How to Build Strong Brand Equity
By: Ashton Graydon, Art Director
August 20, 2024
As a business owner, brand equity should be on your radar. It’s an essential element for long-term success for every business. It’s part of the special sauce that makes Starbucks and Apple the brand behemoths they are today. Brands with strong equity outperform and outlast others, because their value makes them more resilient.
What is brand equity?
Brand equity is a company’s worth based on the strength of their brand recognition and loyalty from a perceived quality. More simply put, it’s the value a business gains from having a good reputation. When customers think about your brand and get a warm fuzzy feeling, that’s positive brand equity.
Why is brand equity important?
Managing brand equity is an extremely important part of any company’s success because it represents the overall value and reputation of the brand. Customers are willing to pay higher prices for products from brands with strong brand equity. This means that putting resources into building your brand equity will help increase profits in the long run, because you will be able to charge a premium.
We’ve said it before, and we’ll say it again…branding is emotional. Brand equity is intangible, but that doesn’t make it any less important. Brand awareness and brand reputation are difficult to control and to measure. Keep reading to learn how to harness the power of brand equity for your company.
What are the components of brand equity?
Customer perceptions about your brand and the effects of those perceptions work in tandem with one another to create positive or negative brand equity. To get a holistic view of the elements of brand equity, let’s quickly break them down:
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- Brand Awareness: Customers’ familiarity and recognition of a brand’s products and values
- Brand Recognition: Customers’ ability to recognize your brand and products
- Brand Association: Emotional connections, feelings, and responses customers make with a brand
- Brand Quality: Customers’ perception of whether a brand is meeting their expectations and standards
- Brand Experience: Customers’ tangible and emotional interactions with your brand
- Brand Loyalty: Customers’ dedication to a brand over competitors
What are the benefits of positive brand equity?
In a market where companies are dealing with increased competition and high customer expectations, working towards strong brand equity is a winning strategy. Building a close, trusting relationship with your customers is the best way to gain and retain market share. Companies don’t build brands, customers do. By increasing your brand awareness, recognition, and loyalty you can:
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- Grow your market share
- Improve your ROI
- Increase your sales margins
- Close gaps in your sales funnel
The bottom line? An increase in brand equity equals an increase in revenue for your company.
How do you build brand equity?
You know your company needs positive brand equity, but how do you get it? We’ll give you a hint, it’s all about putting the customer at the center of your marketing plan in order to create lifelong fans of your brand.
Providing quality products and services is one huge way to increase your company’s brand awareness, recognition, and loyalty. When you meet customers’ expectations, they’re more likely to purchase from you again and recommend your brand to others.
Another path to building brand equity is through positive customer experiences. Think about every touchpoint along your customer journey. Here are four questions to ask yourself:
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- Is my branding consistent? We can’t over-emphasize the importance of consistency in branding. Think about how you would feel if your favorite Indian restaurant suddenly started serving French food? If your marketing efforts aren’t consistent, customers will feel like they have whiplash. This is why it’s so important to establish a brand identity and voice and use it across all your marketing efforts.
- Do customers trust my brand? In addition to being consistent with your branding, you want to establish yourself as an authority in your field. This means doing what you do well and continuing to innovate as your brand grows and matures. You also want to clearly communicate your brand’s values and mission to your customers to help establish trustworthiness. Another way to build trust is through loyalty and referral programs.
- Am I engaging with my audience authentically? If you haven’t figured it out yet, people in today’s world have very little tolerance for brands that have no strong voice or values. All brand communications should include a focus on authenticity, or your audience will tune them out. Always stay true to your company’s core mission and values.
- What are people saying about my brand? Doing a deep dive to find out what folks are saying about your brand is only going to help you. Remember the adage about sticks and stones and be honest with yourself about how you can improve based on what people are saying. Don’t forget to acknowledge what you’re doing right and give yourself a pat on the back while you’re at it!
If you offer great products, deliver on your promises, and provide a fantastic customer experience, customers will keep coming back for more and tell their friends about you as well.
How is brand equity measured?
There are three types of metrics that you can use to set goals and measure your progress in building brand equity.
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- Financial metrics: Analyzing key indicators such as revenue growth, profitability, customer acquisition and retention costs, and lifetime customer value can provide a better understanding of how important the brand is to the business.
- Consumer Metrics: Social listening tools can be used to track brand relevance, perception, value, and emotional connection. Perceived quality is one of the most important components of brand equity.
- Strength Metrics: Track knowledge and awareness of the brand, loyalty, retention, and brand buzz. You can do this by monitoring social media and implementing surveys, in addition to monitoring reach, impressions, and website traffic from targeted marketing campaigns.
All of these metrics can provide valuable insights into emerging trends that can help shape the future of brand equity management for your company. The ability to tailor your marketing strategies based on these insights will help you build brand equity faster and more efficiently.
What are some common challenges around building brand equity?
Building brand equity can be a slow and arduous process. It takes time to earn the trust of your audience and learn what will make them happy. A few common challenges companies face when building brand equity are:
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- Brand Dilution – Brand dilution happens when a company attempts to break into a new market and fails for whatever reason. While most companies hope to avoid this scenario, it does happen. If you find yourself in this situation, it’s important to focus on your core company values and goals to repair the damage that has been done.
- Crisis Management – When crisis threatens a company, their brand often takes a hit. If your company is operating through a holistic plan where every department has goals that stay true to your company’s mission and values, then you’re on the right track. Managing potential threats to a brand is an important reason to have a professional managing your PR.
- Changing Customer Preferences – Customers are fickle, especially in today’s world built for instant gratification and short attention spans. Resilient brands know the importance of innovating and adapting to the changing desires of customers while staying true to their mission and values.
Avoiding these pitfalls will help you stay on the path of building brand equity rather than sliding back into obscurity.
It’s impossible to overstate the competitive advantage strong brand equity can lend to your business. It will help you stake your claim in the market by attracting customers and allow you to charge a premium for your products with reduced marketing costs. Need help establishing brand equity so you can rise above the crowd? Get in touch to see how we can help.