevant to a specific marketing situation facing a company. In other words, marketing research is more about the process than the findings.

On the other hand, market research is research into a particular market, segment or audience-type. It is generally considered to be a component of marketing research. I bring this difference up not because you need to worry about it in how you do your own work, but if you utilize the services of a research firm this will help you speak their language.

Step-By-Step
There are five basic steps in developing a marketing research project. For sure you can just hit the Web and start looking for information. But without some kind of objective in mind, or idea of how you might use the information you find, that searching around is likely to be less effective in the long run. The five steps are: 1) defining the problem or objective, 2) developing the research plan, 3) collecting the information, 4) analyzing the information, and 5) presenting the findings.

Begin with the End in Mind
There is an old adage that says, “A problem well defined is half solved.” This first step is critical to having a successful and relevant marketing research project. It begins with the end in mind and asks “What do we need to know?” “What could we do with the information we get?” “What if we find out something we didn’t expect?” “Why do we need this information?”

Other questions that need to be asked include is the research objective a long-term or a short-term issue? Is it specific enough to be tested or does it wallow in generality? Is the project exploratory in nature (gathering preliminary data and making suggestions for new ideas), or descriptive (trying to ascertain a quantitative finding), or even causal (an attempt to test a cause-and-effect)?

Whatever the motive or type of objective generated, a clear definition as to the research objective or problem is essential. Articulated clearly, it serves as a true-north keeping your research focused and relevant. Without this clearly defined objective, any research you do will be riddled with unnecessary waste and unclear results.

So, for the first step, take a look in your organization. What customer or industry information do you need to operate your business more effectively that you don’t have? What new product or service could you launch if you just had a bit more information about viability and acceptance?

Map Your Strategy
Before implementing any research project, it is vitally important to map out a research plan that is tied to a budget. Research can get very expensive as the different types of research activities vary in associated costs. Additionally, mapping out a research plan is imperative to identify and articulate how the research will be used to improve or develop bottom-line profitability.

If the research can only be articulated as an expense and doesn’t demonstrate a route to increased efficiency or effectiveness, then go back to step one and rethink your objective. This is a major “A-ha” check point to ensure you’re on the right track.

After a budget has been prepared, you’re now ready to begin looking at what types of information you need. There are two types of data sources available: primary and secondary. Primary data is usually gathered for a specific purpose or for a specific project. It is first-generation data generated to answer a specific research question. Secondary data is data that were collected for another purpose and already exists somewhere else.

There are lots of sources of secondary data available to you. They include internal sources (your database), government publications (statistical abstracts, Census, Industrial Outlook), periodicals and books (encyclopedia of associations and trade magazines), and commercial data (MRCA Information Services, Nielsen Company Reports). Many sources of information are available on the Web. Just be sure to vet the information to ensure its accuracy.

Primary data can be collected in a variety of ways. Observational research, focus-groups, surveys and experiments are just a few. These methods utilize two main instruments to gather information: questionnaires or mechanical devices.

Once the research approach and instruments have been decided upon, the next step is to develop a sampling plan. This plan asks three questions: Who is to be surveyed (sampling unit), how many people should be surveyed (sample size), and how should the respondents be chosen (sampling procedure).

Collecting the Data
The data collection phase of marketing research is generally the most expensive part of the process. This usually involves some type of third-party vendor or firm, or extensive in-house staff hours to conduct the research. Whether the collection efforts are in-house or outsourced, it is important to make sure that the integrity of the data collected is high. The removal of interviewer bias and the standardization of the collection process is paramount.

Data collection methods vary greatly and technology is playing a huge role in its development. Today, choices range from professional interviewers who sit in booths and have computers that randomly dial numbers. When a call is answered, that person’s information pops onto the screen and the interviewer asks the questions and types in responses. Other forms of collection include kiosks in malls, or family-based behavior monitors that record television watching habits and their correlation to buying behavior.

Analyze Your Analysis
However you choose to gather your research information, the tricky part then becomes how you analyze it. Depending on how many variables you have in your research project, the complexity of analysis will vary. There are a variety of statistical tools, models and optimization routines that any research firm worth their salt will know and use for you. This analysis should provide you with an answer to your original question/issue, or be able to generate further questions for study or clarification.

The trick in analyzing the information is not to get carried away with looking at the data in every possible way. Look for your answer. See if there are any relevant connections to other data and move on. Don’t get caught in paralysis by analysis.

Getting the Answer
After the information is analyzed, the last step in the marketing research process is to present the findings. Whether presenting to a board of directors or to yourself, it is important to write up a report outlining your findings. Document your efforts and processes for future reference. You’ll be glad you did! Of course, findings can suffer from a variety of errors. If so, this findings report is the basis for your next research project.

Hopefully this article has helped you consider your own company’s research needs and outline how you might begin your own marketing research project. For recommendations on good research firms in your area, contact your local chapter of the American Marketing Association. They can give you some suggestions.


-- David Kinard, PCM

Priorities May Need Adjusting

The American Marketing Association and Lipman Hearne joined forces to produce a report on The State of Nonprofit Marketing. The report, released in July 2008 identified top priorities, strategies that are working, marketing metrics, and a look ahead at the challenges nonprofits face. More than one thousand nonprofit marketers participated in the survey, with a wide representation of various types of nonprofit organizations. The respondents were fairly senior in their roles within the organization.

What strikes me with perennial disappointment is that these marketers self-reported their most effective strategies for achieving their top priorities, but…

“the highest rated metric – event attendance and revenue – scored only average as indicators of success. While considered a top strategy, public relations efforts were not being effectively measured. Print and interactive advertising, often considered essential in brand building, were also among the lowest in being examined for identifiable, measurable results. In many cases, nonprofits were not measuring results at all. More than a quarter of survey participants were not monitoring web activity or public relations responses.”

In fact, when asked to rate their effectiveness in measuring various tactics, only two items earned a score of 3 (with 1 being poor and 4 being very effective). The remaining list of 19 items had scores ranging from 2.8 to 2.1. What seems unconscionable is that these same organizations year-after-year spend scarce resources on the same tactics without any relevant data to suggest if those tactics even work. Then they write their donation letters asking for more money.

Recently on a LinkedIn discussion forum, I defended non profits as being staffed by well-educated leaders who possess a skill-set that easily compares to their for-profit counterparts. And indeed, their sense of accountability is profoundly felt though some may decry poor results. The amazing things these leaders are able to accomplish with limited resources makes them far better managers than many of their budget-rich corporate peers.

But now I wonder if I was right to make such a claim.

Tracking event registrations, overall revenue, and member recruitment are excellent metrics when trying to assess the organization at macro levels, but non profits and cause-related organizations must do a better job of getting into the details such as tracking the effectiveness and impact of their advertising and direct mail. And these organizations must fully embrace digital tools and track and measure their search engine optimization, earned media, Web traffic, and blogs and tweets.

Maybe for 2009, the first priority should be to ensure all marketing is accurately and usefully measured.

-- David Kinard, PCM

Fight Commoditization with Real Value

I just finished reading an amazing book by Erich Joachimsthaller, Hidden in Plain Sight: How to find and execute your company's next big growth strategy. It's a fabulous book and I'll be interviewing Erich on my radio program on Wednesday, November 19 on wsradio.com.

One line in the book hit me like a ton of bricks this weekend while I was reading it.

"We were a highly specialized product turned into a commodity."

To be clear, the line references a German insurance company who by all accounts was a superior product in the marketplace, but because people where shopping on price, none of their elaborate feature sets meant anything. I see this same situation so often; price-driven markets turning complex and highly differentiated products into commodities. So what is a markter to do?

Well, first you should read this book and it will tell you what the insurance company did. But aside from that, you need to ensure your head is not hidden in the sand, hoping that somehow consumers will suddenly wake up to your messaging and branding and agree with you that your products are truly the unique offerings you believe they are. It's never going to happen.

When a product is willingly or unwillingly turned into a commodity by the market and consumer opinion, the simple fact of the matter is that the product has failed to rise above the fray and create a demand ecosystem. In other words, I would say that most products suffering this fate are developing and pushing feature sets that are not relevant, not important, and don't resonate with consumers. That's why they're comparing only on price, because you're just as good, or good enough, as everyone else.

I think Joachimsthaller brings out many excellent ideas in his fresh book and it shoudl be required reading for MBA students. Oh wait, I teach MBA classes, and I assign the books. Guess what folks -- it's now on the reading list!

-- David Kinard, PCM

Hidden in Plain Sight is also the American Marketing Association Foundation’s Berry Book Award winner for the best new book in marketing.

Yeah, so?

People who know me know I believe in courageous conversations. Typically these happen in personal relationships when it takes courage to approach someone and talk about an uneasy subject. But the same is true for business situations. Those courageous conversations happen when creating strategy, thinking about the competition, or evaluating the power of your value proposition.

Posing the right questions gets to the root of issues and assumptions about ourselves and our competition. They are the "bare-naked truth" questions often avoided not because the questions are offensive or even complex, but because we don't have the answers we should. The quality of a question determines the quality of the response. When we ask easy questions of ourselves or our competition, or questions that can't be answered, the answer gives us exactly what we put into the question--easy answers or no answer at all.

What powerful questions do is give us a broader range of exploration. They lead us to examine possibilities and develop scenarios that can lead to competitive advantages. Powerful questions do not have to be complex or sophisticated. My favorite one is: "What would happen if we did nothing?" And another: "Why?" "What is this for?" and "So, what?" These questions cannot be answered easily or quickly; though beware the people who promise that they can. Questions like these require thoughtful consideration of all the possibilities. They allow the us to create different scenarios leading to innovation and leadership within the marketplace, which is what competitive intelligence and positioning is all about.