How to Future-Proof Consumer Loyalty? Invest in Brand Equity!

Do you have a favourite soft drink/chocolate/coffee brand? Guess what – the one that immediately comes to your mind holds the most brand equity with you. 

According to a Gartner study,  81% of organizations expect to compete based on customer experience. And what is brand equity? It’s the epitome of customer experience – how consumers think and feel about your brand.

Brand equity is linked to brand recognition but emphasises the added value that the brand name provides to the product. The higher your brand equity, the more likely consumers are going to pick your product over the competition.

Intrigued? Read on to explore our selection of highlights on the importance of brand equity and learn how to elevate your brand building:

• Key elements of brand equity. According to David Aaker, brand equity has 4 dimensions: 

            1) Brand Awareness: how well-known and recognizable a brand is among consumers. 

            2) Brand Loyalty: refers to the extent to which customers are committed to a particular brand and are willing to make repeat purchases. 

            3) Perceived Quality: refers to how much your brand is worth in the minds of consumers. 

            4) Brand Associations: the feelings or memories that consumers have with a particular brand, such as its values, personality and symbolism. 

• A simple test to measure brand equity. As this article reminds us, in his book The Brand Flip, Marty Neumeier recommends that you monitor how well your brand resonates with your customers or audience by using a simple survey: the Brand Commitment Scale survey. In the Brand Flip, Neumeier describes the scale of “brand commitment” as a ladder. The bottom rung is “Satisfaction” – the customer has experienced your brand product or service and found it to be as expected. The next rung in the ladder is “Delight” – they have experienced a level of surprise and delight with their interaction with your brand, this is the point in customer relationship where they become loyal to your brand, experiencing an emotional response. Next up “Engagement” – your customer subscribes to your brand tribe. You know you’ve reached nirvana when your customer has reached the top rung on the ladder: “Empowerment” – they depend on your brand for social status, personal growth or business success. These “empowered” members of the brand tribe attract others, refer with confidence and stand by your brand promise.

Source

• ROI (Return on Investment) and ROE (Return on Equity). In the context of branding, ROI measures how much revenue or profit your branding activities and campaigns generate compared to how much you spend on them. According to the Harvard Business Review, “emotionally connected customers buy more of your products and services, visit you more often, exhibit less price sensitivity, pay more attention to your communications, follow your advice, and recommend you more—everything you hope their experience with you will cause them to do.” Per Qualtrics, as with any ROI calculation that looks at a single part of brand-building efforts, it’s tricky to attribute exact growth to exact measures. Ultimately though, the most important thing is to look at industry trends to see the value that a strong brand can create. Branding, and brand value, represent some 20% of the value of the entire S&P 500, while 77% of consumers are likely to refer to certain items by brand names, rather than product names.  Consistent presentation of a brand, meanwhile, can increase revenue by 33% – meaning that time and money spent on building your brand equity can pay big dividends. 

In brand building, ROI and ROE can be used together to measure the impact of marketing activities on sales and brand equity. ROI can show how much revenue is generated by a marketing campaign, while ROE can show how much brand value is created by that campaign. Both metrics can help optimize the marketing mix and allocate resources efficiently.

• Video as a major brand building tool and the rise of digital platforms. Brand equity received some well-deserved attention also at this year’s Cannes Lions festival. In his talk on the Third Age of Advertising Effectiveness, Tom Roach, an acclaimed marketing strategist and Marketing Week columnist, revealed that brand equity continues to drive 64% of customer choices, unchanged from a decade ago – in spite of the industry dedicating more resources to direct response marketing. 

In a recent Marketing Week article, Tom Roach further elaborates on building brands on digital platforms and the use of the tools that work today, not ones that worked much better yesterday or those that will only start working tomorrow. Particularly regarding video, in his words, where there’s video there’s brand building. Video is to brand building what water is to life on earth. The rise of the smartphone fuelled the explosion in digital video that’s enabling all this. Video now accounts for the vast majority of global internet traffic, around 80% by some estimates. More video content means more attention, more emotional impact, and sometimes a more personal and attentive viewing experience than on bigger, more public screens. All of which means more of the long-term brand memory encoding that’s needed to contribute to sales tomorrow, not just sales today – aka brand building. According to econometrics company Analytics Partners, most digital channels are capable of contributing to the long as well as the short term. Roach points to the importance of video for brand-building evident in their analysis, the lasting impact of video channels typically being twice as long as non-video channels.  

Source: Marketing Week

• Strong brands have pricing power. According to a study by Millward Brown (now part of Kantar’s Insights Division) analyzing consumer habits, strong brands on average achieved triple the sales volume of weaker brands and a 13% price premium. If that doesn’t prompt prioritizing the building your company’s brand equity, what will? (Source) A strong brand will deliver more revenue and profit, more efficiently, year after year, generating more shareholder value along the way. A strong brand can also work as a barrier to entry for future competitors, in effect creating a legal monopoly. For the past 19 years, Interbrand has released a yearly report titled Best Global Brands outlining the 100 strongest brands in the world. As Interbrand puts it, the market performance of strong brands is “enduring proof that investment in long-term brand-building enables businesses to thrive over time and survive market volatility.” Pricing power is among the most valuable assets of a strong brand. And it’s just another reason why the ROI of branding is so compelling.

According to the latest branding statistics, 80% of male and 76% of female customers purchase products from brands they know. Brand equity results from every interaction someone has with your company – each logo seen or marketing message consumed adds to their perception of you. Consistency is important here – therefore, marketers need to focus more on brand marketing and invest in measuring ROE (Return on Equity) and not just ROI (Return on Investment), in order to measure the long-term impact of marketing. 

Novelty Media, via SmartAdd, has created a framework that brings brand building to a whole new level. We offer video and static content delivery to mobile subscribers as a personalized, engaging and attentive experience every time your audience interacts with your brand. Our innovative mobile media channel endorsed by Mobile Operators makes sure that solely humans – verified mobile subscribers – engage with your brand communication, thus enhancing your brand’s presence and recognition. Reach out to us and let’s make your brand the top-of-mind choice for consumers!