How to Build and Measure Brand Equity


what is brand equity

When you think of well-known brands like Apple, Coca-Cola, or IKEA, you probably have some associations with them. Whether your feelings came from a positive or negative experience, the way you perceive brands after interacting with them is called brand equity.


When it comes to your own brand or company, it’s important to keep brand equity in mind. Many entrepreneurs focus most of their energy on things like getting a product off the ground, creating a website, or fundraising. However, when it comes to branding, it’s easy to forget that your company’s image is a lot more than the just logo and color scheme you choose to represent it.


Brand equity dictates the long-term success of your company, so we recommend building it in a positive way from the start. In this article, we’ll take a closer look at brand equity, including what it is, why it’s important, how to create it, and last but not least, measure its success.



What is brand equity?


Brand equity is a marketing term that defines a brand’s value to its customers. This is measured by the customers’ perception of your brand, which comes from interactions with a company. In other words, brand equity measures how much influence your branding has over its customers or in an industry.


Companies can create brand equity by improving brand awareness and creating positive experiences. The more people are aware of your brand, the more identifiable your company becomes. Likewise, every time you deliver a good product or service, go above your customers’ expectations, or show your appreciation for consumer loyalty, you leave your brand’s imprint on a client.


Over time, the accumulation of positive experiences, coupled with awareness about your brand, creates brand equity. Of course, the goal is to build positive brand equity, but it’s also possible to inadvertently create negative brand equity, which could be detrimental to your company’s brand image.



What Makes Brand Equity so Important?


Aside from improving your reputation, good brand equity increases your sales, improves ROI and builds your customer base. Here are some of the specific benefits that come as a result of positive brand equity:



You can charge more with higher brand equity


Think of high-end fashion designers who are able to sell items like clothes, shoes, or purses for a high markup compared to average retail brands.



Customers will seek out your brand instead of the competition


This will help your company increase its market share, as more and more customers are set on purchasing items specifically from your brand. Think of Apple, for example. If you’ve gotten used to an iPhone and are a loyal Apple client, when the time comes to purchase a new phone, you’re most likely to return to Apple.



Positive brand equity saves you money on advertising


Once your brand is well-known and carries a good reputation, you might not need to spend as much money on ads, since many clients are already tuned-in and engaged with your brand.



Brand equity can increase your share price


Not only is brand equity important for retaining and converting customers, but a strong brand with loyal clients is valuable to shareholders. Your share prices will increase since shareholders will bank on your strong reputation.



How do you build brand equity?


Rome wasn’t built in one day, and your brand equity won’t be either. Building brand equity is a process that needs to be done consistently over time. It starts with the basics, like building your brand from scratch, and will include improving qualities like brand awareness and customer experience.


If you’re just starting to build brand equity, here are some things you should focus on:



Know your mission statement


Customers will be more loyal to a company they identify with. Let’s take a popular outdoor sports brand, Patagonia, as an example. The company’s products are geared towards surfers, climbers, and people who enjoy outdoor sports.


Because of this connection to the great outdoors, its clients are likely environmentally conscious and want to support eco-friendly brands. Patagonia’s core values reiterate its commitment to the environment and protecting nature, which is a key reason why this brand has so many loyal and returning customers. Take the time to write a strong mission statement that will allow your customers to connect with your values instead of just your products.



what is brand equity


Create brand awareness


Of course, a key part of brand equity is creating brand awareness. You can’t sway public opinion of your brand if no one knows who you are. There are a few ways you can go about creating brand awareness:



  • Unique slogan: Creating a short and catchy slogan can have a huge impact. Take Nike’s “Just Do It” slogan as an example. It’s become synonymous with athletics, and if you see those three words alone out of context, you’ll immediately associate them with Nike.


  • Social media presence: Your online presence is more important than ever. Customers want to see how active your brand is on the social networks that they frequent, and use these channels to seek the positive experiences other customers have had before they commit to making a purchase.


  • Brand campaigns: Running campaigns is a great way to help improve brand equity. Since they will run over an extended period of time, campaigns help reiterate a specific message, continuously placing your brand at the front of your clients’ minds



Use the right messaging


Creating effective brand messaging means knowing what kind of messages resonate with your audience the most. When you’re just at the beginning of building brand equity, you should test out a few different messages to see what your clients engage with. In general, it’s best to keep your company’s message simple. For example, Walmart’s slogan “Save Money. Live Better,” is a strong message contained in just a few words - evoking the feeling to clients that shopping at Walmart will both save them money and improve their quality of life.



Offer a positive customer experience


Aside from flashy ads or a catchy slogan, one of the most important elements of building brand equity is maintaining a high level of customer service, and a consistent one at that. Customers will remember a positive customer service experience more than anything else. However, service isn’t the only part of a customer’s experience with your brand. When building up a positive customer experience, there are various other factors you want to focus on, too:


  • Accessible and honest customer reviews

  • Gathering customer testimonials

  • Customer experience on social media

  • The availability of your customer support team

  • Personalized experience and support



Reward brand loyalty


Brand loyalty programs are a crucial part of the overall customer experience. By rewarding repeat purchases or interactions with your brand, you’re creating a long-term relationship with your customer.


The Starbucks Rewards program is a perfect example of how a brand rewards customer loyalty, and one of the reasons Starbucks has undeniably built up its positive brand equity. By offering clients free products and personalized suggestions based on their preferences, Starbucks is able to keep its customers coming back for more instead of taking their business to a competitor.



How to Measure Brand Equity


While you’re going through the process of building up your brand equity, it’s important to measure your success along the way to get a good overall view of what’s working and what needs to be tweaked. But, when it comes to measuring brand equity, there’s no one metric that will tell you how you’re performing. Instead, you need to look at a combination of metrics for different elements of brand equity to get an accurate picture of how you’re doing.



Brand awareness metrics


First, you’ll want to check if you’ve succeeded in creating brand awareness. There are a few ways you can do this, and your method might depend on the products or services you offer. To measure brand awareness, you’ll want to look at metrics like:


  • Traffic to your website or to stores

  • Search volume for terms related to your business

  • Social listening

  • Reviews of your business in media or the news


Aside from these metrics, you can also send our customer surveys or even conduct focus groups to see how aware real customers are of your brand.



Financial metrics


You’re probably the most curious about how improving your brand equity has impacted your profits. There are a few ways you can measure your success in this area:


  • Market share: You want to look at how your brand is performing in your industry’s market and how it compares to competitors.


  • Rate of growth: Is your company growing consistently? How your brand grows over time is a direct reflection of positive brand equity.


  • Customer lifetime value: Are clients purchasing more from you? If you find you’re having repeat customers with more frequent sales or purchases with larger sums, then your brand equity strategy is working.


  • Cost to retain and acquire customers: Look at your spending over time when it comes to acquiring new customers and retaining existing ones. If your brand equity is strong, then you should be spending less on both of these metrics.


  • Brand evaluation: Figure out what the total value of your brand is as an asset. Show how the worth of a brand contributes to a company’s overall success. You might want to consider the cost of the brand and how much profits it brought in to measure this.



Output Metrics


By looking at output metrics, you’ll be able to see how well your marketing activity is performing with your audience. Output metrics are a good way to measure if you have a good ROI and if the marketing materials and campaigns you’re releasing are really worth the effort. It might calculate things like the success of email marketing, local offers, downloads, sign-ups, or any other marketing activity that requires audience engagement. Essentially, you want to see how your audience is responding to the calls-to-action you’re putting out there.


There are a different metrics you can use to measure the effectiveness of your marketing campaigns:


  • Click-through-rate

  • Downloads

  • Heat-mapping on your website

  • Newsletter sign-ups

  • Adoption of loyalty programs

  • Revenue from new product launches



Competitive Metrics


Finally, you’ll want to measure how your brand is performing compared to its competitors. Looking at competitive metrics will help you see areas in which you’re outperforming your competitors and also where you can provide extra customer value in areas where your competitors are lacking. You’ll also be able to track what’s working well in your own campaigns as well as those of your competitors to understand what resonates with your audience. Here are some metrics to consider and compare with your competition:


  • Market share

  • Customer acquisition rate

  • Social media engagement

  • ROI on channels that you both use



By The Wix Team




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