How to Measure Brand Equity in 5 Steps
To measure brand equity, you need to understand the strength of your brand from the perspective of your customers. Learn to measure brand equity and sustain your business's success.
What is Brand Equity?
Brand equity is like a bridge between your company's brand and your target customers. It's the value that your brand adds to your products or services. This value comes from customer experiences, perceptions, and the feelings that they associate with your brand. Brand equity isn't just about being known; it's about the kind of vibe your brand gives off. It can make your target market pick you over the competition, allow you to set a price premium, and help you measure how well your brand is performing in the market.
It's made up of several parts, including:
- Brand Awareness: How familiar your target market is with your brand and how easily it comes to mind.
- Brand Loyalty: The commitment of your customers to continue choosing your brand over competitors.
- Brand Associations: The thoughts, feelings, perceptions, images, experiences, and beliefs linked to your brand by customers.
Think of brand equity as the reputation of your company that lives in the minds of your customers. It's a big deal because it can mean the difference between someone choosing your brand or passing it by for another.
Why Brand Equity Matters for Your Business
Brand is the engine that can drive your market share and sales performance skyward. Imagine two brands selling the same type of sneaker—one is a brand your friends love and talk about, the other you've never heard of. Which would you trust? That trust is brand equity at work. It can lead to customer loyalty, allowing a brand to stand out in a competitive market.
With solid brand equity, businesses can attract new customers more easily, retain existing ones, and even convince customers to try new products under the same brand name. It’s also about the emotional connection; customers often choose brands they have a strong attachment to. This emotional bond can turn first-time buyers into loyal customers, contributing to a loyal customer base and, over time, increasing the overall financial value of the brand.
Brand equity is not just about today’s sales — it’s about tomorrow's growth. It represents how much a brand’s equity contributes to its future in terms of expanding to new customers or markets. That’s why measuring, understanding, and nurturing brand equity is a top priority for brand managers who want to ensure their brands not only survive but thrive.
Brand Equity vs. Brand Value
Brand equity and brand value might sound similar, but they're different concepts. Let's break them down:
Brand Equity is Built On:
- Feelings & Opinions: How do customers feel about a brand? Your brand equity is the positive reputation and emotional connection that comes to mind when people think of the brand.
- Popularity: High brand equity means the brand is popular and well-liked.
- Trust & Preference: It includes how much customers trust a brand. When they prefer you over competitors, you’re on your way to a loyal customer base.
- Effects on Sales: Strong brand equity helps a company sell more. People trust the quality of your products.
What is Brand Value?
- Money Matters: Brand value is the financial worth of the brand. It's how much money the brand could bring in if it were sold.
- Facts & Figures: This is calculated using financial data, looking at current revenue, future earning potential, and the brand's overall strength in the market.
- Asset on Balance Sheets: On a company's balance sheet, brand value is considered a tangible asset—it's a number you can see and measure.
Book a call with our Program Director
Book a 15-minute call with our Program Director to discuss your goals and what the Augment MBA has to offer.
Enroll now5 Steps for Measuring Brand Equity
Measuring brand equity helps companies understand their brand's strength and value in the market. Here’s how you do it:
1. Check Out Brand Awareness
- What It Is: See how well people know your brand. Do they recognize it? Remember it?
- How to Do It: You can measure this through surveys, looking at how often people search for your brand online, and checking out social media mentions.
2. Look at Brand Preference
- What It Is: Find out if customers like your brand more than others.
- How to Do It: Measure this by customer feedback, seeing which brand they pick when given a choice, and through reviews.
3. Assess Customer Loyalty
- What It Is: Understand if customers keep coming back.
- How to Do It: Look at repeat sales data, customer retention rates, and if customers recommend your brand to friends.
4. Evaluate Perceived Quality
- What It Is: See how customers view the quality of your brand's products or services.
- How to Do It: Use customer satisfaction surveys and compare your products’ performance to competitors'.
5. Analyze Financial Metrics
- What It Is: Look at the financial data to see how much money the strong brand equity is actually bringing in.
- How to Do It: Check the sales transactions linked to the brand, pricing valuations, and overall market share.
By using these steps to measure brand equity, brand managers can get a clear picture of the brand’s current health and how it compares to competitors. It takes time to build brand equity, and it's worth a lot when it's strong. Keep it healthy, and your brand can enjoy benefits like more loyal customers, better brand performance, and the ability to maximize profitable sales.
8 Tips for Improving Brand Equity
By following these tips, you’ll help your brand grow stronger, be more liked by customers, and you’ll see better sales data:
1. Make Your Brand Stand Out
- Create a unique and specific value that sets your brand apart from others.
- This could be anything from a cool new feature, a different kind of service, or a special way you handle customer service.
2. Connect With Customers
- Work on making a strong emotional connection with your customers.
- Share stories, get involved in the community, and be responsive on social media.
3. Keep an Eye on the Competition
- Regularly check competitive metrics to see how your brand compares.
- Stay ahead by being the first to know about new trends or changes in customer preference.
4. Deliver Quality Consistently
- Customer satisfaction is huge for brand equity. If your customers are happy, they’ll keep coming back for more.
- Every product or service you offer must be top-notch and consistent.
5. Boost Brand Awareness
- Spread the word! Marketing campaigns can make sure people know about your brand.
- The more people see your brand's messaging, the more likely they'll be to remember it.
6. Listen to Customer Feedback
- Make sure you’re listening to what people say about your brand — especially in customer reviews.
7. Keep Track of the Numbers
- Use brand equity metrics like sales data, financial metrics, and brand performance to measure your success.
- This will help you see if your efforts are working and where you can improve.
8. Invest in Brand Building
- Spend time and money on brand management and promoting your brand products.
- Remember, building a strong brand might cost you now, but it’ll be a separate monetary asset for your business later.
