Someone calculating Brand ROI

Why You’re Struggling to Calculate Brand ROI

Justin Lynch
Justin Lynch

Brand Strategist & Co-Founder

Calculating ROI for your branding initiatives should be easy…right?

If you’ve ever sat down and tried to accurately calculate brand ROI you already know the answer to that question.

Spoiler: It’s not easy.

So the better question to ask is why is it so difficult to calculate brand ROI in the first place?

Your Brand Is Intertwined

Your brand is intertwined with all aspects of the company. It doesn’t matter if it’s sales, customer support, your marketing efforts, or the products themselves — they all influence the brand.

So, when your brand is strong things tend to be easier. However, when your brand is struggling it makes everything feel like a slog.

This means you can get a broad sense of how your brand is impacting the business, but it doesn’t provide the clarity needed to say with confidence your brand is directly influencing an aspect of the business.

Branding Is Only a Small Part of the Outcome

The other problem is most common KPIs are influenced by additional factors outside of traditional ‘branding efforts’.

For example, let’s look at  Customer Acquisition Cost, which follows a simple formula:
total spend / # of new customers

Breakdown of the different factors that influence the outcome of the Customer Acquisition Cost KPI

While the formula itself may be simple, the factors influencing the end result is more complex.

Your Total Spend is directly tied to how much you are spending on ads, which in itself is influenced by the market and your ad strategy.

If you’re in a competitive market you’re going to have to spend more money to acquire customers. So, right there you already have a factor (completely unrelated to branding) influencing your Customer Acquisition Cost.

This makes it nearly impossible to accurately know if branding initiatives are having an impact on your Customer Acquisition Cost.

How to Make Calculating Brand ROI Easier

The best way to make calculating brand ROI easier is to find KPIs influenced by no more than two factors.

For example, the KPI for Referral Close Rate is a great indicator of how well your brand is influencing the business. Here’s the formula:

Breakdown of the different factors that influence the outcome of the Referral Close Rate KPI

As you can see the only other factor influencing your Referral Close Rate is your brand’s influence and referral strategy.

So, if you don’t change your referral strategy for a period of time then you any changes to your Referral Close Rate are due to your branding efforts.

6 KPIs to Use for Calculating Brand ROI

Referral Close Rate is one of six KPIs we’ve identified to help you track Brand ROI.

While you can read about those KPIs, we recommend going through our free Brand ROI mini-course. It covers all six KPIs, includes a workbook with all the formulas, and you’ll finish it in under an hour!

Signup and start taking the course right away.