Whether you’re conscious of it or not, everything you do to provide value to your customers is considered brand equity. To establish a strong brand identity, you first need to identify your target audience and create a strategy as to how best to gain their trust and maintain their loyalty.
In fact, consciously building brand equity is a sure-fire way to drive organizational initiatives for a lot of reasons, but before diving into what those are, it helps to have a firm grasp on what brand equity is as a whole.
Once you’ve learned how to build a brand, establishing strong brand equity is next. Consider this your crash course in brand equity, and how you can leverage it to drive your bottom line.
Defining Brand Equity
The textbook definition of brand equity is:
A value premium that a company generates from a product with a recognizable name when compared to a generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable, and superior in quality and reliability.
Your marketing campaigns are a prime example of building brand equity. In fact, every message or flow you employ in your ManyChat dashboard aids in riving your brand equity.
Why is Brand Equity Important
Now that you know what brand equity is, it’s easy to see why it’s important – even if you’re rebranding.
When a company has a high degree of positive brand equity, it increases its chance of retaining customers for the long haul, increasing their lifetime value over time. Additionally, their customers are more likely to pay a higher premium for their products or services.
It’s not quite the same as brand loyalty or recognition, though it is relatively similar. The main difference is that brand equity goes a step further and solidifies a deep perception of the brand name itself.
A good example would be considering Apple.
One of the most prominent associations we make with the Apple brand is it’s high-value tech products that are easy to use. If you were to go out looking for a new phone that you wanted to have a bunch of features, but you also wanted to be user-friendly, Apply might come to mind.
Why? Because they’ve built a high degree of positive brand equity.
Subsequently, you can create negative brand equity, in which your brand image is associated with a negative perception.
Three Components of Brand Equity
Brand equity can be broken up into three major components: consumer perception, negative or positive effects, and the resulting value.
Consumer Perception – The consumer perception of your brand is how your audience views you, and the associations they make to your brand. These are influenced mainly by past experiences they’ve had with your brand or the reputation your brand has in-general within the consumer market.
Negative or Positive Effects – The consumer perception can either have a negative or positive effect on your brand image. If the consumer perception is positive it can attract and retain customers. If it’s negative, it can repel or deter customers. The goal is obviously to build positive consumer perceptions and work to dismantle any negative ones.
Resulting Value – The resulting value refers to the effects of your positive or negative consumer perception. The resulting value can be both tangible and intangible. If you have positive brand equity, you can experience a tangible resulting value such as increased profit margins. Intangible resulting value from positive brand equity may be market awareness or goodwill.
Effect on Profit Margin
The overarching reason why brands would want to build strong, positive brand equity is that it directly relates to their bottom line in regards to growing their profit margin.
When a brand has successfully created a perception of high-value or prestige, customers will be more likely to buy their products at a premium over competitors. Even if the two brands paid the same amount for the materials.
Additionally, brand equity can greatly impact sales volume, as brands with a better consumer perception will have an easier time attracting new customers. They’ll also have an easier time building customer loyalty, which drives business growth and will help you learn how to increase brand awareness.
Thinking again about the Apple example, you can see how their brand equity has allowed them to solidify critical objectives. Most people when they upgrade, upgrade to a newer model of the same Apple tech. Additionally, they’ll have a higher price for said product.
Both of those are the result of positive brand equity, which affects Apple’s profit margin and protects their bottom line.
Examples of Brand Equity
Let’s take a look at some real-life examples of positive brand equity.
An EquiTrend study showed that consumers trust Tylenol over other generic over-the-counter medicine brands. Because of this, Tylenol has grown its market by creating new products such as Tylenol Extra Strength, Tylenol Cold & Flu, and Tylenol Sinus Congestion & Pain.
Geico’s “15 minutes could save you 15% or more on car insurance” campaign built positive brand equity by associating their brand name with cost savings. Now, when customers want a quote for cheaper car insurance.
Tiffany & Co. has built positive brand equity by creating the perception that they’re jewelry is a top-of-the-line luxury, and therefore they can successfully have a much higher price tag.
How You Can Build Brand Equity
The great thing about brand equity is that you’re likely already doing it one way or another. Now that you consciously know what it is, you can take the necessary steps to accelerate building yours.
1) Get Clear on How You Want to Be Perceived by Customers
Building brand equity means creating a positive customer perception, particularly in one well-defined area. Establish your desired brand voice and use that to research your audience. Now, you may already have an identifiable competitive edge over customers, in which case, you’ll want to direct your marketing initiatives at driving it further. You can also use this perception as a strategy to promote your brand personality and set yourself apart from other companies.
2) Use Your Intended Perception to Fuel Your Marketing
Now that you know how you want to be perceived by customers, you can start to build brand equity by executing marketing initiatives with that equity as the main objective.
For example, let’s say you want customers to associate your brand name with great customer service. You can use this as a directive for your marketing campaigns, such as setting up your chat marketing to provide that superior level of customer support. Your ManyChat dashboard allows you to activate pre-templates flows, which you can use to build brand equity.
3) Stay Consistent
One of the reasons why brands have achieved superior brand equity is because they stay consistent.
Their brand equity isn’t just a result of effective marketing plans, but because they’ve built their intended brand equity into virtually every area of their organizations. They embody their values as a whole.
For example, if a brand wants to be perceived as having a superior level of customer service, this needs to be reflected in all departments, from accounting to marketing, to tech support to research and development. The best way to build brand equity is to focus on becoming what you want your brand to be.
4) Listen to Your Customers
Building positive brand equity means listening to and capitalizing on what your loyal customers love about you. That said, you’ll have to do some field research to identify what that is. Here are a few ideas to get started:
- Ask customers to share the specifics about their experience using the flows in your ManyChat dashboard.
- Create a customer nurture email campaign incentivizing loyal customers to fill out surveys.
- Host a forum or gain feedback from followers or subscribers on social media.
- Brand equity is a value premium that a company generates from a product or service with a recognizable name when compared to a generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable, and superior in quality and reliability.
- When a company has a high degree of positive brand equity, it increases its chance of customer retention for the long haul, increasing their lifetime value over time. Additionally, customers are more likely to pay a higher premium for their product or service.
- The Apple brand is a great example of brand equity because it’ll successfully associate the brand name with high-value, user-friendliness, and strong support.
- The over-arching reason why brands would want to build strong, positive brand equity is that it directly relates to their bottom line in regards to growing their profit margin. Brand equity can attract and retain customers, which gives them a competitive edge and protects their bottom line.
- You can build brand equity for your own brand by 1) getting clear on how you want to be perceived by your customers 2) using this to fuel your marketing campaigns 3) staying consistent organization-wide in your efforts to build brand equity 4) listening to your customer for opportunities to capitalize on what makes your brand great in any given area.
Remember when beginning to be prepared with a strong brand strategy to give yourself a competitive advantage over other established brands. Any investment you make in building brand equity will produce favorable customer retention as you long as you understand it’s full potential and harness its power effectively!