Think about the brands you love most. Odds are, you probably came up with a brand like Netflix or Dove, which were among the 25 most-loved brands of 2019, according to consumer research company Morning Consult. Aside from enthusiastic fan bases, these brands have a few other things in common: They’re instantly recognizable, they have huge footprints, and they have a lot of brand equity.
What Is Brand Equity?
According to e-commerce platform Shopify, brand equity is simply a marketing term that refers to the brand value determined by consumer experiences and perception.
“If people think highly of a brand, it has positive brand equity,” Shopify says in its business encyclopedia. “When a brand consistently under-delivers and disappoints to the point where people recommend that others avoid it, it has negative brand equity.”
Why Does Brand Equity Matter?
Brands want equity because it yields consumer loyalty, and therefore sales and profits. In fact, in a blog post about brand awareness, marketing software provider HubSpot noted positive brand equity enables brands to charge higher prices thanks to a greater perceived value in the marketplace, as well as to expand their product lines — and perhaps even impact society someday.
Sounds great, right? But how do you get brand equity? And how do you build it? It starts, of course, with consumers. Here’s how.
For more on how to build customer loyalty:
Engage Customers and Prospects
In a brand equity explainer, graphic design platform Canva notes one of the easiest ways to figure out how much brand equity a brand currently has is to talk to customers. And, of course, once you know your starting point, you can grow brand equity from there.
“Whether it’s enlisting a team of customer service representatives, sending out automated feedback forms — with an incentive for responses — or activating a dedicated email address for feedback, spotting issues and then working to fix them quickly is one of the most significant ways you can build trust in your brand — and ensure returning customers,” the post says.
Other options for customer engagement include newsletters, Q&As, and giving behind-the-scenes looks on channels like Instagram Stories, Canva suggests.
For more on how to increase customer engagement:
Foster Relationships and Grow Trust
Because brand equity is tied to the customer experience, Shopify says the process of building equity mirrors that of building customer relationships. You start by creating brand awareness and encouraging consumers to try a given product or service. If the first two prove successful, your brand becomes a customer preference and eventually even a customer favorite. In a best-case scenario, that endpoint is when a customer isn’t just choosing a product, but actively opting to become a brand evangelist to share his or her experience and invite others into the fold.
“They think so highly of it that any product associated with the brand benefits from its positive glow,” Shopify says. Therefore, by nurturing those relationships and turning customers into fans, brands can enhance their equity.
For more on how to build customer relationships:
Build Brand Awareness
Building brand awareness, or how well consumers know a given brand, also increases brand equity — provided consumer awareness is of positive experiences and associations and not a brand faux pas. (Which, naturally, would cause a brand to lose equity).
That’s according to HubSpot, which notes awareness eventually leads to consumer trust for the brands that play their cards right. Growing awareness, however, is not only a never-ending process, it also includes multiple steps, like embracing brand values and interacting with customers on social platforms even when they’re not looking for a sale.
“Imagine if you met a new person who wanted to be your friend. If they asked for [money or loyalty], you’d probably laugh and walk away, right? Not only is that a shallow approach to friendship, but it also leaves no lasting impact on you,” HubSpot writes. “The same goes for establishing brand awareness among your audience.”
Other ways to grow awareness include creating free content, offering a freemium model for services, sponsoring events, or starting a podcast. But how your brand connects with consumers also depends on what your brand is and who your customers are. Brands are wise not to attempt to be everything to everyone.
Canva also recommends carefully considering visual elements your customers interact with, like your brand logo, website, blog, and/or social media presence, and how they can help fuel awareness.
For more on how to increase brand awareness:
Tell Your Brand Story
Once a brand has figured out what it stands for, it also has to communicate those values to customers through a brand story. Brands can literally tell their stories on their websites, but they can also weave elements of that story into other brand assets, like posts on social media or in email outreach. Human beings naturally gravitate toward storytelling, and the brands that successfully communicate this message are the ones that establish authentic relationships with consumers, which Canva says helps establish a solid foundation for more equity.
Invest in the Customer Experience
Since customer experience lies at the heart of brand equity, it should come as no surprise investments here can also pay off. Sometimes that can be as simple as doing your homework to figure out where customer pain points exist in your industry and building out a brand experience that eliminates those pitfalls. But it also means following the old “surprise and delight” marketing tactic. It was arguably perfected by Amazon, but that doesn’t mean other brands can’t do it, too, by striving to make every customer touchpoint a delightful experience for the end user.
And while brand experience will certainly vary depending on factors like industry and customer needs, brands are also wise to think about how they can craft a unique customer experience that differentiates them from competitors as another means of appealing to customers and building brand equity.
For more on how to increase customer retention:
Monitor Where Your Equity Is Coming From
In his Brand Report Card in the Harvard Business Review, Kevin Lane Keller, who is now Senior Associate Dean for Innovation and Growth and the E.B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth College, said the world’s strongest brands share a number of characteristics, including monitoring where their brand equity comes from. To do so, brands must conduct periodic audits of their marketing efforts.
A brand audit should include a history of the brand’s recent marketing efforts, as well as information about consumer response to said efforts. The latter can be derived from surveys, focus groups and/or other consumer research. The goal is to determine whether the brand’s perception of itself and its outreach aligns with consumers’ view.
For more on how to conduct a marketing audit:
Institute a Brand Equity Management System
Strong brands also go as far as drafting what Keller called a brand equity charter, which outlines the brand’s philosophy, and details acceptable uses for brand assets and brand audit results. This is often distributed to company executives on a monthly, quarterly, or annual basis.
“The brand equity report not only describes what is happening within a brand, but also why,” he said.
This, in turn, helps brands stay focused on their equity-building goals and not get sidetracked by potential distractions along the way that don’t contribute to the brand’s long-term vision.
Design Future Marketing Programs
In addition, Keller described brand equity as a bridge that helps marketers travel from the past to the future.
“That is, all the dollars spent each year on marketing can be thought of not so much as expenses, but as investments — investments in what consumers know, feel, recall, believe, and think about the brand,” he added.
In turn, this helps marketers figure out what to do next in order to build even more equity.
“Everything the company does can help enhance or detract from brand equity,” Keller wrote. “Marketers who build strong brands have embraced the concept and use it to its fullest to clarify, implement, and communicate their marketing strategy.”
The Key to Brand Equity
Since brand equity is rooted in customer experience and perception, building it is much like building human relationships. Communication is key from the first initial encounter and throughout every touchpoint thereafter. That’s one reason brands like Amazon, Netflix, and Dove rank so highly among consumers. But you don’t need the resources of an international corporation to increase brand equity. The key is to simply listen to your customers, engage them no matter where they are on the buyer journey, and provide an incomparable experience — and watch your equity grow.
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