Let me ask you a question: what’s the main difference between Starbucks and the local coffee shop down the street from your house?
Both serve delicious coffee and pastries. Both have a warm, inviting atmosphere. And both offer free WiFi to customers. Yet one is an internationally recognized brand while the other struggles to keep the lights on.
The answer is: brand equity.
Keep reading to learn what brand equity is, why it’s important, and three tips you can use to boost brand equity for your own organization.
A Brand Equity Definition
According to Shopify, brand equity is:
“A marketing term that describes a brand’s value. That value is determined by consumer perception of and experiences with the brand. If people think highly of a brand, it has positive brand equity. When a brand consistently under-delivers and disappoints to the point where people recommend that others avoid it, it has negative brand equity.”
Your goal is to build positive brand equity for your company. Doing so has multiple benefits, which we’ll discuss in more detail in the next section.
Why is Brand Equity Important?
So what’s the big deal? Why should you spend time and money increasing your brand’s equity? Because you’ll experience two amazing benefits:
Greater Customer Loyalty
Have you ever bought a new product just because you like the company who made it? Then you know that positive brand equity results in greater customer loyalty.
This is incredibly important since studies show that it costs 5-25x more to secure a new customer as it does to keep an existing one. Once brand equity is built, your company will experience financial advantages. Let’s talk more about that…
Improved Revenue Numbers
Brand equity is your ticket to a more profitable business.
First, you won’t have to spend as much money on advertising because your current customers already trust your brand. When you release a new product, they’ll be ready to buy it and tell their friends and family to do the same.
Brand equity will also allow you to charge a premium for your products and/or services. Ever wondered why Louis Vuitton can charge $2,000+ dollars for a handbag while other brands struggle to sell them for $50? Brand equity is a big reason why.
3 Tips to Build Brand Equity For Your Company
Now that we’ve covered what brand equity is and why it’s important, let’s talk about how you can build it for your company. These three tips will help:
1. Tap Into Audience Emotions
Customers don’t just buy products, they buy the feelings that those products stir up inside them. If you can tap into positive audience emotions, your brand equity will skyrocket.
Don’t believe me? Consider this: professional athletes make up a very small percentage of the world’s population. And most adults don’t physically engage in any sport on a regular basis. So why then is Nike, an athletic clothing manufacturer, one of the most recognizable brands on the planet?
One of the reasons is because the Nike brand represents the fit, active lifestyle that many of us aspire to. In other words, Nike knows how to tap into the emotions of its audience.
Take time to learn about your target market on a deeper level. Discover why they want to buy the kinds of products you sell. Then speak to these desires in your marketing campaigns so that you connect with potential customers on an emotional level.
2. Be Unique and Consistent
To build brand equity, you need to separate your company from the competition.
You can do this in a couple of different ways. First, ask yourself what makes your company different? This is what’s known as a unique selling proposition (USP). Identify your organization’s USP and promote it in your marketing campaigns.
And second, make sure your brand’s visual stylings are unique. A colorful logo that sticks in people’s minds is better than a simple design that’s unrecognizable.
Once your brand is established, make sure it’s consistent across all channels. The look of your company, as well as its messaging, should be the same on your website, social media channels, YouTube videos, print advertisements, etc.
CleanPix can help with this. Our digital asset management platform is designed to be the one source of truth for every visual element connected to your brand.
Use our solution to easily store and distribute images, videos, logos and more so that they’re all used in a consistent, company-approved manner that boosts brand equity. Try CleanPix for 14-days for free to see if it’s the right solution for your needs.
3. Take Advantage of Social Proof
Social proof is the reason you’d rather eat at a busy restaurant than the empty one across the street. If the empty restaurant was any good, it wouldn’t be empty, right?
There are plenty of reasons why the restaurant could be empty — none of which relate to the quality of its food. But it doesn’t matter. As humans, we have a strong desire to emulate the behaviors of the people around us, so we naturally gravitate to what’s popular.
You can use this psychological phenomenon to your advantage when building brand equity.
For example, you could encourage satisfied customers to review your company on Google, Facebook, Yelp, etc. Since most people read reviews before purchasing a new product, these positive testimonials will help raise the profile of your brand in the eyes of the general public.
You could also take advantage of user-generated content, which refers to content created by customers. Ask your audience to post pictures of themselves using your products on social media. When they do, reward them with discount offers or other incentives.
How Brand Equity is Measured
How much brand equity do you have? You won’t know until you measure it. To do so, keep an eye on knowledge, preference, and financial metrics, which I’ll explain below:
This metric type measures the popularity of a brand.
Do people know who your brand is and the products and/or services it creates? Digging deeper, do they know the inherent value your offerings provide? Even deeper, how do your customers feel after experiencing one of your products or services?
Because knowledge matrics aren’t always tangible, they can be difficult to pin down. But do your best to assess the way your brand is perceived by the public. Then use your findings to create better and more engaging customer experiences.
Preference metrics refer to brand relevance, accessibility, emotional connection, and value. Let’s take a closer look at each to make sure we fully understand them:
- Brand Relevance: This is your company’s ability to provide a specific benefit to its customers. What’s your brand’s unique selling proposition (USP)?
- Accessibility: This is your company’s ability to reach potential customers. How easy is it for them to access the specific value propositions that you offer?
- Emotional Connection: This is your company’s ability to bond with customers. How are you building relationships with your target market and encouraging loyalty?
- Value Provided: This is your company’s ability to exceed customer expectations. Is the cost of your products and services less than their perceived value?
Assess the brand relevance, accessibility, emotional connection, and value provided of your company. Then compare it to your competitors to help measure brand equity.
Finally, we have financial metrics, which are the most straightforward and easiest to dig up. Data points that belong to this category include market share, transaction value, price premium, revenue (generated and potential), and growth rate sustainability.
- Market Share: The percentage of sales in your industry attributed to your company.
- Transactional Value: The specific price of your company’s products and/or services.
- Price Premium: Your company’s ability to charge higher than average prices.
- Revenue: The money your company has already generated and its potential for more.
- Growth Rate and Sustainability: Your company’s ability to grow consistently.
By looking at knowledge, preference, and financial metrics together, you’ll be able to identify your brand’s equity. Just remember to decide on which specific metrics you care about first.
2 Brand Equity Examples
We’ve covered a lot so far. But before I wrap this post up, I want to share a couple of brand equity examples — one good and one bad. Let’s take a look…
The Good: Apple
Apple is widely known for having incredibly high brand equity. You’ve heard the saying, “once you go Mac, you’ll never go back.” This is a testament to the brand Apple has built.
Apple users absolutely LOVE the brand, which is why they’re willing to pay a premium for its computers, wait in long lines to get their hands on new iPhone models, and always mark their calendars for the next big Apple event.
The Bad: Goldman Sachs
Sometimes brands acquire negative brand equity. A good example of this is Goldman Sachs, who received backlash for its role in the 2008 financial crisis.
According to the Guardian, Goldman Sachs was fined $5.06bn for “its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail.”
But the bank lost more than money. It also lost much of the brand equity and trust it had built up with its customers over its 150 year history.
Brand equity measures the value of a brand. In most cases, the more equity a brand has, the more loyal its customer base and the higher it’s revenue numbers will be.
Building brand equity for your company will take time and effort. But if you implement the three tips outline in this article — tap into audience emotions, be unique and consistent, and take advantage of social proof — you’ll be able to build it over time.