Have You Considered Your Brand in Terms of Equity?
We often talk about equity in financial terms of the real and perceived value gained over the course of time. We gain equity through the act of improving a piece of property and/or carefully managing our financial investments. We take certain risks in investing our time and resources with the hope that our investments will pay off and earn us equity. Yes, equity represents value and risk, but it also represents the growth of our initial investment into something more than we started with. It can be beneficial to look at brands through the equity lens.
But First, How Do You Define “Brand?”
Any discussion about brand equity is well served by considering the term brand, as it is often too narrowly defined as a logo, fonts, or colors. Marketing expert Seth Godin defines brand as “the set of expectations, memories, stories, and relationships that, taken together, account for a consumer’s decision to choose one product or service over another. If the consumer (whether it’s a business, a buyer, a voter, or a donor) doesn’t pay a premium, make a selection, or spread the word, then no brand value exists for that consumer.”
At Drawn, we define brand similarly, as a set of perceptions about a company or person. This definition allows for the reality that it is, in fact, the consumer who creates the brand.As a consumer, you make brands what they are based on how you perceive and react to the messages that companies or people send to you. Yes, sometimes those messages include logos, colors, or fonts, but brand messages include so many additional touchpoints that contribute to the way brands are perceived, such as hiring practices, customer service practices, social media standards, and much more.
How Can We Apply the Concept of Equity to Brands?
Simply put, brand equity is the value of a brand, including all assets and liabilities as perceived by the consumer. Positive brand equity can propel your company through growth. Negative brand equity can be a signal that it’s time to refresh the brand or face a loss of market share.
How to Maintain Positive Brand Equity
There are a few things that you can do to develop and maintain your brand’s equity:
- Develop a plan to earn and sustain brand equity for the lifetime of your business.
- Discuss brand equity valuations at all levels of your company, including the executive level.
- Consistently check in with your target market about your actual brand equity.
business decisions that attract the people you strive to do business
with, as opposed to chasing them: There are two ways to reach consumers.
You can chase them or you can attract them. We vote for developing
brands that are genuinely invested in providing value to the consumer
because they attract fans and cultivate lifelong loyalty that always
wins in the long run.
- Remember that earning equity takes time. Keep track of your equity and any risks to the equity you have earned.
Make Brand Equity a Part of Life
Many companies care for their brand by developing and maintaining a brand standard document. This usually includes understanding the personality, voice, and visual elements that contribute to a brand’s identity. Let’s take that good brand work a bit further and develop a brand equity statement. This statement should reflect your commitment to the equity that you’ve already earned and list specific ways to care for your equity moving forward.
To start, ask yourself the following questions:
- What are the top five assets of my brand?
- What are the top five equity risks for my brand?
do I measure my brand equity? (Each company will have their own way of
measuring brand equity. Ideally, measurement will include feedback from
current and potential consumers of the brand.)
- What does my target market think about my brand right now?
- What am I currently doing to generate more brand equity?
- Are there business practices that we currently use that are risky in terms of brand equity longevity?
- Where is the potential to earn brand equity?
Once you have your own answers to these questions, ask them of your co-workers. Then as a team, develop a Brand Equity Statement for your company.
Brand Equity Matters
Brand equity may feel a bit intangible because, like your brand itself, equity resides in how your brand is perceived by others, but it’s important nonetheless. Strong brand equity delivers real benefits: opportunity for higher margins, deeper customer loyalty, greater growth potential, and a competitive advantage in the marketplace.If you are interested in seeing how some of the biggest brands stack up in terms of brand equity, Forbes has ranked the top brands in terms of value for 2017. It’s important to remember that while your company may not have the same equity as Apple, your company can take just as much care of its brand equity as Apple does.