When you think about businesses and brands you really love and admire, it's usually the ones that showcase an outstanding ability to create and nurture emotional connections with customers.
This phenomenon is also known as brand equity.
Unfortunately, it can be tough to get buy-in from executives on brand equity initiatives, primarily because measuring the impact of brand awareness campaigns can be particularly trying. Brand equity doesn’t result in immediate results overnight — it’s a strategic effort that requires time, tracking and analysis of your branded work.
With that in mind, we’ve compiled valuable insights as to what brand equity is, what it means to business on the whole, and how teams can contribute to and measure brand equity.
What is brand equity?
The first and most important question to answer is, of course, what is brand equity?
It's the value of your company relative to how recognizable your brand is. More specifically, brand equity is the commercial value that's derived from aggregated customer opinions of your brand.
For example, if you're trying to gauge your brand equity, ask yourself:
- Is your brand (and content) memorable?
- Are you providing dependable experiences for your customers?
- Are your customers loyal?
If your answer is yes to any of these questions, you most likely have pretty good brand equity. Brand equity highlights your company's ability to connect the dots between all touchpoints in and of the customer journey.
That said, good brand equity can be harder to attain than it seems. Because you can have the best, most efficient business with a high-quality product, but customer opinions of you still may be less than favorable. Brand equity requires you to shift from a brand-centric storyline to a user-centric one. Doing so empowers you to truly own your brand's narrative from a value-based perspective — not just fling it at customers willy-nilly whenever you have a new product to highlight.
The benefits of brand equity
Of course, it's all well and good to talk about the fact that brand equity is an extremely critical force of nature. But you deserve to know why exactly brand equity is important — and how it benefits your bottom line.
Brand equity gives you a competitive edge.
Strong brand equity indicates that customers choose your business over a competitor's time-and-time again. Take a moment to think about the purchasing decisions and the customer journey most of your consumers embark upon in the modern era. Specifically, think about what parts or departments of the brand your customers interact with the most.
Sure, you're bound to find and have customers who make their final decisions based on the fiduciary quality of various businesses, but, to be honest, that's not what your customers are looking at most of the time.
What impacts most consumers is how they feel about a given brand — what does your content or collateral illicit for them? Does it frustrate them? Answer questions? Console them?
Think about brands for who you have high praise. Take Apple as an example. Apple is a company with a massive amount of brand equity and market share as a result. It dominates the tech industry, thanks to Apple's ability to optimize on brand awareness, customer loyalty and opinion. Naturally, competitors come along to try and muscle in on Apple's arenas, but those companies indefinitely encounter the serious challenge that defines attempting to edge out an established brand.
Brand equity increases customer loyalty
Customer loyalty and brand equity go hand-in-hand. Some companies tend to think of what-comes-first paradox — the chicken or the egg, or in this case, customer loyalty or brand equity.
So while it might be tempting to think that the best way to increase your customer loyalty is through the quality of your products, you need to establish yourself as a trustworthy brand first through effective branding and brand management.
Trust is earned — not simply given. To learn more about how to boost customer trust through brand consistency, check out our ebook.
Ultimately, brand equity makes customers seek you out, not the other way around. It can translate into more repeat customers and make you seem less reliant on acquiring new customers through outreach efforts. That said, you'll still need to conduct outbound sales, but customers will be far more likely to recommend your business to others if they have an emotional connection to your brand.
Brand equity helps you grow your business.
One of the hardest factors when trying to grow any business is the drain on resources that are incurred by attempting to increase the market presence of your brand. After all, marketing a business can be a time-consuming and resource-heavy process.
With strong brand equity, you're going to be up against a good deal less resistance when it comes to growing your business, making the whole process a whole lot easier.
This is particularly applicable when you choose to move into new markets. If you already have a well-established brand, the higher the chances are that customers know your brand's reputation, making them more likely to buy again. Alternatively, for customers who might not have had a reason to interact with your business, your reputation gives them reason to — instead of pause.
Brand equity increases your negotiating power.
Negotiating with suppliers is inevitable. And it's likely challenging. However, the negotiation process gets a whole lot easier when your brand has leverage, like a strong brand reputation and equity.
To some extent, your suppliers are like your customers in the sense that your suppliers also need a trustworthy, legitimate reason (i.e., brand reputation) that they should work with you. So, the higher in demand you are, the more sway you have. And the more power you have, the better your products can (or at least in theory) can be.
Measuring brand equity
So, all that said, how can you improve and make the most of your brand equity? Start by measuring brand equity.
To do that, you'll need to aggregate and analyze the following metrics:
Brand awareness compliments brand loyalty.
So, you'll need to measure how aware consumers are of your business. To gauge awareness, try the following:
- Send out surveys through your customer's preferred channel of choice
- Conduct focus groups
- Monitor web traffic
- Identify frequently utilized Google search terms (relative to your business)
- Track mentions on social media.
The more often your brand comes up in a conversation about specific products and services, the higher the awareness of your brand — the higher your brand equity. Brand awareness is a particularly helpful metric when trying to gain ground and understand the mindset of potential customers.
When it comes to measuring brand equity, brand loyalty is one of the most important factors to consider. Two elements mark brand loyalty:
- Behavioral factors — Based on purchasing patterns.
- Attitudinal factors — Based on consumer mindsets and how your business interacts with its customer base.
Conduct a cross-comparison of the two factors and evaluate for signs of parallel data, contrasting data and overlap. Leveraging AI and data automation resources can help explain what the data means. Plus, data and AI platforms can translate real-time insights, therefore providing you with a deeper understanding and actionable takeaways as to how you can elevate existing campaigns and brand loyalty strategies.
Each customer has their own unique set of preferences. Keep in mind, your consumers are creatures of habit and they predictably seek out ways to get what they prefer. You can attain this type of intel through the similar venues we mention in the "brand awareness" section.
Most customers will take the time, effort and money to interact with a brand (over others) that has or features a company, product style or production process that they prefer overall. And should an unfamiliar brand feature the same products or services, your customer is more likely to choose the brand they know, trust and have an emotional connection with — even if the unfamiliar option is cheaper.
But at the end of the day, the numbers say a lot about your brand equity.
Take a long hard look at the sales performance of your products or services. And as you do so, ask yourself:
- How is the financial value of your brand increasing?
- Do you offer a higher customer lifetime value?
- Is your business's growth rate consistent?
- Do you have a price premium over your competition that consumers are willing to pay?
These types of questions present you with critical insights regarding the financial decisions your business frequently makes and gives you a tighter grasp on the numerical state of brand equity.
Output is the measure of your marketing activity.
You need to have a finger on the pulse of how much money, effort and time you are putting into your marketing campaigns. Having substantial brand equity simply empowers you to make the most of what you already know about your customers — and then, in turn, personalize the campaign content based on audience insights.
Ultimately, you don't want to spin your wheels on marketing output. You should be gaining back what you put out in terms of money, time and activity. To measure output, consider how often customers adopt loyalty programs or evaluate the sales figures on promoted products. Other metrics include click-through-rate, ebook downloads, website heat mapping and more.
How measuring brand equity impacts you long-term
Keep in mind that when measuring your brand equity and taking deliberate steps to improve it, you need to be sure that you understand both your customers and your business.
You own the narrative, but your customers help you write it. Think of them as the musical score to your movie — they set the stage and the mood before an audience member knows what will happen, while you present them with the folly. Brand equity helps you sustain the narrative and build repeat customers time-after-time, purchase-after-purchase.
How strong is your brand? Take the quiz to find out.