The importance of strong brand equity
We've touched on a few reasons why brand equity is important. Ultimately, every business wants to be on top of consumers' minds. If you sell dog food, you want your customers to think of your brand whenever they need to restock at home. Likewise, if you're an e-commerce fulfillment company, you want all e-commerce business owners to know your name in case they need your help.
Building brand equity improves your company's success because it directly results from the perceived quality and your brand's reputation within a market. Having a positive brand image makes it easier for you to attract customers who are willing to pay a premium for your products and services because of your brand's perceived quality.
Let's take a closer look at some of the top benefits of managing brand equity:
Increased market share
Positive brand equity translates to a higher market share that helps your brand stand out even more. In addition, building brand equity gives you a competitive edge because your company stays on top of consumers' minds; they'll think of your products or services before anyone else's.
We've mentioned numerous times that brands with higher brand equity tend to charge higher prices because they have perceived higher quality. Therefore, the higher your brand equity, the more you can charge for products similar to your competitors, improving your company’s financial performance.
Improves sales across the board
Once you've achieved brand equity, consumers will continue to purchase your products and services. If you choose to expand your offerings with new products, your customers already know they can trust you because they're loyal to your brand.
Unfortunately, no one can accurately predict the future. While we can use data to help us understand what may happen to a business in the future, all companies deal with market fluctuations. However, having high brand equity puts you in a better position, making your brand more resilient than others and protecting you from shifting consumer demands and market changes.
How to measure brand equity
There's no single metric you can use for measuring brand equity. Instead, you'll need to track various aspects of your business, such as financial performance, strength, and consumer data.
You're in business to make money, and healthy financials directly result from brand equity. You can calculate profitability, market share, revenue, growth, and customer acquisition and retention costs to determine if you're building brand equity. Ultimately, you should see higher revenue and profits with lower customer acquisition costs.
A brand's resilience and strength allow them to survive and thrive when other brands fail. Your brand's strength is a measurement of awareness, recognition, customer loyalty, and customer retention. You can measure your brand awareness with an awareness survey or using metrics like reach, impressions, and website traffic from specific types of marketing campaigns.
Measuring brand equity relies on customer data. One of the most important components of brand equity is perceived quality. You must determine if your customers have positive brand associations. How your customers feel about your business determines whether you have positive or negative brand equity.
You can measure customer sentiment and brand associations across channels and invest in social listening tools to see how your customers talk about your brand. Learning their perception of your brand is crucial when developing and building a business, especially one where you want to increase your market share and brand equity.