Over the last few decades our country, and much of the Western world, has been transformed. Our largely manufacturing based economy has morphed into one where three quarters of us are now employed in a service economy which now accounts for a similar proportion of GDP in the UK. Re-reading a favourite FastCompany article by Tim Brown recently, one quote stood out:
“Service brands have a horrible habit of focusing on the one interaction where they think they make money”
If you’re an airline, it goes on, this might mean focusing all of your attention on what it’s like to fly a particular route on a particular aircraft, ignoring all of interactions that your customers have with your brand that are relevant.
So if you’re a company looking at your recent performance what does it mean? Perhaps it means something like this.
There is something particularly unsettling about the tiny proportion of FTSE 100 companies that use brand and marketing measures as key performance indicators, whilst almost a quarter of them have KPI’s (like sales) which are in significant part driven by marketing activity. Of the KPI’s reported on, the most popular typically included earnings per share, profit and revenue metrics, CO2 emissions, and employee retention rates.
Why is brand equity so undervalued (particularly when, as Moray MacLennan says, it accounts for “12% of a company’s value”)? Why is there such a disconnect between marketing activity, sales and other performance benchmarks?
Perhaps with ever shortening business cycles, the real issue is to prevent marketing & advertising being seen as a short-term reactive tool rather than what it actually is: a brand builder and a business builder.