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:
We’ll get into everything you need to know about brand equity, how to build it, and how to measure it.
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.
Here are some examples of positive and negative 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:
Brand equity is more than just perception, and it can impact the bottom line.
There are two preeminent schools of thought when it comes to proactively building and measuring brand equity: Kevin Keller’s, and David Aaker’s.
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:
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:
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.
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.
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.
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.
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.
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.
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:
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:
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:
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.
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:
Here’s the questions to ask when conducting a Nielsen Winning Brands Brand Equity Index survey:
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.
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.
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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