Increasing shareholder value is the ultimate measure of success. The right brand metrics drive the behaviors that will deliver that shareholder value, but those metrics shouldn’t necessarily be built of cost and revenue components. If financial measures are your primary metric for your brand protection strategy, you might want to rethink your approach.
The right metric has 3 critical features:
Ties performance to impact
Indicates actions to take
Is credible
For example, the right metrics for an eCommerce leader could include sales growth and market share by product, by marketplace. An eCommerce leader knows what levers to pull to accomplish goals in those areas and it is credible to both the eCommerce leader and to the management team that the eCommerce leader can and does impact those performance metrics directly.
For the same metrics to be “right” for others, the same criteria need to apply. It would be inappropriate for both the individual and for the organization.
For example, can an attorney’s actions be tied to an improvement in sales? Does that legal resource know what actions to take to grow sales? Is it credible that a legal resource will directly impact a sales number?
If so, a sales metric qualifies. If not, it does not.
Brand protection leaders are at the intersection of sales, brand, and compliance. As a result, multiple metrics are at play. Below are 8 KPIs that matter, depending on a brand’s omni-channel strategy and the structure of the organization:
8 Metrics for Brand Protection
1. Cost (resource time + $)
2. Number of sellers
3. Number of listings
4. Pricing
5. Sales volume
6. Share of revenue
7. Share of sales
8. Speed to impact
Now, let’s talk about a few different scenarios where various combinations of these metrics would apply.
Scenario A: BRAND SELLS ON AMAZON OR HAS EXCLUSIVE AUTHORIZED SELLER STRATEGY
Metric: Share of revenue (specifically buy box revenue)
In practice, Amazon Buy Box performance often becomes the exclusive way brands measure financial performance. Sales data provided by Amazon, along with advanced analytics, provides solid distribution of revenue on a brand’s authorized ASIN. Buy Box metrics are “comfortable” because they are clear.
The result of using Buy Box as the primary measure of financial performance is that brand protection effectiveness is based on removing unauthorized listings from authorized ASINs, focusing efforts on the current top 2-3 sellers who most closely compete for Buy Box ownership on a brand’s authorized ASINs.
Metric: Share of sales (including # of sellers, listings and pricing)
Measuring true financial performance requires a denominator: a view of the total available market (TAM). Determining TAM in any marketplace requires quantification of competitor sales revenue, estimating sales volume based on offers, price and known sales data.
On Amazon that means analyzing products behind the ASINs, number of sellers, number of offers and pricing information. Then it means applying a method (e.g., Buy Box as benchmark, Pareto Principle, test & learn, etc.) to transform those data into an estimate of TAM.
We did some work for an accomplished Brand Protection Manager at a massive food and beverage company. She had improved their Buy Box win rate from 35% to an impressive 75% within a couple of months of taking over the portfolio. Her top 10 ASINs were contributing >$20 million in shareholder value per year. She asked how we could help her boost the win rate even higher and quantify the potential financial impact of increased brand protection.
The revenue share metric based on Buy Box was 75% share for 10 ASINs = $20MM year = TAM of $26.7MM
When we pulled ASINs for those 10 products, we found an additional 36 ASINs with 42 previously unknown 3rd party merchants. Calculating TAM using the Pareto Principle (80/20 rule) is an overly conservative but straightforward exercise. If the buy-box based TAM is 80% of the REAL TAM then the REAL TAM is $33.3MM which means $20MM is only 60% of the share of total revenue.
The good news is that this reveals an opportunity to add an estimated $13MM to shareholder value by widening the brand protection focus to include rogue ASINs.
Scenario 2: BRAND ALLOWS 3RD PARTY SELLING
Metrics: Pricing
It is crucial to establish the right Amazon brand protection metrics for companies executing an omnichannel strategy, because Amazon sales can be destructive to other channel relationships.
Poor pricing performance is a lightning rod for channel conflict. Some 3rd party merchants offer products not just below Minimum Advertised Price (MAP), but below manufacturer’s cost. Brand protection teams are often pressed to correct dishonest pricing because channel relationships are at risk when price falls, no matter the practices that drove the unfair pricing.
There are two challenges in a brand protection strategy focused on pricing compliance:
Not every seller has agreed to follow MAP
Amazon does not enforce distribution agreements and will shut down conversations dealing with MAP.
Though MAP compliance is not a criterion for evicting illegitimate offers from listings, there are other listing behaviors that cross the line of marketplace policies, thus invalidating those listings. In our experience, sellers are typically violating 3 policies on average.
Brand protection teams can focus on their branded products where dishonest pricing most often occurs.
Scenario 3: BRAND DOES NOT WANT PRODUCTS SOLD ON AMAZON
Metrics: number of sellers, number of listings
In some circumstances, prices are irrelevant. Instead, listings in the wrong places can damage retail relationships, endanger personal health and safety, unravel core business models, violate FDA regulatory restrictions, and more.
Here are a few examples:
Diabetes test equipment and similar at-home diagnostics with FDA oversight
Pet products intended (for good reason) for distribution only by veterinarians
Direct sales companies with a business model anchored in social selling that manufacture a product with cross border ingredient and product copy considerations.
Special release products for club stores like Costco, BJs and Sam’s Club
In these and other cases, the only relevant metrics are the number of sellers, the number of listings, and the number brand managers strive to reach: ZERO.
Scenario 4: BRAND EXPERIENCE IS CRITICAL
Metrics: Number of sellers, number of listings
“It only takes one. Just one, and the world changes.” Rick Yancey
Though inspiring, this maxim is also the stuff of nightmares. One bad actor can dilute or destroy brands and can do so very quickly.
A friend of mine from a large confection company gave me two powerful examples of this:
1. Brand reputation
“If a reseller does not keep our product at the right temperature, the candy melts. Where does the consumer place the blame? The seller? No. Amazon? No). The consumer makes us pay the price with horrible reviews.”
2. Brand destruction
“Before we launch a new candy (i.e., a holiday), we spend tremendous resources preparing the advertising, promotional materials, logistics, etc.. Strict warnings and procedures are put in place to prevent information leakage. Many times, our candy suddenly shows up on Amazon just before the release date. It blunts the impact of our investment in the launch. It also hurts the consumer experience because premature listings have shabby product images with underwhelming and inaccurate product descriptions. On top of it all, the products are coming from a seller that has already demonstrated dishonesty by hijacking products that aren’t yet available for sale. That’s the seller that represents our brand on those listings.”
At some level, each unauthorized seller has equal opportunity to dismantle a brand by undermining investments in brand assets, by sparking an avalanche of bad reviews, or by leaving one nasty review on the wrong product at the wrong time.
Once again, brand protection KPIs that include the number of sellers and the number of listings will drive action to remove risky illegitimate sellers from listings— even if those sellers aren’t directly disrupting price or overall revenue.
Scenario 5: BRAND TRACKS RETURN ON INVESTMENT (ROI)
Metrics: cost (resource time + cash), speed to impact
Most teams engaged in brand protection activities are severely over capacity. Some will have formalized full-time roles but have a few people covering all forms of brand protection, including trademark enforcement, fraud and counterfeit. In other companies, the eCommerce function is tasked with growing sales and reducing unauthorized sales.
Cost measures go beyond the money spent on tools and services. Another key consideration is the time your teams spend on non-value-added activities. For example, is your team performing data gathering and reporting, sending cease and desist (C&D) letters, arguing with sellers?
Another important consideration is how quickly impact can be achieved.
Taking down a few entrenched sellers who are competing for the Buy Box matters little if it takes months to pursue. They will have captured millions in sales. They will kill price by liquidating inventory just before exiting and as soon as they do, other sellers will fill their places almost immediately.
Unauthorized sellers are nimble and lightning quick. Coronavirus fallout has created massive surges in demand and unauthorized sellers are immediately materializing to start filling that demand. We have seen new seller activity increase more than 100%.
Unauthorized sellers are cunning. They know the workarounds. Today’s #20 seller on one ASIN is tomorrow’s Buy Box squatter across multiple ASINs.
At the end of the day, tracking seller behavior will trigger the right interventions. Sellers act rationally. If the potential of making money exists, sellers will deploy strategies to capture that revenue.
Sellers crowded on certain ASINs indicate proliferations of duplicate or adjacent listings. Surges in duplicate ASINs mean sellers are mining gold. If a seemingly harmless seller is camped out on a listing for several days, there’s a reason for it, and it isn’t benign.
Effective brand protection requires tracking and outmatching unauthorized sellers’ speed, scale and resourcefulness. If the cost of going after sellers is high, if it takes months to achieve impact, then it’s time to realign metrics and shift brand protection strategy.
THE METRIC THAT MATTERS MOST
When a senior executive asks, “How is brand protection going?”— whatever that leader expects to hear first is the metric that matters most.
“MAP compliance is at 98%”
“We’ve removed 85 sellers and 180 listings this month.”
“We’re getting 85% of the Buy Box”
Invariably, senior leaders choose a headliner metric to use as a quick diagnostic. In fact, you probably have your own headline metric too.
For example, if MAP compliance is slipping, a leader knows there is the likelihood of channel disruption and that unfair pricing threatens to undermine revenue numbers. If MAP is in good shape, a fundamental component of the omni-channel strategy is in good shape.
Through that headliner metric, senior leadership is communicating:
How you are being measured (MAP compliance)
Which actions to prioritize (go after unfair prices)
The certainty that you are critical to MAP compliance.
It’s not that senior executives can’t change their perceptions of what is important, and it’s not that senior executives believe only one metric matters. Senior executives understand that nuances of metrics drive successful teams. However, they put leaders like you in place because they know you will create and track those team-specific metrics.
So, lean into the headliner metric that matters most to your executive team and continue to utilize all of the relevant metrics that help you drive the right behaviors.
THE METRICS THAT MATTER TO YOU SPECIFICALLY
Gray Falkon uses all of the critical KPIs in driving impact for our brands:
1. Cost (employee + $)
2. Number of sellers
3. Number of listings
4. Pricing
5. Sales volume
6. Share of revenue
7. Share of sales
8. Speed to impact
We’re the only company that can engage unauthorized sellers instantaneously and at-scale. We typically solve >50% of the problem in the first 2 weeks and up to 85% in the weeks following.
We’re faster and more effective because we anchor our enforcement using Amazon’s seller rules instead of relying on slow and expensive legal remedies. Our pricing is accessible because our advanced technology makes us remarkably efficient.
Let’s talk about your strategy, your metrics, and your goals, and let’s explore how we can more powerfully enable your success.
About the Author
Trajan Bayly, CEO of Gray Falkon is a proven expert on business metrics. He graduated from the Fuqua School of Business at Duke University with his MBA in 2005. He earned his Six Sigma Black Belt certificate in 2007. In 2008, General Electric filed patent US20090216588A1 for one of Trajan’s inventions a “Return on Investment Calculator” . From 2007 to 2009, Trajan was the corporate pricing leader at GE, establishing best practices for quantifying product value, identifying customer price elasticity and creating effective pricing structures. In 2009, Trajan constructed a $6 billion health innovation platform that included a process and 3rd party audit organization to document cost, quality and effectiveness measures for health products and systems and worked with healthcare economists and product leaders through certification processes.