Think of a famous brand today.
Apple is usually the first thing that comes to mind. Why do you think that is?
Is it because of their high-quality products? Or is it because people are willing to wait in long lines for hours to get their hands on their latest offering?
The frenzy that comes with their latest releases speaks of how this brand is so desirable.
Apple's success doesn't only rely on its quality and aesthetic design. They also make sure that customers have a positive perception of their brand.
When you say "Apple", you'll think about how valuable and innovative their products are. They're worth having.
This is what we call brand equity. It's one of the most valuable assets that any company has. In fact, it’s the factor that sets many famous brands apart from their competitors.
In this post, we'll talk about the key metrics for measuring brand equity. Plus, we'll give you a few tips on how to build brand equity for financial success.
But First, What Is Brand Equity?
In the simplest terms, brand equity is the perceived value of your company based on customer experiences and reputation.
It's the result of a customer's multiple interactions and experience with your business.
So, if your customers have a positive experience, they'll think highly of your brand. This results in having positive brand equity.
The positive perception of consumers offers incredible value to any business.
But what if you continuously under-deliver and disappoint consumers?
They'll recommend others to avoid your brand. As a result, your business will suffer from negative brand equity.
Later, we'll discuss the key metrics for measuring brand equity. But before that, here are a few reasons why you need to strive for positive brand equity:
Brand Equity Model: Developing Your Brand's Equity
Before, we said that brand equity is developed through customer experience with your brand.
But this doesn't happen from the get-go. To reach and connect with customers and prospects, you need to go through several stages.
Brand Awareness Stage
First of all, you need to introduce your brand to your target audience. You can do this through marketing and advertising.
Today, digital marketing through social media platforms is in vogue. These channels boost brand visibility. More importantly, it brings your business closer to your audience.
In this stage, your advertising and marketing efforts start to pay off.
Your prospects are slowly becoming familiar with your product. They'll start to recognize your brand.
You've heard the saying, "First impressions last".
This is true in developing brand equity as well.
In the trial stage, customers decide to buy your product or service. They will assess the quality of your offerings.
This is where you need to provide a good experience for your consumers. It's important to put your best foot forward. Satisfied customers will likely choose your brand again.
In the trial stage, the brand association is formed based on their experiences with…
When customers have positive experiences with your brand, they'll keep choosing your brand.
For this reason, it's important to invest in customer interaction. You need to plan how you interact with your customers. Plus, you'll also need guidelines for social media, press, and employee interaction.
Remember, negative associations can destroy your brand's equity.
Customer Loyalty Stage
By continually providing positive experiences, they'll become loyal customers. They will think highly of the product/service associated with your company.
Finally, brand loyalty reflects the level of trust that your customers have in your company. This can lead to excellent performance and financial success.
For these reasons and more, you need to take the necessary steps to improve your brand’s equity. In doing so, you'll be closer to reaching more customers. Plus, with the right strategies, you'll eventually become a household name.
In a minute, we'll give you a few tips for building brand equity. But first, let's take a closer look at the key metrics used to measure brand equity.
Key Metrics to Consider When Measuring Brand Equity
What is your brand's worth?
Interbrand, a leading brand consultancy, base their valuations on three metrics:
Based on these metrics, a brand's worth is a combination of its brand value and equity.
Isn't brand value and equity the same?
They are similar, but definitely not the same.
Brand value is the financial worth of the brand. How much is it worth in the market?
Meanwhile, brand equity is how people perceive your brand. It is acquired through visibility, association, and customer loyalty.
When customers know and associate with your brand, they're more likely to choose your product or service. This will then directly impact your financial performance.
But positive brand value doesn’t always mean the company has positive brand equity.
So what metrics should you use when measuring your brand’s equity?
This metric measures customer knowledge of your product or service. It's important to score high in this area.
But it shouldn't stop there.
The goal is to achieve top-of-mind recognition and recall. This means that customers will immediately think of your brand when buying.
Most importantly, your brand must become a household name. It must come up in everyday conversations when talking about the product or service you offer.
Here's an example based on a real-life situation:
When someone accidentally nicks their finger and someone will say, "Go put on a Band-Aid".
Notice how they used the company name instead of the generic name.
Although there are hundreds of similar products on the market, the brand is still top-of-mind.
When you measure brand equity, consider these questions:
By asking these questions, you will know what needs improvement. For example, you might realize that you need to be clearer in your advertising strategies.
You can measure brand awareness and association through the following:
This measures your company's competitive advantage. What is your position in the industry? Preference is a powerful factor that affects purchase decisions.
It's why consumers are willing to pay more for a certain brand as compared to other similar products in the market.
Here are a few factors to consider:
Brand relevance: Does your company provide specific value to your customers?
One example is Everlane, an American clothing retailer. Although they have lots of competition, the company is still able to stand out.
Why? Because they pride themselves in making clothes from ethically sourced materials. To those environmentally - and socially - conscious consumers, this makes Everlane the best choice.
Accessibility: Are you capable of delivering your product/service to your customers?
When we talk about accessibility, the first company that comes to mind is McDonald's. No matter where you are, there'll always be a McDonald’s store.
Emotional Connection: Are you engaging with your audience?
It's not enough to deliver high-quality products/services. It's equally important to form an emotional connection with customers and prospects.
When measuring this metric, determine how your customers feel about using your product/service:
An emotional connection with customers is a key factor in developing customer brand loyalty.
Brand Value: Are your customers receiving value for their money?
For example, you're providing the same service to your customers as your competitors. But you're offering them at a much lower cost.
This means you're providing consumers more value.
When you put all these factors together, you can assess where you stand in the market and use this information to build brand loyalty.
When you measure brand equity, you also need to analyze your sales performance.
What is your financial situation?
Consider these key indicators to your company's financial value:
With these metrics, you'll understand your brand's value. More importantly, you'll know whether you have positive or negative brand equity.
But what if you find out that you don't have strong brand equity?
How to Build Brand Equity
Develop Your Brand Story
First of all, you need to determine how you want to be perceived by your prospects.
This means developing a brand story. Plus, you also need to determine your brand personality, voice, and tone. These are all important parts of your branding.
These elements will also determine your marketing strategies in the future.
Let's say, for example, you're a company that's committed to delivering eco-friendly products.
Then your story must communicate what your company means and what it stands for. It's important to clearly convey your message. In doing so, you'll attract those who identify with your values.
Build Brand Awareness
Now that you have a clear brand story and personality, you can start generating awareness around your business.
How can you get your company’s offering in front of your prospects? What can you do to stay in their mind?
This is where marketing comes into play. Your target market must recognize your brand. Most importantly, they must perceive it the way you want.
Take Coca-Cola for examples. When people see the colors red and white, they're more likely to think "Coca-Cola".
So when building brand awareness, think about these three key areas:
You build brand awareness by becoming more visible to your prospects. So you need to blog about your industry, share your brand story on social media, and provide additional value.
As awareness about your company grows, so does your brand equity. The value of your product/service increases as more people can easily recognize it.
Create a Positive Brand Image
To stay in your customer's mind, you need to provide a consistently positive experience.
It's not enough to simply generate brand awareness. You need to make sure that customers and prospects positively remember your brand.
Customers respond to most businesses based on these elements:
But they stay loyal because of their lived experiences. If a company made them feel excited, warm, valued, or respected.
For this reason, you need to invest in building relationships with your prospects.
How do you do this?
For one, you need to engage with your target market. Here are a few tips:
The bottom line is: make your customers feel valued. Let them know that their voices are heard.
Measuring brand equity is important in assessing where you stand in your industry.
Brands with positive equity are more likely to be recommended to others. Plus, they enjoy premium pricing without losing customers.
Most importantly, building positive equity will allow you to better understand your customers. You can easily address their problems and needs. In fact, you can apply these assessments to every stage of your sales funnel.