Business Strategy Metrics for Enhancing Brand Value

CFO: We hit 4 ROAS at a 5 MER. Acquisition offer incoming? Acquirer: Those numbers mean nothing. You have zero fundamental asset value. CFO: What? Our growth is 40% year-over-year! Acquirer: And what happens when you turn off the marketing spend? CFO: We'd never do that. Our funnel is optimized to perfection. Acquirer: That's exactly my point. You're dependent on constant ad spend to survive. CFO: But we're incredibly efficient at converting traffic! Acquirer: I don't care about conversion efficiency. I care about building something that lasts. CFO: Our LTV:CAC is 3.5. That's industry-leading! Acquirer: Looks good on paper, but it ignores discounts, ad spend, and variable costs. What's your contribution margin? CFO: So what metrics actually matter for acquisition? Acquirer: Three things. First, revenue resilience - can you maintain sales when marketing stops? CFO: Our customers are loyal... Acquirer: If that were true, you wouldn't need to spend 30% of revenue to keep them coming back. CFO: Fair. What's the second thing? Acquirer: Distribution breadth. DTC-only is a strategic chokepoint. CFO: But wholesale dilutes our margins and direct relationships. Acquirer: Which brings me to the third pillar - margin structure strong enough to support multiple channels. CFO: Our gross margins are healthy. Acquirer: But not healthy enough to maintain profitability in wholesale while still investing in brand. CFO: You keep saying "brand" like it's some magic solution. Acquirer: It is. Brand is what lets you command premium pricing, enter new channels, and acquire customers organically. CFO: But how do we measure brand impact? Acquirer: Track the percentage of revenue from unpaid channels. That's your brand strength. CFO: So you're saying our perfect ROAS and MER are... Acquirer: Signs you're overly dependent on paid marketing. True asset value lives beyond ad spend. CFO: Our investors love our efficiency metrics though. Acquirer: Smart investors know sustained profits beat temporary growth. Marketing efficiency means nothing if revenue vanishes when ads stop. CFO: So we need to build resilience, distribution, and margins? Acquirer: Exactly. And a strong brand is the only way to achieve all three. CFO: I've been chasing the wrong numbers my entire career. Acquirer: Most D2Cs are. That's why they're dropping like rocks when they try to become profitable. CFO: Like Taylor Swift said - we had the numbers, but we were missing the whole story. Acquirer: And now you're ready to build something with Reputation and not just folklore.

Every head of marketing I talk to is fixated on the same 3 vanity metrics. • Platform ROAS • Repeat sales percentage  • Conversion rate But these aren’t the true indicators of business growth. They account for local optimization – even when they're in the green, they might not impact your business health. Here are 3 metrics you should focus on instead: 1. Instead of platform ROAS, focus on Marketing Efficiency Ratio (MER) Platform ROAS (e.g. Meta reported revenue ÷ Meta ad spend) only tells part of the story. The problem: Add up platform-reported revenue across channels, and you'll often get 2-3x your actual revenue. This is the fundamental error in attribution. All platforms claim conversions for themselves. Marketing efficiency ratio (total revenue ÷ total ad spend) shows true performance because it's objective – real money in versus real money out. 2. Instead of repeat sales %, focus on repeat purchase rate by cohort Repeat sales tells you what portion of this month's sales came from existing customers. It's backward-looking and easily distorted. I recently talked to a brand with 40% of sales coming from repeat customers. Sounds healthy, right? But their cohort retention showed only 10% of customers returned after a year. Not healthy. This brand had been in business for 10 years but wasn't adding many new customers. Their seemingly healthy 40% repeat purchase rate masked an acquisition problem. The problem is that repeat purchase rate combines all historical customers into one bucket, hiding true retention patterns. Cohort retention follows specific customer groups over time, showing exactly how loyal different segments are. 3. Instead of conversion rate, focus on pure revenue growth I constantly get asked: "Is my 0.8% conversion rate good? Is 3% good?" That percentage alone doesn’t tell you much. When traffic grows, conversion rates naturally decline. Some of Polar Analytics 🐻❄️’s most successful clients – doing hundreds of millions in revenue – have conversion rates below 1%. From the outside, that might seem terrible. But they're crushing it because their revenue is growing 2x year-over-year, and that's what matters. Platform ROAS, repeat percentage, and conversation have their place for tactical optimization but won't show your true business health. Marketing efficiency, cohort retention, and revenue growth will. If you need help setting up these metrics, DM me.

When it comes to understanding the true value of a brand, Brand Finance employs a highly structured and data-driven 7-step approach that combines financial analysis, strategic insights, and future projections to accurately estimate brand worth. Market Definition: This involves identifying the relevant markets where the brand operates. Brand Financial Performance: This step focuses on assessing the financial performance directly attributable to the brand. It includes analyzing key financial indicators such as revenues, profits, and growth rates to understand the financial impact the brand brings to the business. Brand Contribution to Profits: Next, it’s critical to measure the brand’s contribution to overall business profitability. This step analyzes how much of the company’s profits are directly driven by the brand’s strength and market influence. This separates the impact of operational efficiencies from the unique value created by the brand. Brand Strength Evaluation: Brand strength is evaluated using qualitative and quantitative factors, such as brand awareness, reputation, customer loyalty, and the strength of its competitive position. Tools like consumer surveys and brand equity models come into play here, and the outcome is often expressed as a Brand Strength Index (BSI). Royalty Rate Determination: In this step, Brand Finance estimates the hypothetical royalty rate that the brand could command if it were licensed to third parties. This is based on industry benchmarks and comparable brands. Stronger brands typically command higher royalty rates. Brand Revenue Forecasting: Forecasting future brand-related revenues involves projecting the potential future growth or decline of brand-driven revenues. This forecast takes into account market trends, historical performance, and strategic initiatives the brand plans to implement. Discounted Cash Flow (DCF) Analysis: Finally, the projected brand revenues are discounted to the present value using a suitable discount rate. This step generates the final brand value, representing the present worth of the future cash flows attributable to the brand. It’s a robust financial model that helps ensure an accurate and reliable brand valuation. By following this comprehensive approach, businesses can gain a clear, financially sound view of their brand's value, helping them make informed strategic decisions. The process aligns with ISO 10668, the international standard for brand valuation. #BrandValuation #MarketingStrategy #BrandFinance #BusinessValuation #BrandStrength #FinancialAnalysis #ISO10668 #RevenueForecast #DataDrivenDecisions #MarketDefinition #BusinessGrowth #FutureProjections