Here’s a quick pop quiz for you: What do Starbucks, Coca-Cola and Tylenol all have in common? Have your guess ready?
If you’re trying to figure out what a pain relief product has in common with caffeinated beverages, we’ll spare you the headache. The answer is that all three brands rank as having some of the highest brand equity in the U.S. — both within their respective sectors and across all industries. Although brand equity does not directly translate into fiscal equity, as we’re about to find out, there’s some major correlation.
So, what’s in a brand name? Well, when it comes to the value of your company, everything.
Before we dive into your company’s own brand equity and everything you can do to further grow it, it’s important to make a few key distinctions.
A brand is an intangible business concept that helps customers to identify your company and your products. Your brand is not just your logo, slogans or any other marketing tools you use to stand out in your market. Think of it instead as everything you represent as a company.
Brand equity can be a bit of a subjective idea, but to keep things simple we’ll boil it down to one sentence: It’s the perceived worth of your brand when compared to an alternative option. However, your brand and marketing tactics both feed into your ultimate brand equity.
At its most basic, we can break brand equity down to three major components:
Over time, these factors result in either a high or low total brand equity. If your organization falls into the first camp, you’ll be able to leverage the value of your brand to more easily grow your company. However, if a customer is willing to purchase a substitute based on their perception of your brand, you may have negative brand equity — and some legwork ahead of you.
Brand equity isn’t something that’s developed overnight. The accumulation of your company’s entire history from your earliest products to your media presence today all feed into the average consumer’s perception of your company.
As an example, for Coca-Cola, the brand’s equity spans all the way back to 1892. This includes hiccups along the way such as the now infamous “New Coke” incident that the company refers to as “one of the most memorable marketing blunders ever.” After introducing a new formula for its classic flavor, the company received enough backlash that they had to quickly change back to the original ingredient combination.
However, just like Coca-Cola witnessed, when your brand equity is high, you’ll be more likely to withstand those negative effects and rebuild trust with your consumers. It will just take a bit of time to get there.
While the exact definition of brand equity can be up for interpretation, its impact on your organization and your long-term success are not. Like we saw with Coca-Cola, having a high brand equity will provide your company with a bit of a safety net. A single miscalculation won’t send your customers packing.
In addition to stability, there are several other long-term benefits you can begin to realize as you start building your equity:
As your brand equity grows, so too will customer loyalty. Consumers who truly believe in the value of your brand and your products are far less likely to consider an alternative offering, as they’ve begun to perceive yours as the best on the market. In addition to the fact that loyal customers are more likely to buy from a brand they trust, they are also more likely to advocate for your company. In fact, 77% of customers would recommend a brand to a friend after a single positive experience according to Forbes.
As you continue to develop your brand’s positioning and maintain high equity, loyal customers will prove essential in growing awareness and expanding your audience.
When it comes to brand equity, recognition and awareness all go hand in hand. For some of the most recognizable (and valuable) companies out there, the secret to achieving all three stems from having a consistent brand identity. As both potential and existing customers are exposed to your logo, colors and taglines, they’ll become more familiar with your brand. However, if these vary across your marketing assets, it’ll be difficult to grow.
While not every company is reaching for worldwide growth, the goal of creating a strong and consistent brand image should always be a priority. That way, whether a would-be customer sees an ad online or hears your slogan, they’ll immediately recognize your branding and think of the positive traits you embody.
Once you’ve proven your brand’s value in one category, the world is truly your oyster. Customers (and soon-to-be clients) who recognize your brand will be interested in trying more products as you continue to expand your offerings. Just make sure all of your new ventures align with that positive brand image you’ve worked so hard to cultivate.
By leveraging the value of your brand, you can more easily add new products to your line and people will be more willing to try those new offerings. You can expand into new markets and geographies.
It’s important to keep in mind that you won’t be able to reach this point right out of the gate. Instead, it will take years of establishing goodwill within your industry as well as a combination of strategic brand management and a high-quality customer experience.
OK, you understand the importance of brand equity and the impact it can have on your organization’s long-term success. Now, it’s time to determine where your brand stands and map out your next steps.
Due to the somewhat subjective nature of brand equity, it can feel difficult to put an exact number on the value of your branding. Every customer will perceive your company in their own way — just think, there’s a reason Pepsi continues to thrive in the face of Coca-Cola.
While consumer preferences can vary, there are several metrics you can use to get a better understanding of your brand equity:
Depending on your company’s long-term goals for growth, you may have slightly different KPIs compared to another organization in a different industry. However, there are some important financial metrics every brand can agree on when it comes to equity:
Although these metrics might not tell the whole story on their own, put together they’ll be a major clue in assessing the total value of your brand.
The traditional NPS survey pairs together the objectivity of data with the subjectivity of consumers’ preferences by asking a single question: On a scale of 1 to 10, how likely are you to recommend our brand?
Using this scale, customers are segmented into three groups:
By subtracting the percentage of your customer base that identifies as detractors from those who have fallen into the promoter category, you’re left with your final score. However, remember that each industry has its own average NPS ranking. Knowing your’s compared to the average your market research uncovers will be key to using NPS as a benchmark of your equity and overall customer sentiment.
If you haven’t already, define your target market. Which group of customers should your brand resonate with the most? What are some of their key traits, values, opinions and attitudes? Once you’ve characterized your ideal customer, you can launch a survey within a population representative of that group. If you want to go a level deeper than recognition and recall, you can also use this survey to capture sentiment and broader market insights.
No matter which metrics you choose to track, be sure to check in on them over time so that you can measure your changes in your brand strength.
Now that you know where your brand stands through a combination of objective and subjective data, it’s time to lay the groundwork for stronger, long-lasting equity. Although you can experiment with several different strategies, we recommend focusing on specific goals for growth:
If potential customers aren’t aware your company even exists, leveraging your brand and its value will be impossible. As we mentioned earlier, consistency is a key component to achieving widespread awareness. However, there are several other tools you can use to expand your brand‘s reach:
Your brand can talk the talk, but can it walk the walk? Once you’ve clearly defined your values and goals as an organization, reinforce and demonstrate those concepts by:
One of the most important components of brand equity is the way your current customer base perceives you. While it’ll be important to foster awareness and recognition in potential buyers, be sure to continuously find new ways to delight your existing ones as well. Some potential tactics to this include:
Although these aren’t the only tactics out there that will help you develop your brand equity, they’ll be key to building your initial foundation for growth.
As you begin your journey toward higher brand equity, just remember: It takes time. Some of the most valuable companies in the world have taken a century to reach the point they’re at. The good news is that that doesn’t mean you’ll have to check back in circa 2122. Instead, stay consistent and find new ways to delight your customers at every touchpoint.
From keeping your branding consistent to developing high-quality, professional assets, the team at MOO can help. Check out our Business Services and learn more about how we can support you on your path to stronger brand equity.