What Is Brand Equity? 5 Tips on How to Grow It.
Your brand can be worth a lot of money. Like the equity in your home, it grows over time as long as you keep strengthening your brand and take good care of it.
If you are like most successful startup entrepreneurs, you likely had to spend thousands of dollars on marketing over several years until your company became recognized as a serious player in its market. That included creating engaging and informative content for social media, newsletters, and your website.
Despite some early visible successes, you probably felt at times that you didn't have much to show for your years of marketing efforts.
Fortunately, the opposite is often the case because the fruits of your labor, your brand equity, usually accumulate invisibly.
Brand Equity
Brand equity refers to the monetary value of a brand. It can be a substantial amount — think of Apple.
Like the equity in your home, it is challenging to measure it directly; you will only accurately know the amount when you sell your house.
Similarly, in business, you will only see the value of your brand when you receive the first purchase offers for your company, even if your company's shares are traded on a stock exchange (buyers usually pay a premium to the share price).
Because brand equity is difficult to estimate, accountants usually group it with other hard-to-evaluate items into goodwill. Besides your brand, other intangibles in this group are intellectual property like patents, your loyal customer base, your employees, and your management team.
Financially, goodwill is the difference between the purchase price and a company's tangible assets and liabilities, as shown on the balance sheet. As such, goodwill is a residual value, a catch-all, that usually covers everything without a specific dollar figure. However, your brand's value undoubtedly is one of the most significant contributors to goodwill.
How Much Is Your Business Worth? How much money you get for your company depends on what you sell, who your buyer is, and the amount of profit your business makes annually.
5 Tips to Increase Brand Equity
Even if you can't watch brand equity grow like the money in your bank account, it will silently increase as long as you continue to do the things that strengthen your brand and avoid the ones that weaken it.
Here are 5 tips that will make your brand stronger and increase brand equity.
Tip 1: Reward your loyal customer base
Customers who repeatedly buy from you are invaluable in two aspects:
you save the high cost of acquiring new customers;
they can become phenomenal brand ambassadors who recommend your business to neighbors, write positive online reviews, or share your posts with others on social media.
Companies know the benefits of word-of-mouth marketing and launch loyalty programs that allow customers to earn discount points for writing online reviews or recommending you.
While monetary rewards can deliver good results, they can significantly reduce profitability.
Alternatively, you could reward your loyal customers non-monetarily by giving them access to priority event booking, exclusive content and shopping hours, or free upgrades.
Reward Loyal Customers Without Spending Anything! Discounts are the most expensive way to thank your loyal customers. Instead, consider rewards that are very effective but do not cost you anything. Here are 10 ideas.
Word-of-Mouth Marketing: Word-of-mouth marketing is inexpensive but can be very effective, two attributes that make it perfect for small businesses.
How Do You Stay in Contact With Your Past Customers? Keeping in touch with your past customers can be as simple as emailing them a regular newsletter with promotions, event invitations, or valuable tips. But you have several other options.
Tip 2: Invest in your employees
Not only are your loyal customers a tremendous asset, but so are your employees. Without them, your company wouldn't be where it is today.
Being surrounded by creative and motivated team members is a blessing. But it is also a big responsibility to do everything you can to keep the assignments exciting and challenging and the work environment healthy, positive, and productive.
Invest in Your Employees: To create a high-performance work culture, you should follow 10 dos and avoid 5 don'ts.
Tip 3: Stay true to your values
Living your brand values without compromise, even if it's difficult or costs you money, is the source of your brand's strength.
Weaker brands usually don't care enough about brand values and often don't walk the talk.
For example, take a business that promises high-quality products. If customers experience the opposite, this company's brand equity will significantly decrease.
What Is Your Brand Promise? Like a solemn pledge you take, a brand promise commits your company to deliver on this promise every single time. Follow these three steps to create a compelling brand promise.
Can You Say What Your Business Stands For? Based on your values and how your products and services improve the lives of your customers, your business should make an emotional connection. But you need to earn their trust through your actions.
Tip 4: Use your brand design elements consistently
Generally, strong brands have a characteristic, easily recognizable look and feel.
This memorable signature look is the intentional result of using the verbal and visual design elements consistently across all media.
Whether you read a social media post, go on their website, or visit one of their physical stores, the brand's presentation is always identical. That's hard to get right. But if you do, brand awareness will soar and, with it, brand equity.
Why Your Visual Brand Identity Matters: Use different visual design elements to create a website with a memorable signature look — a unique visual brand identity.
Why Consistency Is the Key to Successful Marketing: Having a perfect marketing plan is great. But your success depends on the consistency of your customers’ brand perception and how well you execute on your plan.
Tip 5: Keep advertising even during tough times
Launching new advertising campaigns is often not an issue when times are good and money is plentiful.
Unfortunately, marketing is among the first items to be cut during economic downturns.
Not so with strong brands.
They might adjust their spending but avoid drastic reductions and maintain their primary campaigns. To increase their market share, some brands even increase their marketing spending while their competitors cut back.
Cost Cutting Is Not a Growth Strategy: Cutting costs can inadvertently make your profitability problem worse.
The Long Game
Building a brand doesn't happen overnight. Far from it. It often takes years of unwavering marketing investment and prudent leadership for a brand to be widely recognized by customers. But when they do, brand equity can accrue quickly, and so will goodwill.
