Why ROI may be the wrong measure of success.

There is no standardized metric or database in the financial services industry today that measures and quantifies the brand value and ROI of community banks (non-publicly traded) or credit unions. Yet many executives desire to know the ROI before acting on needed improvements and investing in their brand, logo or name.

Financial leaders who have completed strategic rebranding programs point directly to their significant investment in an enterprise-wide rebranding effort and attribute a range of direct and substantial impacts ranging from higher client acquisition rates, increased lending, higher employee engagement and NPS scores and market share expansion.

Interestingly, the same desired standard for ROI is rarely used for many other capital investments leaders routinely make in technology, branch automation and operational projects. Brands are a less tangible asset compared to online banking system upgrades that enhance user experience, yet there is no standard ROI for tech investments. However, a weak or poorly differentiated brand can stifle market awareness, diminish prospect interest and slow market share growth (including new branch investments). Few leaders ever ask the question: What is the risk, or lost “opportunity cost” of an ineffective brand, a confusing name or a dated logo and brand image?

Your financial institution’s corporate brand and image is arguably far more valuable an asset, and more visible than a $2.0 million investment in one new freestanding neighborhood branch. Your brand shapes market and consumer perceptions and defines your competitive market positioning and reputation. Many leaders know their brands are ill-defined, or even impossible to articulate clearly. Their brands are inconsistently linked across channels, not understood among their employees, and randomly communicated across marketing, channels and social media.

While leaders understandably love to see the marketing ROI metrics of loan campaigns, email and digital marketing, these are short-term measures—and while vital to driving revenue, they are not the most important strategic measure of a high-functioning organizational brand program with competitive market distinction. These are larger and significant measures that influence growth, market image and cultural alignment.

Why "ROO" is a better long-term measure of brand success and cultural alignment than ROI alone.

Should the lack of a tangible ROI stop your organization from tackling a transformative branding process to articulate the current equity (good, bad and ugly) in your brand, name, branches, mobile and channel experiences today, so you can make badly needed improvements?

Is it possible that ROI might actually be the wrong primary measure of investing in your corporate brand, logo or your name to improve your competitive distinction? Targeted market growth planning, successful brand differentiation, high NPS scores, cultural alignment and employee satisfaction can all be part of a wider set of vital signs of a thriving and well-focused organization—beyond ROI.

Organizational improvement factors that help you increase your competitive market differentiation, raise market awareness of your unique value proposition, and bring positive shifts in consumer perceptions that lead to accelerated growth, plus market share and retention are what we call ROO (Return on Objectives). Collectively, ROO can drive market share, wallet share and long-term performance gains.

In our work with large credit union and community bank clients across the US and Canada, we have quantified a wide array of organizational growth metrics, multi-year trend patterns, and consumer and leader anecdotes, cultural shifts and stories that unequivocally demonstrate that their brand investment drives measurable organizational improvements.

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“We’ve learned that making data-driven market decisions and growth forecast planning, combined with understanding our target member’s preferences and behaviors, has led us to make more intelligent and far more accurate decisions that have helped increase Logix’s bottom line performance and to deliver rich and distinctive member brand experiences.”

-Phil Hart, COO, Logix Credit Union, CA, $5 billion

Why global brand leaders understand the value of their brand.

Sophisticated public companies with measurable stock values like Amazon and Starbucks don’t ask what the ROI of branding is before they invest major resources in managing and evolving their brand experiences, market perceptions and internal brand culture. They actively manage, design, reinvent and proactively work to keep their brand evolving, relevant to consumers and “best in class.”

The most successful corporate leaders know that a strong brand image, superior brand experiences online, in-store, via mobile channels, and design and product innovations yield huge payoffs in ROI, growth and stock value.

"Branding demands commitment; commitment to continual re-invention; striking chords with people to stir their emotions; and commitment to imagination."

-Sir Richard Branson, CEO, Virgin

The most renowned measures of the economic value (and ROI) of public company brands is a decade-long program developed by Kantar Millward Brown called BrandZ. Each year they identify the most successful brands in the world by industry, including financial services.

Their formula attributes stock performance, increased revenues, market share growth and consumer survey perceptions to quantify an organization’s brand value.

In 2017 BrandZ valued the VISA brand at $111 billion; Apple at $235 billion and Chase Bank’s brand at $14.3 billion. Google was ranked the #1 brand in the world, valued at $246 billion. 

Strategic branding programs that become an enterprise-wide focus strongly influence and ultimately improve growth and ROI. But like many major strategic growth initiatives, they are better defined as ROO investments that must be made to evolve, compete, retain and inspire people, resulting in sustained performance and consistency. 

Following a 2014 rebranding and name change program to attract a younger audience and badly-needed loan growth, Jim McCarthy, CEO of Trailhead, a Portland, Oregon-based credit union, attributed the bulk of their financial success metrics to their enterprise-wide, transformative brand process initiative. McCarthy shared, “We don’t have the budget to do large ad campaigns, so I’d say we’ve attracted that millennial audience through our new and distinctive brand image. Employees feel a new sense of pride in our brand.” The results have been staggering, and record growth trends continue three years later in 2017: 

  • In the first year, lending increased 18%; Loan to share ratio increased from 59% to 78% and website traffic increased 28%.

  • New account growth increased 367% to 131 accounts a month.

  • Trailhead achieved it’s highest earnings in 10+ years: NIM increased 71BP; Net Worth grew 54BP.

  • Net member growth went from 7 years of negative growth to +18.9% the 1st year; then averaged 15.7% growth annually the next three years (2014–2017).

 Read a case study on Trailhead Credit Union  here .

Read a case study on Trailhead Credit Union here.

While Trailhead’s performance numbers are not about ROI alone, no one could argue the direct value, payoff and residual benefits of the investment in a comprehensive rebranding and renaming program. It moved Trailhead from seven years of stagnation to accelerated growth, financial health and a staff culture on fire with renewed enthusiasm and newfound focus. Trailhead has also successfully acquired a critical and elusive younger Millennial target audience. Millennials aged 25–34 grew 173% from 2014 to 2017, reducing their average member age by an incredible 8 years in three years.

So why can't you measure all brand projects with an exact ROI?

Some financial leaders believe marketing, advertising or branding efforts must show an ROI or they have no value to the organization or bottom line. Branding and marketing are held to a higher standard of ROI tracking. Yet few would argue that investing in your organization’s brand, culture, channel design and reputation among clients, prospects, stakeholders and your communities is crucial to future success. 

Some CFOs use pat formulas to show a breakeven or ROI for a handful of projects, such as building a branch. Quantifying brand (or name change) ROI is nothing like showing a branch breakeven analysis or an ROI for a $2.0 million freestanding brick and mortar branch investment that is simple to forecast. You can model ROI assumptions of fixed costs, chart predictable growth assumptions, new client growth, deposits and fee income against overhead costs and net interest margin.

Unfortunately, most historical branch ROI methodologies vary widely today in accuracy and true “attribution” (especially as branch transaction volumes are declining annually an average of 3-5%). Branch ROI relies solely on the new branch itself, ignoring direct marketing, staff cross-selling, business development, public relations, events, rate specials or targeted media efforts. Those factors and resources rarely make it into the ROI or break-even calculation of branches.

As your organization faces critical investment scenarios beyond technology alone to evolve and innovate your brand, name or logo to increase relevance to your markets (or targets like younger professional Millennials), consider using ROO in making wise decisions that balance risk against driving sustainable growth, market expansion, cultural focus and enhanced competitive performance. 


Original abbreviated article published here on The Financial Brand.

Mark Weber, CEO, Weber Marketing Group

Mark is a marketing consultant, brand strategist, and data analytics expert. He advises clients on strategic growth and transformational initiatives. He is a national speaker and author, and blogs on brand strategies, business intelligence, and consumer behavior trends. Read Read more...

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