Customers are now the prime focus of companies, with products and services coming in second. With companies offering the best customer experiences that money can buy and technology can support, the expectations of customers have also been heightened. A 2020 report suggests that “74% of customers expect more from brands”, not just from their products and services, but regarding how they “treat their customers, employees, and the environment.” And customers are also loyal to brands that meet their expectations, gain their trust, and brands they have thus come to recognize.
Very simply put, Brand Equity is the perceived value that is added to a brand name on account of being easily identifiable and having a history of creating positive experiences for customers. This public perception counts for a lot in a market environment where your brand needs to trump its competitors. Your brand can have multiple competitors offering similar products at cheaper prices; but if you have established brand equity, just the perception alone will increase customer retention and make new customers choose your products over others.
Brand equity and its impact follow a self-fulfilling cycle. The very concept creates a market environment that favors companies with greater brand equity. Your revenue will continue to rise as customers choose your brand based on perception, even if competitors offer cheaper substitutes. The goodwill and brand awareness you generate further elevates your brand equity and creates business opportunities for the future.
Brand value and brand equity are both educated estimations of the worth of a brand. We view the financial worth of a company as its brand value. It is the monetary valuation of the brand in the current market conditions.
On the other hand, brand equity is the perception of the brand and the value attached to it by customers, vendors, and channel partners.
While trying to build your brand or while working with an established brand, you need to monitor the brand’s progress over time and measure the progress to understand its strength in the relevant market. Computing economic data (O data) and emotional data (X data) are the two broad approaches towards measuring brand equity.
Economic data is essentially operational data from finance, product development, sales, and HR departments. Being numerical and historical, they can be calculated to generate data sets, but they can only help you understand your brand’s performance history. Predictions can be made on trends in the past, but they aren’t always accurate as this does not consider the customer’s sentiments. Hence the necessity for the second approach.
Emotional data lets you measure brand equity based on customer experience (CX) data. Helping to understand the qualitative reasons behind customer decisions based on sentiment, and how a customer perceives your brand. If you can understand your customer’s emotions, you can portray your brand image accordingly. This enables customers to identify with your brand, remodel their self-image according to your brand’s ethos and choose your premium product over a competitor’s.
Measuring both data sets and viewing them parallelly can offer you a comprehensive view of your brand equity. And a strong brand image not only helps generate new customers and retain loyal ones but also attracts a motivated workforce who adds to the overall value of your business.
Having high brand equity and being a recognized brand has its perks and leads to an improvement in the Return on Investment (ROI). The following are the two major benefits:
Brands with positive brand equity not only attract more customers, but customers are willing to spend more on their products. Even if competitors offer cheaper products of the same quality, customers will choose the more expensive one simply for the value the brand name carries.
If a brand is preceded by a good reputation, because of quality products and premium customer experience; customers will look you up, make purchases, and will spread your reputation further by word of mouth. Not only do you have to then spend less on advertising your brand, but you can also improve the effectiveness of your marketing spending with new products selling easily because of the trust and goodwill that has been established. Customer loyalty is an asset every brand should cultivate and maintain. Good brand equity will help you achieve that, and consequently enhance the Customer Lifetime Value. And if your brand is going public, nothing improves stock prices better than strong brand equity to fortify the value of the brand in the minds of consumers and shareholders alike.
Once you have your approaches chalked out, you can measure your brand equity across the following dimensions and make a positive impact on your brand’s performance.
1 Brand Awareness:
This essentially is how well your brand is known in the market, by target customers and stakeholders. Brand awareness is emotional data and can be gauged through a process such as questionnaires which target –
2 Consumer Preference Metrics:
Consumer preference is one of the driving forces behind why the customer wants to avail a specific product or service. It is the reason why they may choose to spend more or travel further to engage with your brand and not a competitor offering cheaper substitutes. The following facets of customer preference can be measured with the help of sales data analysis, customer surveys, and focus groups –
3. Channel Partners:
Just as important as the consumers, channel partners have a major role in determining your brand equity and consumer preference. You need to ensure that channel partners comply with brand guidelines and adopt systems your company has put in place while engaging in local or national campaigns. Company culture also becomes important here, because how you treat and work with your channel partners will determine their commitment to your brand and their efforts to enhance your brand equity.
4. Financial Sales Metrics:
Directly associated with a brand’s sales performance, if the financial metrics of your company are improving, there is a relevant increase in the revenue generated and the overall brand equity.
The following financial metrics can be leveraged to measure brand equity –
5. Competitive Metrics:
Your brand equity can be directly influenced by the brand equity of a competitor. Adjustments in branding, marketing, or sales in one brand, can affect customer preferences for the other. If your potential customers are in the market looking for but not being able to access products or services that fit their specific requirements, have high-quality design and longevity, are not overpriced for the value they offer, and can deliver a satisfactory experience, these are the opportunities your brand needs to capitalize on. Anticipate and address the market requirements, stay ahead of your competitors, and watch your equity grow.
6. Output Metrics:
This is a measure of all the marketing activities being undertaken by your brand and all the marketing assets being released for public consumption. It identifies not just the type of assets, but the frequency of them being released in the market. This output can also be measured by the impact that offers have on local sales. Local sales and business activities are crucial to your brand equity because local store owners using and promoting your products greatly influence sales, consumer mentality, and a sense of trust in your brand.
Brand equity is developed and built at every touchpoint that customers engage and interact with your brand. Whether it is a digital advertisement, or a physical advertisement, or simply a local store owner spreading your brand identity by word-of-mouth; every touchpoint is an opportunity for brand managers to create a positive impression in the customer’s mind. Elevating brand equity has to be a gradual process where the equity can be measured and employees can focus on enhancing every touchpoint for optimizing the customer’s journey and offering the best experience possible.
A few things you need to focus on for building up your brand equity; are building a national brand, improving performance in local markets, and fostering local innovation.
With customers becoming the point of focus, organizations have to pay a lot of attention to the brand image they are portraying and how business activities impact and contribute to the overall brand equity at every touchpoint. Digital Analytics is the answer to figuring out how your brand is performing, how your consumers are responding, and what can be done to improve business processes, products and services, customer engagement, and the overall enhancement of the customer’s journey.
We, at Course5 Intelligence, can help you understand your brand better, address your customers more effectively and build your brand equity over time.
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