How do you measure an unmeasurable thing? Don’t worry, this isn’t a paradox or an introduction to a Lewis Carrol novel. No, I’m talking about brand. Knowing how to properly measure your brand equity is crucial for any organization. It can impact your valuation, your annual reporting, consumer loyalty and your product price point. Now let’s explore how to find the tangible value of your brand.
What is brand equity?
Brand equity is simply the value of the brand in and of itself. From a marketing perspective, that value is determined by the perceptions consumers have of a brand. Said another way, it’s the value that an organization or product generates through the strength of their brand alone in comparison to an equivalent product or competitor. Think about two pairs of the same pant, but one is from Costco and one is from Lululemon. The Lululemon pair will cost more for the name alone.
Ok, but what does “brand equity” mean for non-Fortune 500 companies?
Your brand is the beating heart of your organization; a representation of who you are, what you do, and what you value most. A strong brand can help to position you in the mind of consumers, assist in times of crisis, and ultimately help you make the big bucks. We call these attributes brand equity: the total value that your brand brings to your organization (of any size).
How to measure brand equity
Brand equity is never going to be an exact science. Unless you and an imaginary clone organization that have all the same attributes (financial statements, product, team size, etc.) but a worse brand sell at the exact same time, you’d be hard-pressed to determine the exact dollar amount of your brand. But you can know what your general brand equity is.
The true value of brand lies in awareness, recognition, and loyalty; all attributes that can be found by listening to your audience and monitoring their behaviours. To do this, we can look at the following indicators:
Aided and unaided awareness numbers
Aided and unaided awareness numbers are gathered through research initiatives. They tell you if your consumers are aware of your brand and how likely they would be to purchase it. Aided awareness numbers will show you if your consumers can recognize your brand with a prompt, while unaided shows if your brand is top-of-mind for consumers without prompting.
Net promoter score
Determining your net promoter score (NPS) will show you how happy consumers are with your brand experience. This is another research-based initiative that asks customers to rate your brand on a sliding scale to determine how likely they are to support and recommend your brand. Completing an NPS annually can show you how much value your brand has to your consumer base over time.
Purchase intent
Determining purchase intent is a research-driven process that often comes with a high price tag. However, this elusive metric can show you if you’re connecting with the right audience and if your brand is spurring consumers into buying or interacting with your product. One way to determine purchase intent without the hefty cost of consumer research is to measure it using social media by looking at followership, saves, and click rates on posts. This will be more applicable to B2C or D2C goods but it’s worth knowing.
Now that we understand why brand equity matters and how to measure it, how can we build it?
Building brand equity
Put your money where your brand is
Investing in brand can occasionally be a difficult sell because as we’ve seen it’s not always measurable; there is no firm dollar value that can be attributed to your efforts at the end of the day. So, why is investing in brand so critical? Think of your organization as an apple tree, your product as the apples, and your brand as the tree itself. You can’t just constantly pick the fruit without watering the tree. Even if you work hard to sell the apples, neglecting to water the tree will make the fruit unhealthy and undesirable to the consumer. For a product to see the largest success, the framework and spend supporting brand must be properly maintained.
I recommend considering a 60/40 split for brand and sales investment efforts. Your brand provides a foundation for you to share your vision with your audience, connect with them, and generate purchases. Studies show that a strong and consistent brand can increase revenue by 23 percent, making it a crucial component to focus on and invest in.
It’s important to note here that a brand investment doesn’t just mean a constant update to your logo. Brand investments mean brand building and brand awareness-building activities. This could mean ads, content, and whatever else. It’s just about not dedicating all your promotional spend to sale messages.
Start with the building blocks
In order to generate equity, your brand needs to have a solid foundation to stand on. This doesn’t always need to be a fully baked strategy, but it should be enough to provide a general guideline for your actions and messaging. Your brand should have:
A solid purpose
64 percent of consumers say that shared values were a primary reason for their support of a brand. They connect with a brand’s purpose. You need to have a clearly defined purpose, an understanding of how you contribute to society beyond making money for the shareholders, and a value system that is relatable to your audience and sets you apart from the competition. Most importantly, you must actively work to consistently align your actions and messaging with this purpose, or it will become meaningless.
A strategy for community building
Good branding builds community; a connection between you and your consumers. This is incredibly helpful not only to establish brand loyalty but also to mitigate crises when needed. McKinsey & Company puts this best, stating: “as new disruptions dominate the media every day, the familiar brand becomes even more important than usual as a source of security and comfort.”
To infinity and beyond
Measuring your brand equity will show you where your strengths lie, and where improvements can be made. Ultimately, it is a process that will require continuous monitoring and experimentation. This is where the fun begins! Get creative with your branding and use it as an opportunity to show your audience what makes you unique and important. Holding true to your purpose and making connections with your audience will be the most valuable investment you make on your journey to generate sales and reach your business targets.
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