Why building and measuring brand equity is key to long-term growth

What is brand equity photo featured image

What is brand equity?

Brand equity can be defined as a brand’s perceived value according to its customers.

If customers think positively about a brand based on their previous interactions with it, the brand has built positive brand equity. But brand equity works the other way, too: if a customer has an unpleasant interaction with your brand — whether it be related to customer service, product issues, or a highly publicized PR crisis — they are less likely to use your business again and are also more likely to dissuade others from using your business if asked for their opinion. That’s negative brand equity.

Managing your brand equity is an essential step in helping your business grow. Here are the three main reasons why brand equity is important:

  • It can lead to an increase in market share. A positive experience from the consumer allows your business to increase its brand awareness, and then end up increasing its market share.
  • It can lead to easy extensions in your product or services. If you’re known for creating one thing really well, it’s easier to gain the trust of your customers should you choose to expand your service or product offering. A strong example of this can be seen in the ever-growing list of products that Apple has to offer — which happen to also have a cult following.
  • You can charge clients premium prices for your products and services. If your company has developed positive brand equity, and customers are loyal to your business for the quality of your offerings and the personality of your brand, you can charge more and they’ll still stay with you.

We’ll get into everything you need to know about brand equity, how to build it, and how to measure it.

Table of contents

Brand equity vs. brand value

Brand equity is often confused with brand value, so let’s clear it up: brand equity refers to how your brand choices influence customer perceptions of your company. Brand value refers to the additional monetary amount that your branding choices are able to generate for your company.

For example, let’s imagine a beloved local grocery store. The store has positive brand equity because they have friendly staff, great prices, a catchy jingle, and, thanks to a recent rebrand, a pleasing and inviting aesthetic. Their brand value is the fact that they can see that their rebrand increased brand awareness across the city, and led to a 10% increase in sales within a year.

Examples of brand equity

Here are some examples of positive and negative brand equity.

Positive brand equity examples

  • A local veterinarian’s office is known around the city for their welcoming environment, cheeky social media presence (with lots of pet photos), and accessible prices.
  • Coca-Cola is extremely well-known around the world: chances are, if someone asked you about Coca-Cola, you could describe the color of the can, imagine the taste, bring up a memory you have of drinking it, and remember where you’ve seen it advertised before.
  • Fenty Beauty has very positive brand equity, as they’re known for their glamorous packaging, high-quality products, and very inclusive shade range.

Negative brand equity examples

  • A local sandwich shop was traced to several cases of food poisoning due to a bad batch of house-smoked salmon. Their reputation took a hit and they had negative brand equity.
  • The CEO and face of a theater production company was hit with allegations of abusive behavior. Until the CEO is replaced, and the company reckons with any harm done, the theater company will have negative brand equity.
  • A software company gets a stream of customer complaints on Twitter due to slow and ineffective customer service. Until they can make things right with all those customers, and implement a better customer service plan, they have negative brand equity.

The 6 elements of brand equity

Your brand equity is made up of many other metrics that marketers and advertisers often look at when assessing the health of a business. These include:

A brand equity diagram with associated categories including brand loyalty, brand preference, brand experience, perceived quality, brand association, and brand awareness.

Brand equity is more than just perception, and it can impact the bottom line.

  1. Brand awareness: how easily does your community recognize your brand and your products? What percentage of your target market knows who you are?
  2. Brand association: what adjectives, feelings, and traits come to mind when your brand is mentioned?
  3. Brand loyalty: when customers try your products, do they stay with your company for future purchases?
  4. Perceived quality: is your brand known to be high-quality and luxurious? High quality but affordable? Standard quality, but all you need?
  5. Brand preference: what makes consumers pick your brand over others?
  6. Brand experience: what’s it like for customers to interact with your brand and products?

Brand equity models: Keller vs. Aaker

There are two preeminent schools of thought when it comes to proactively building and measuring brand equity: Kevin Keller’s, and David Aaker’s.

Keller’s model of brand equity: the customer-based brand equity (CBBE) model

Source: Researchgate

Keller’s model is often shown as a pyramid, where every brand question you answer builds upon the fundamental question of “Who are you?”, and involves getting to know how a consumer feels and interacts with your brand. His take on brand equity is more centered on a consumer's emotional perception.

The four questions that Keller encourages brands to be able to answer are as follows:

  1. Identity: Who are you?
  2. Meaning: What are you?
  3. Response: What do consumers feel about you?
  4. Relationships and resonance: How do we (the consumer and the company) connect?

Aaker’s model of brand equity

Aaker, on the other hand, sees brand equity as a metric that’s more about recognition, explaining five major inputs that can help a brand measure how well, and how often, their brand is recognized.

Those five inputs are:

  1. Brand awareness
  2. Perceived quality
  3. Brand loyalty
  4. Proprietary assets
  5. Brand associations

How to build brand equity

1. Develop a strong brand story and brand personality

In order to make sure your customers see you the way you want to be seen, it’s important to first develop a brand story and brand personality. These foundational choices will underpin all your marketing and strategy decisions.

If you’re just starting your business, create a visual representation of what you want your personality to look like and feel like, including your brand colors, your logo, and the fonts you use on your labels, your social media posts and even your packaging. These elements give your customer insight into who you are as a company.

Start brainstorming your brand personality with a mood board. For a beautiful and adaptable design, try the Simple Pastel Grid Photo Mood Board or the Gold Peach Brown Mood Board Photo Collage template.

Design tip: For a serious and corporate personality opt for dark shades of blue and green, and stick to a simple, professional-looking font. If you’re opting to build on a fun and relaxed personality, opt for pastel colors and playful fonts.

2. Invest in brand consistency

If your brand isn’t implemented consistently across all channels, your customers will have a harder time picking your brand out of a lineup. That’s why it’s important to make sure you’re using brand management tools to safeguard your brand consistency.

Building a brand kit, including your brand fonts, colors, and approved imagery, helps everyone at your company create on-brand designs quickly and easily. And you can also create brand templates, so your most widely used content formats — from social posts to presentations — can be created in minutes and always be brand-ready.

3. Grow your brand awareness

Once you have a strong brand story and brand personality that you’re proud to display, the next step is building awareness around your brand and what you offer.

You can lean into any or all of the following areas of focus when working to build brand awareness.

  • Share your brand statement everywhere. At the heart of all your brand awareness efforts, you want to make sure that you’re giving potential customers a brief explanation of the problem you can help them solve. Whether you add your brand statement to your Instagram profile or provide more context on your website’s About page, providing the consumer with context allows them to assess whether your business is able to potentially fill their need.
  • Keep your website updated. Your website is the perfect medium to inform potential customers of your business, while also communicating your brand story and brand personality through the use of design and multimedia elements, like photos and videos.
  • Publish a blog. A great way to increase web visibility is to start a content marketing blog. This helps with search engine optimization (SEO), and also starts building a trusting relationship with your customers.
  • Run creative advertisements. Well-placed and well-planned ad campaigns, whether they’re out-of-home advertisements or social media paid ads, can help you seriously expand your reach.
  • Post regularly on social media. Having a strategic social media presence is an effective and affordable way to show your customers more of your brand personality, and engage with them on a regular basis through TikTok videos, Instagram stories, reels, and posts, and even LinkedIn or Twitter posts.

With 600K+ designer-approved templates at your fingertips, Canva makes it easy to build brand awareness with engaging social media graphics. Check out these modern and sleek designs you can easily personalize for brand promotions.

4. Solicit feedback from customers

An accurate way to understand your true brand equity is to open the lines of communication with your customers and clients.

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.

5. Connect with customers

Building and retaining relationships with your clients and customers allows a stronger bond to be created between consumers and companies. A growing relationship is powerful because it leads to repeat purchases and a sense of loyalty to your business and brand.

Staying in regular contact with your customers can be as simple as a weekly newsletter, Facebook Live Q&A sessions, Instagram stories, or even hosting an exclusive event to thank your loyal customers.

Stay in contact with your customer with regular newsletters. For easy-to-read templates that also come designer-approved, try the Black and White Minimal Newsletter, or the Pink Grey and White Newsletter template.

How to measure brand equity

Once you’ve spent time working on building brand equity, it’s important to keep track of how your brand equity is doing. To do so, you have to understand how to assess and measure the growth or decline. Below are some of the ways you can measure brand equity:

1. Run surveys to learn your community’s associations with your brand

Surveying your clients and customers is one way to assess where your brand currently sits on the brand equity scale. Qualtrics suggests exploring two main categories when creating brand equity surveys: awareness and consideration.

Awareness: How well consumers recall your brand within its larger category, spontaneously, or when aided with a prompt.

Some questions to ask:

  • What product or service do you first think of when presented with the overall category, like grocery stores, or electronics providers?
  • When you have a need for a product or service in X category, who do you think of?
  • When prompted with [your logo or brand name], do you know what they offer?

Consideration: How likely a consumer is to choose your brand in the future, both as a new product (absolute consideration), or as a back-up option to their preferred brand (relative consideration).

Some questions to ask:

  • How likely are you to consider our brand when shopping in X category?
  • How often do you purchase from X category?
  • How likely are you to recommend [brand] to friends?

2. Use a brand equity index

A brand equity index is a way of measuring how your brand is perceived by customers — but in a more qualitative way. Marketing and branding expert Ashok Charan shares that Nielsen’s Winning Brands Brand Equity Index is built off of the success of NPS, or net promoter score, which is a popular one-question survey that asks how likely a customer would be to recommend your services to a friend. With this one question, a company can easily gauge how they’re doing overall, especially when it comes to customer service.

A brand equity measurement diagram created by Ashok Charan that evaluates willingness to recommend vs willingness to pay a premium vs favorite brand and adds the sum of the rating of each attribute and provides a score.

Ashok Charan’s method for measuring brand equity.

But specifically for measuring brand equity, Nielsen’s brand index involves using a series of three questions to determine the following factors:

  1. Brand loyalty
  2. Willingness to pay more for your brand due to positive brand equity
  3. Willingness to go out of their way to get products or services from your brand

Here’s the questions to ask when conducting a Nielsen Winning Brands Brand Equity Index survey:

  1. If you had to recommend a certain brand of [product], which would you recommend?
  2. Which brand in this category is your favorite? (It doesn’t have to be the one you actually use the most often).
  3. Multiple choice: Choose which one of the following statements best applies to describing how much you’d be willing to pay for a product from this brand:
  4. I would be happy to pay whatever the listed cost is
  5. I would buy it even if it’s more expensive than any other brand
  6. I would buy it even if it’s a lot expensive than the cheapest brand
  7. I would buy it even if it’s a little more expensive than the cheapest brand
  8. I would only buy it if it’s the same price as the cheapest brand
  9. I would not buy it at all
  10. Not sure

If possible, survey large groups with these questions on a regular basis, and you’ll be able to track whether your brand equity is trending in a positive or negative direction — and be able to come up with a plan to improve it.

3. Analyze other financial metrics

Look at your financial metrics when trying to measure your brand equity. By analyzing your financial situation — both the growth you have had internally and compared to your competitive set — you’ll gain a better understanding of how brand work has helped grow your business.

Make reports fun and engaging to read with the Blue and White Graph General Report or the White and Yellow Graph Daily Report template.

Positive brand equity brings positive results

Taking time to invest in your brand’s equity allows you to better understand the needs of your customers, and apply these learnings to your products and your marketing strategies. Then, you can use these insights to grow your business and keep delighting your customers for years to come.

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