Profitability and market leadership
An undeniable revelation from the study was the importance of profitability. Incumbent market leaders were all profitable across all six product categories, cementing profitability as a prerequisite for sustained category leadership. The study also found that while emerging brands were not expected to unseat the behemoths of industry immediately, their innovative approaches forced market leaders to adapt or face likely decline or potential failure.
Technological relevance
Another facet of the Index is the assessment of the technology being promoted by brands. The evolution and innovation of a company’s technological offerings are seen as vital to securing a brand’s future in a rapidly changing market. Consistent with this theme were older companies that were seen in a positive light. They consciously retooled and proactively invested into next generation technology if they were clearly behind in current generation competitiveness—frequently with proactive market updates to what their brand was about going forward. The absence of communication about next-generation initiatives was consistent with brands that have historically higher market share but low or no presence in the Challenger Index.
Beyond financial metrics
Using financial metrics as the sole measure of business strategy success doesn’t work. In the past several years we have seen purely financial metrics such as ARR, NRR, ACV, etc., mask underlying behavioral metrics as customer retention and churn—the foundations for why financial figures are there in the first place. Avasta regularly analyzes the market with “Finance is a layer” as an interpretive approach of underlying behaviors, or their absence—as in, prospective customers with negative brand perceptions don’t become customers. This insight is missed almost unanimously by executives. Revenue you never booked doesn’t show up on your financial statements and is frequently not thought of as part of setting strategy—if that revenue is winnable because of a stronger brand, it becomes a financial imperative to understand the brand as a business driver.
The role of belief and shared values
Liquid Agency’s efforts highlight the significance of shared beliefs in cultivating brand growth. By orchestrating brand experience (BX), employee experience (EX) and customer experience (CX) around a unified brand belief, the Index underscores the necessity of alignment with market perceptions. This approach fosters a community of believers—employees and customers alike—who advocate for and engage with the brand beyond transactional interactions. Believers are a critical component of activating a brand in the marketplace and are the canary in the coal mine with regard to your brand momentum being strong enough for the generation of category purchase.
