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    4 Replies Latest reply on Apr 7, 2008 6:38 AM by intechspecial

    Brand Paradox: What's your ROCI?

    ibranz Wayfarer
      Pronunciation: 'par-&-"däks
      Function: noun
      1: a tenet contrary to received opinion
      2: a statement that is seemingly contradictory or opposed to common sense and yet is perhaps true
      At the heart of branding resides a distinct paradox. This article meticulously unveils this paradox and
      examines its true intricacies. It begins by asking what and why this paradox occurs. Next, it translates
      branding from the realm of the theoretical into metrics that are financially based. This approach
      illuminates the critical need for brand management, and in turn, quantifies the process into tangible
      results. A new metric arises from this process – Return on Customer Investment (ROCI).
      In previous articles, my constant droning that top management “doesn't get branding” has reached an
      apex (in my mind) and this article attempts to frame the discussion in terms that business leaders are
      most comfortable with. If “financial metrics” are more palatable to organizational leaders, then let’s
      translate branding into quantifiable terms (ROCI).

      To read more

        • Re: Brand Paradox: What's your ROCI?
          LUCKIEST Guide

          What is your Return on Customer Investment?

          <!-- Start Content -->

          CEOs and CFOs like numbers; mostly profitability numbers. If you can't
          speak their language and convert your project or proposal into numbers that talk to
          them; your chance of having it approved are slim to none.


          Return on Customer Investment is a business approach that looks at all of your customer
          focused investments and puts hard return on investment facts behind them.


          Facts that you can take to your CEO or CFO to justify the investment to drive business profitability.


          ROCI can be used to justify many types of customer focused investments including for example:

          • *Customer Satisfaction *- how oh how do you justify investing in increased customer \\ satisfaction. Its so soft and hard to relate to profit. We have several approaches \\ that can be used to develop hard business cases for investment in customer satisfaction.
          • Customer retention - Justifying an acquisition campaign is conceptually easy but \\ how do you justify investing in existing customers? Genroe have developed several \\ return on retention models that look at the opportunity cost rather than the acquisition \\ revenue of retention campaigns.



          By definition, then, a business that focuses on a niche market is addressing a need for a product or service
          that is not being addressed by mainstream providers. A niche market may be thought of as a narrowly
          defined group of potential customers.


          A distinct niche market usually evolves when a potential demand
          for a product or service is not met by any supply,
          or when a new demand
          arises due to changes in society, technology, or the general


          Niche market ventures may become profitable even though they are by nature small in comparison to the
          mainstream marketplace, due to the benefits of specialization and focus on small identifiable market segments.
          Niche markets may be ignored or discounted by large businesses due to
          what they consider to be small potential;
          this in turn is part of the
          process that makes the niche market available to smaller businesses.The
          key to capitalizing on a niche market is to find or develop a
          market niche that has customers who are accessible, that is growing
          fast enough, and that is not owned by one established vendor already.


          • Re: Brand Paradox: What's your ROCI?
            Iwrite Pioneer

            I read your article. I agree that brand needs to be considered but I'm not sure even this system of measuring is going to be accurate enough. Look at Alli, the weight loss drug, for example. The inital branding push relied heavily on PR which we know has lower costs associated with it. Out of the box, Alli was a huge success, but how do you factor in the low expenditures due to the heavy use of PR and the internet? Will this formula provide me with a clear picture of the impact and weight of a branding effort that has high response but low costs? And will the conclusions drawn present a realistic view of the value of the brand?

            More importantly, the value of branding is really a long term investment. Branding helps to develop trust between a customer and a company, this happens over time. Both Coke and Nike carefully grew and cultivated their brand over time through both good and bad periods. How does time factor into this? What about the intangibles, the Tylenol brand saw a huge increase trust worthiness and sales in the wake of their handling of the poisoning event because of great PR and a well thought out advertising campaign? Southwest Airlines with a couple of well placed and produced TV commercials was able to rebound from 9/11 faster than other airlines. How do these efforts get factored in to show the importance of branding to decision makers?

            I am trying to better understand how this works or have I missed your point entirely? Which could be the case.
            • Re: Brand Paradox: What's your ROCI?
              Lighthouse24 Ranger

              I think I'm missing the paradox. I would agree that as recently as 1990, three-fourths of the stock market capitalization (valuation) of almost any company was in its "book value" assets (facilities, equipment, and cash). Now, however, book value accounts for less than one-third of the valuation the largest 100 U.S. companies -- including Coke and Nike. From an investor's perspective, most of a company's value lies in its brands, patents, databases, and know-how. So it seems that investors would find this neither contrary to received opinion nor opposed to common sense.

              In analyzing how and why senior executives at those companies made key strategic decisions in recent years, protecting brand value often seems to be the most compelling driver (as opposed to say, safety or regulatory compliance). For instance, a commitment to be socially or environmentally responsible is often quite expensive for a company, but it boosts brand value and in turn, earnings -- so they do it with little hesitation. At this point, I don't think there are very many experienced managers who've missed that lesson.

              The truly surprising thing to me is that so few entrepreneurs and small enterprises consciously think (at the business planning stage) about building their "intangibles" including a brand -- even though such assets are clearly the prime factor in powering start-up growth and attracting first stage investors.

              Even if I missed your point (or just have a different perception), I appreciated the post/link. Thanks!

              • Re: Brand Paradox: What's your ROCI?
                intechspecial Ranger
                Not yet seen a definable return.

                Although my service takes quite an investment.

                The true paradox is that I have forgotten their is one.

                Most of my customers/clients (or C.C. for short) seem to be completed satisfied with getting something for free.

                My scheme of branding most certainly will get me somewhere.

                Yes that somewhere might be half way in between broke and a constant delusion.

                Oh my at least someone enjoy's a good service.