Brand Equity: What It Is and How to Build It
Brand equity is the secret weapon behind companies that thrive while others struggle.
Businesses dedicated to consistent branding experience 20% greater overall growth, according to Marq’s State of Brand Consistency Report. Also, those with positive brand equity enjoy 33% higher revenue than other organizations.
It’s a tough market out there: budgets are shrinking, growth is slow, and advancements in marketing software are changing how we approach marketing strategies. As Bob Dylan sings, “The times they are-a changin’,” and it’s more important than ever to consider what influences your brand value right now.
Today, we're dissecting the layers of brand equity, diving into equity-building strategies that leverage social media management, content marketing, customer service, and more. But first, some definitions.
What is Brand Equity?
Brand equity refers to how much people value your brand based on quality and desirability.
Consider it your brand’s reputation – the intangible force that defines your brand identity or attaches trust and recognition to your brand name.
It’s what makes buyers choose your brand over the competition. You can measure brand equity via KPIs like brand awareness, customer loyalty, and customer satisfaction.
Your brand can have either positive or negative brand equity. Positive brand equity is like the Apple phenomenon – where the brand is so valuable and loved that people passionately argue about it. This is evident in the ongoing Apple vs. Android debates.
On the other hand, we have negative brand equity. The Facebook/Meta rebrand is an excellent example of this.
Before rebranding to Meta, Facebook was flying high with a value of over $1 trillion. However, consumers weren’t impressed with the new company vision. A study by Harris Brand Platform found Meta's trust score plummeted from 16% to just 5.6%. Trust matters big time – Meta's valuation took a hit, dropping $650 million within a year of the rebrand.
This demonstrates what is known as the brand equity chain, which links brand image to brand value. When Meta altered its brand image, it decreased its brand strength, leading to a drop in its valuation.
Why is Brand Equity Important
According to the Edelman-LinkedIn B2B Thought Leadership Impact Report, 64% of C-suite executives say their companies have tightened their procurement processes.
Here’s the thing: that same report found that 91% of decision-makers are still open to non-critical businesses, so long as the business can demonstrate their value.
This is where your brand equity starts to move the needle. When you come to the table with a strong reputation and positive brand associations, your chances of winning business improve thanks to the perceived value of your brand.
Positive brand equity lends you the power to justify price premiums, expand into new markets, and drive stock prices up, up, up! It’s a necessary element to compete in a time of tight budgets and economic fears.
As the CEO of UserGems, Christian Kletzl, says:
“When spending is down overall, dominating mindshare is a long-term investment that pays off in dividends.”
The Building Blocks of Brand Equity
Much of brand equity is intangible – tied to emotions, thoughts, and discussions that we marketers can’t quite measure. This makes it necessary to break the concept of brand equity into measurable categories.
To better visualize these categories, we can turn to The Aaker Model by “The Father of Modern Branding,” David Aaker. This brand equity model breaks the concept into four distinct building blocks:
- Brand awareness: How well consumers recognize or recall a brand.
- Brand associations: The mental connections customers make between a brand and specific attributes, features, or benefits.
- Perceived quality: Also known as brand perception, it focuses on customers' opinions about the overall quality or excellence of a brand.
- Brand loyalty: The degree of customer commitment and repeat business to a particular brand.
Think of it like this: brand equity is a cake, where each element of The Aaker Model serves as an ingredient in the recipe. Much like a well-executed recipe, a mix of these elements results in a brand with a rich and irresistible appeal, leaving a lasting impression on the taste buds of your target audience.
Consider Starbucks, for example. Before Starbucks, coffee culture wasn’t prevalent in North America. Starbucks put immense effort into connecting its brand to coffee culture to grow the company into the behemoth it is today.
What is that brand culture if we break it down?
- Brand awareness: Remember the saying “a Starbucks on every corner?” Starbucks puts immense effort into brand placements across locations their customers frequent. Today, their Siren logo is immediately recognizable.
- Brand associations: Starbucks brought Italian cafe culture to North America, building a unique brand around a “coffee experience” rather than just a cup of coffee. Today, their name is synonymous with both coffee and cafe culture.
- Perceived quality: Customers associate Starbucks with a certain level of sophistication and quality, thanks to their commitment to using premium coffee beans, employing skilled baristas, and creating an ambiance that reflects a “premium” experience.
- Brand loyalty: Ever wonder why all Starbucks locations look the same? This is to remind you that no matter where you are, you can get the same cup of Starbucks coffee. This also makes it far easier for customers to remain loyal, as it’s available anywhere.
Case Study: Leveraging Customer Reviews for Brand Equity
Once you grasp the foundational elements of high brand equity, you can deconstruct them into a ladder approach. Take Grooveshark's success story, which began with a dedicated focus on the user experience and led to a loyal customer base that propelled the company to 30 million monthly members and $15 million ARR.
Sam Taratino, Fractional CMO of Harmonic Reach Marketing and former CEO of Grooveshark, explains, "At Grooveshark, we understood the paramount importance of building brand equity, particularly in the SaaS landscape.” “
Grooveshark's strategy began with a focus on delivering an exceptional music streaming experience. They simplified their process to just two steps, search, and play, which resulted in heightened user engagement. “It's not just about having a good product; it's about presenting your unique value proposition in a compelling way," Tarantino notes.
Their positive user experience led to heightened perceived value and strong brand loyalty. This translated into enthusiastic reviews on platforms like TechCrunch, which contributed to increased brand awareness and trust. With several elements of brand equity working together, Grooveshark successfully built a positive reputation and strong brand equity.
How to Build Brand Equity
We’ve covered what brand equity is. Now, how do we build it?
Managing brand equity in 2024 and beyond will require a careful approach. Decision-makers demand value for their company dollars, especially in times of constrained budgets.
The challenge is real, especially with your shrinking budget, but possible. The first step? Get the fundamentals of your brand right. Then maximize brand-building through a strategic mix of thought leadership, excellent customer service, employee advocacy, and social proof.
Share High-Quality Thought Leadership from Your C-Suite
Thought leadership can sometimes feel cringey (remember your LinkedIn feed?), but it is underappreciated as a brand management strategy. In 2021, 54% of B2B decision-makers spent more than one hour per week reading thought leadership, and 48% awarded business to the organization responsible for the content.
Regarding the components of brand equity, thought leadership and personal brand support brand awareness, brand perception, and brand associations. That’s precisely why Wojciech Chrzan, Head of Insights at Brand 24, highlights thought leadership and storytelling as his go-to strategies to build brand equity.
His tips include regularly publishing insightful content on industry trends, sharing case studies to highlight product use cases, and personalizing your content for your target audience.
Prioritize Customer Reviews and Referrals
Data from Big Commerce’s Global B2B Buyer Report indicates customer ratings and reviews strongly influence B2B buying decisions. Given how competitive the SaaS industry is, social proof holds significant importance – especially when building brand equity through perceived quality.
That was precisely the case of PartnerStack, as shared by Joe Kevens, Director of Demand Generation at PartnerStack and Founder of B2B SaaS Reviews. The company's intentional focus on online user reviews led to a boost from under 40 to over 500 reviews, propelling them from 9th to 1st in their category on a major review site.
Joe emphasized the substantial impact of this approach, stating, "This significantly enhanced our brand awareness, loyalty, and trust, influencing 40% of our revenue."
Use Employee Advocacy to Build Brand Loyalty
Your employees, as key contributors, naturally become influential brand advocates. The positive experiences of employees (or unfavorable) impact consumer perception, media coverage, regulators, and purchase decisions.
At a time when institutional trust is eroding, employees rank trust in their employer 23 points higher than average for other institutions, including government, NGOs, and media. This is an opportunity for building brand equity from the inside out.
To make the most of this opportunity, foster a positive workplace culture, implement advocacy programs, provide branded items, and encourage social media engagement.
Take it from Sujan Patel, founder of Single Grain, who explains how company shirts attributed to a $500k growth in revenue:
“These days, our Single Grain shirts are our uniforms. Everyone on our team wears them, so when we all go to lunch together, we roll deep. Even our book keeper wears our shirts every single day. In our SOMA neighborhood – where we’re surrounded by hundreds of other startups and entrepreneurs – this kind of publicity and name recognition is huge.”
Deliver Outstanding Customer Service
When a customer has a bad experience with your brand, who hears about it first? Their friends, family, and colleagues. This negatively influences brand perception, brand loyalty, and brand associations.
However, the opposite is true as well. Happy customers lead to increased sales and higher profit margins. Positive experiences support word-of-mouth marketing and referrals, leading to a consistent stream of new customers.
Excellent service also helps during tough times, steering brands through challenges and keeping a good reputation. Customers often are okay with paying more for the comfort of a great customer experience.
How to Measure Brand Equity
Measuring brand equity is a big task, but it helps to recall the building blocks of brand equity – brand awareness, brand recognition, perceived quality, and brand loyalty.
We can break down our approach to measurement through these four components:
Brand Awareness
Brand awareness assesses how well consumers recognize or recall a brand.
How to measure it: Use brand management software to track your social media metrics (followers, shares), analyze website traffic, and conduct surveys to measure brand awareness with a focus on metrics such as unaided/aided brand recall, NPS scores, and earned media coverage.
Brand Associations
Brand associations involve customers' mental connections between a brand and specific attributes, features, or benefits.
How to measure it: Utilize content analysis, surveys, social listening, and focus groups to identify and strengthen positive associations, fostering a solid and desirable brand image.
Perceived Quality
Perceived quality, also known as brand perception, focuses on customers' opinions about a brand's overall quality or excellence.
How to measure it: Analyze customer reviews, product performance metrics, and market research to gauge and enhance consumer perceptions of your brand's quality.
Brand Loyalty
Brand loyalty measures the degree of customer commitment and repeat business to a particular brand.
How to measure it: Measure repeat purchases, customer retention rates, and loyalty program engagement to assess your customer commitment. Most brand advocacy software solutions can help you keep track of these metrics.
Challenges and Solutions to Growing Brand Equity
Ensuring your company goals match up with building a strong brand isn't just a good idea – it’s necessary for long-term success. Let's break down this vital link with some practical tips you can implement.
Dealing with Resource Limitations
Tight budgets have a chokehold on many marketers at present, but it’s not impossible to increase brand value on a budget, though it will require creative solutions. For example, swap paid brand awareness campaigns for word-of-mouth marketing tactics.
Referral programs are a fantastic way to build brand recognition through word-of-mouth marketing. Take Dropbox, for example; their referral program helped them grow 3900% in 15 months, all with minimal brand marketing spending.
Other low-cost equity-building activities include:
- Organic brand promotion through social media content.
- Showcase user-generated content to enhance authenticity.
- Establish industry thought leadership with webinars or online events.
- Brand collaborations with partners or micro-influencers for affordable brand endorsements.
- Reward customer loyalty through effective loyalty programs.
- Create shareable content via blogs, videos, or podcasts.
- Participate in online forums to connect with your target audience.
Adapting to Market Changes and Trends
In the last three years, we’ve had to navigate a worldwide pandemic, economic recession, and now the emerging AI revolution. These market dynamics influence your approach to building brand equity.
The organizations that come out on top in turbulent times are agile and proactive. As marketers, we must monitor our competitors, industry benchmarks, and trends and react to them.
Do not fear change; embrace it. Charles Kettering, considered one of America’s greatest inventors, once said, “The world hates change, yet it is the only thing that has brought progress.”
In this arena, customer feedback is gold – as it’s direct insight into changing preferences that your brand can use to stay ahead. Flexibility in marketing strategies and a commitment to social listening? That’s your ticket to adapt swiftly to the market's twists and turns.
Lastly, keep your workforce (and yourself) informed and engaged. An insightful and motivated team is your secret weapon to staying ahead.
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Aligning Brand Equity with Business Goals
As much as 90% of organizations fail to execute their strategies successfully. According to data from PMI, 61% of executives believe this failure springs from an inability to align strategy development with strategy implementation.
Aligning your equity-building tactics with company goals isn't just a good idea – it’s necessary for long-term success. Let's break down this important link with some practical tips you can put into action:
1. Define clear brand objectives: Nail down precisely what you want your brand to be in the market. Ensure you tie your brand goals to the bigger picture company goals. Clarity is your best friend here.
2. Integrate brand into business strategy: Don't treat your brand like a distant cousin. Weave brand-building right into your business strategy. It’s not an add-on; it's the beating heart of your growth plan.
3. Understand customer expectations: Your brand isn't for you; it's for your customers. So, sync your brand efforts with your customers' expectations and cravings. Dive deep into their world to ensure your brand hits the sweet spot.
4. Integrate customer feedback: Don't play in the dark. Soak in feedback from your customers and stakeholders. It’s not just about listening; it’s about tweaking your brand game based on what they tell you. It's like having your audience write the playbook for your success.
Your Next Move: Take Charge of Your Brand’s Destiny
Growth rates dip, and economic uncertainties linger, but the power of brand equity trudges on.
Trust is currency, and positive brand equity is not a luxury but a necessity. It's the force that propels your brand above the competition, justifies premium prices, and fosters unwavering customer loyalty.
As you embark on the journey to master brand equity for SaaS success, stay informed and inspired with weekly insights from marketing leaders. Subscribe to The CMO newsletter for marketing leaders to have these insights, strategies, and tips delivered to your inbox.