Brand equity has always been crucial to a successful business. Before the days of the Internet, a business owner’s personal reputation within the community and the quality of the product or service they provided were the key factors in how people viewed that business. The situation hasn’t fundamentally changed for growing businesses, but the way brand equity looks is a little different in the digital age.
Defining Brand Equity
Brand equity is an intangible. It’s everything that your customers or clients think when they hear your name, use your product, or see your logo. Everything about your business goes into your equity, including the services you provide, the quality of your products, the way people perceive your marketing attempts, and every experience a person has with your brand, for good or ill.
Every TV ad, every Facebook post, every sale, and every customer service interaction is affecting your equity. What you don’t say on Twitter could be as important as what you do say on the phone, and there are some compelling reasons brand equity is crucial to keep you thriving.
9 Reasons Brand Equity Is Crucial to Your Business
Charge a Premium
There’s a reason that the local coffee shop down the road is struggling to keep their doors open even with lower prices than Starbucks’, and that has to do with brand equity. Starbucks has premium equity, so they can charge premium prices.
People see Starbucks as high value, and they have confidence in the company’s promise to deliver a consistent product that tastes the same whether you buy it in Miami or Mumbai. Because of this confidence, Starbucks is able to charge higher prices and yet still attract customers away from their competitors in markets all over the world.
Gain Some Breathing Room
Your equity can protect you when you make a mistake. While the goal should be to avoid making any mistakes, they do happen, and your brand equity can protect you from the worst.
Going back to the Starbucks example, there are many locations where lines to get coffee in the morning before work can stretch out the door and around the block, while the drive-thru car pileup threatens to block the street. People would not tolerate waiting this long for coffee from another brand, but because of Starbucks’ strong equity, they are able to get away with making people wait while they build new stores and try out ways to streamline the process.
Earn Customer Loyalty
If customers have a good experience with your brand, associate it with a premium image, and resonate with its values and promises, they stay loyal for years. It takes a lot to shake that kind of loyalty, and they tend to pass that loyalty on to the next generation.
A good example of strong customer loyalty is Toyota. The automotive market is crowded and competitive, yet Toyota stands above most of the competition and has the most faithful buyers: nearly 50% of people who own one plan to buy another Toyota when it’s time for a new car.
Access the Best Marketing
The best kind of marketing is word-of-mouth, and this is the only type of marketing that you cannot buy. The higher your brand equity, the more loyal your customer base tends to be and the more likely they are to create buzz for you with friends, family, and co-workers. The more positive word-of-mouth marketing you get, the less you have to spend on your marketing efforts. This means a bigger profit margin and a stronger customer base at a lower cost.
A good example of this is Apple. Apple customers tend to be highly loyal and quick to talk about how much they like their Apple products. In fact, they’ll gather online and argue to the death about the superiority of Apple over competitors. While Apple spends a bit more in advertising now than they used to, they still don’t spend nearly what other digital companies do because they simply don’t need to. Their customers do it for them.
Trade On Your Name
One of the best things about having strong equity is that you can leverage it for other benefits. You might have the opportunity for expansion, for example. In other cases, you might be able to “rent” your equity to companies that want to use your name, and the repetition that goes with it, to promote their complementary services or products. Every time you see a celebrity doing a commercial for a product, for example, you’re seeing someone rent their personal equity. It works the same way with brand equity.
Be Instantly Recognizable
When customers recognize your brand, they’re more likely to buy from you in a situation where they’re not sure what to choose. Consider McDonald’s as an excellent example here.
If you are visiting a country with a cuisine dramatically different from your own, a McDonald’s can be very attractive. Nestled among restaurants with unfamiliar names and unfamiliar cuisine, McDonald’s is instantly recognizable. If you’re in a hurry, feeling slightly unsettled, or simply don’t know where to start with the local cuisine, you’re very likely to choose the McDonald’s over nearby restaurants that might offer far better cuisine.
Improve Your Negotiating Position
When your brand equity is high, other brands want to work with you. Partners want to come alongside you. Manufacturers want your endorsement. Vendors and distributors want to say that they’re associated with your brand, and they’re willing to negotiate. From this strong negotiating position, you can lower costs and boost your bottom line even as you access the best products.
Bring New Products and Services to the Market
When you have strong equity, any new products or services you bring to the market have an advantage. They are already tied to the trusted name, so in some ways, they are hardly “new” at all.
Consider Subaru, the #2 ranked car company for customer loyalty. The most popular cars in their line have always been the Outback, Forester, and WRX. These vehicles stay in families and are passed down to rising generations. When Subaru announced their new Subaru Ascent, many predicted it was a huge mistake. But because Subaru had built strong equity for their brand (not just for one vehicle type or another), they were able to ride that equity to record sales numbers for a full-sized SUV.
Gain a Competitive Advantage
All other things being equal, if your brand equity is stronger than a competitor’s, you have the edge. Without having to spend extra money in marketing, slash prices to levels you can barely sustain, or even improve your product, you can guarantee you will outsell the other guys’.
Tips for Building Your Equity
You can’t build brand equity with just a few quick tips. It takes effort, clear direction, and professional help. That said, it’s worth evaluating whether you’re doing the basic things that build equity so you know where to start:
- Be true to your promise: the promise of what you deliver
- Be clear about who you are and what you stand for
- Build emotional capital by being genuine and open
- Be consistent in your message across platforms and situations
- Bring genuine value to resolve customer pain points
- Be committed to always delivering excellent customer service
Are You Ready to Grow?
If you’re ready for your business to grow, get focused on your brand equity. Contact us at Evolve One Media today and work with dedicated professionals who know what strategies will strengthen your brand, grow your business, and develop customer loyalty that will last a lifetime.