Aug 2, 2017

Knowing Your Licensing Business: 4 Milestones That Matter

Everyone in the licensing business knows how important it is to remain focused when moving forward in the licensing process. However, it's usually licensors who are the most aware of this matter as they bear the greatest responsibility for the success of licensing programs. Their main mission is to ensure meeting the set goals and targets throughout the lifespan of the program. While the range of their responsibilities is broad, their time is finite. Thus, many have the so-called fear of missing out, which can be simply suffocating at certain points in the licensing journey. For those concerned about the above, we outlined a checkpoint for maintaining the integrity of the brand before, during, and after the licensing journey.

Performance Of The Licensing Sales Pipeline

The ultimate goal of a licensing program is driving the profitability of their brand through extending it into the selected product categories. It should be noted that the category choice should be in line with the brand's values and its licensing strategy.  It bears being said that licensing profits severely depend on the performance of the whole pipeline. Therefore, the need to monitor it is an obvious driver of success in the licensing business.

One factor that makes licensors lose track of the sales pipeline performance is not asking concrete questions that would orient the team in the pipeline flow. As a result, this negligence puts them at risk of further missing important pipeline landmarks and bearing unnecessary losses. Depending on the current goals of a licensing program, the questions may be:

  • Are the deals moving in the right direction and eventually getting closed?
  • Is the pipeline active, i.e. items actively managed and processed?
  • Are the deals closest to the 'won' status being pushed towards sign-off?

Formulating the metrics against the set goals in advance will not only save licensors time and money but also help to clear their vision for their brands' licensing activities.

Brand Licensing Strategy

Undoubtedly, implementing and enforcing the brand's licensing strategy is the key task of everyone in licensing teams. What many of them see as challenging is the fact that licensing strategies seldom remain constant throughout licensing journeys. Upon the development of licensed production, licensing strategy can change more than the brand might have thought in the beginning. For instance, it may first focus on maximizing licensing revenues and then switch to filling the freshly discovered market gaps with even newer products or increasing the consumer awareness. In this scenario, a brand will have to improvise and adjust their plan to the new circumstances.

Regardless of how the strategy diverges from the initial plan, it's imperative for licensors to properly communicate the changes to other stakeholders. This concerns both the actual changes and the changes that licensors anticipate to happen. Communication breakdown is the number one reason for brand licensing fiasco. Therefore, licensors should always seek to remain in direct touch with their licensing partners.

Timelines, Designs Development, And Licensing Outcomes

To efficiently manage the licensed products pipeline, it's essential for a brand to keep up with the stages of product development. Design and product revision rounds and approvals play a significant role in fulfilling this task, hence licensors should make special effort to sustain them decently throughout the licensing lifespan.

Ensuring that product development is smooth implies validating the brand's actions against the program timelines. For example, licensors could ask themselves a question like:

Does our brand licensing program aim to release new ranges of product in a time frame that supports a cinematic, tv or games release?


Does the brand wish for multiple licensees to leverage against each other in a cross-marketing launch?

Licensors should appreciate that the turnaround times support their timelines and thus take proper care to facilitate their smooth flow. Without spurring the licensing process, a brand risks to miss important deadlines and not reach the desired revenue on time.

Financial Figures

The outcome of a licensing program largely depends on the sell-through rate. Even more, it pretty much is a direct indicator of the brand's performance in the market. If the sales rates don’t reach the desired level, the brand needs to take measures to improve the situation. If a brand makes a mistake, rarely will it remain credible to consumers again without severe efforts towards the improvement.

Brands need to be able and ready to embrace the change and discover strategic tweaks to adverse situations. They need to be aware of the financial performance of their licensing programs and optimize it whenever needed. This requires regular tracking of the sales, receipt of the minimum guarantee payments, and financial forecasts of all kinds. Knowing the financial figures will prepare licensors for the potential need to modify their licensing or marketing strategies.

Understanding your licensing business literally means succeeding with it. Even small hitches in the licensing journey can lead to serious lagging in the process and delay of earnings. Avoiding this requires licensors to remain flexible, foresee and analyze the upcoming changes, and communicate with their partners regularly.

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