The KPIs that Matter for Lifestyle Brands06.20.18 / David Lemley
When it comes to measuring business performance, so many retail brand owners live and die by the numbers.
Revenue, profit, same-store sales margin, ratio of assets to debt — these are the types of key performance indicators (KPIs) that years of experience and a business school education have taught you are the best and likely only ways to measure the success of your brand.
But what if there were other KPIs you should be using to measure your brand’s health and scalability? What if the performance indicators that really matter to your brand are more qualifiable than quantifiable?
The secret to uncovering these hidden KPIs is to look out for the six indicators that could signal a performance problem for your brand:
6 Signs of Brand Underperformance You Didn’t Know You Should Look for
1. Employee Disengagement/Culture Problems
Strangely enough, we often find employee disengagement and culture problems most prevalent in companies that, for all intents and purposes, should be thriving.
Maybe the timing is just right for their brand or product line to come into the marketplace. Or perhaps there’s enough operational significance to ensure widespread manufacturing and distribution. Whatever the reason, from the outside looking in, these are companies that look like they have it together.
On the inside, however, these companies have a culture problem. Maybe employees are scared to speak up for themselves and their customers. Or perhaps leadership has created a culture of insularity. Whatever the reason, these employees can no longer be relied upon as brand ambassadors.
The key lesson here? Disengaged employees will ultimately lead to disengaged customers — and that’s something that will, without a doubt, impact your bottom line.
2. Innovation Overload
Brands that have been around for a few decades are the ones most prone to excessive brand extension. After so many years in business and with manufacturing capabilities at an all-time high, it’s easy for the products to start piling up. Many times, these brands don’t even realize how oversaturated and unfocused their product line has become.
The issue with innovation overload is that it so often signals a problem with positioning. An enormous product line doesn’t strengthen your brand — it dilutes it. You’re better off with a small, targeted product line that considers who your audience is and what they need from your brand.
3. Innovation Stagnation
When we talk about innovation stagnation, we’re not just talking about a drought of ideas. Any brand can dream up a new product. What we’re really talking about is a lack of strategic innovation — an inability to come up with ideas for products that logically extend into your customers’ lives.
Let’s say you have a product that’s selling well and bringing real revenue to your company. This product has been your bread and butter, but you know there’s untapped opportunity to capitalize on your brand’s reputation in the marketplace.
The natural next step is to extend your brand with a new product line or offering, right? But simply creating a new product is not going to fix an innovation stagnation problem. To generate real revenue for your brand, your brand extension has to be strategic.
4. Limited Distribution
We work with a decent number of lifestyle brands that have rightfully gained a cult following — just with a small audience and only at a handful of retail chains. For some retail owners, limited distribution may make sense. But success on a limited scale can be problematic.
We recently partnered with a health food brand that had for many years sustained their business as a top seller at two big-name retailers. Fast forward a bit and the marketplace for their product became flooded; so much so that they could no longer hold their #1 spot at these two retailers. Because they had put all their eggs in one basket, they were left scrambling to convince new retailers to carry their product — but to no avail. Their limited distribution threatened to become their biggest downfall.
Think about distribution like portfolio diversification. You can put all your stock in one company, but if that company fails, you’ll have nothing to fall back on. In the same way, diversifying your retailer distribution minimizes the risk that a sudden change in the market will jeopardize your brand’s viability.
5. Fragmented Messaging
Fragmented messaging is a good signal that your brand is off course. If there are 47 different versions of your brand message floating around, there’s no way for your brand to differentiate itself in a crowded marketplace. Why would customers decide to purchase your brand over a competitor if you haven’t given them a reason to?
A cohesive brand message speaks volumes. It says you know who you are, who you’re for, and what you’re about. Brands with focused, thoughtful messaging are the ones that reap the greatest rewards.
6. Emotional Attachment
One of the most obvious signs that emotional attachment has creeped into your brand is SKU proliferation. It’s natural for a brand to equate quantity with quality; but more often than not, an extensive product line says less about your production capabilities and more about your lack of positioning.
Speaking from experience, we know that most retail owners/operators truly care about the products they’re manufacturing and selling — to the point that they often let personal opinion get in the way of strategy.
Having a vested interest in your products is not a character flaw. By all means, be passionate about what you’re creating. But don’t let emotional attachment derail your brand’s purpose.
If your brand has a SKU proliferation problem, simplifying your product line is likely the solution. Evaluate each product in the context of your target market and brand promise. If that product doesn’t speak to what is true about your brand and your customers, it needs to go. Plain and simple.