Heard the expression, ‘Everyone is a critic’? Critics have been around since the curtain came down on Shakespeare’s first play, ‘Henry VI Part II’.
Laughed off at first as being pompous windbags, over time critic reviews became important to people who were keen to hear their opinions of a performance before parting with their hard-earned money to watch it themselves.
One could even go so far as to say that these critics of yesteryear were actual the first thought leaders of their time. Put that in your pipe.
An apple a day
Just like a tribe, we all need to feel a sense of identification and belonging. Sure, we are individuals in our own right, but one simply cannot deny the fact that sometimes we are led by the herd.
Global brands have their tribes and none more so than the likes of Apple, Nike and Teslar, to name a few. Individuals who belong to them are often so ensconced with the brand that almost no matter what products they release, these early adopters will be first in line to purchase them. Apple have certainly got that business model right.
So why do these people go so blindly into the light? Mainly because these individuals trust those brands implicitly. The allegiance is called brand equity and it comes from a combination of customer perception, experience, and opinions about a company.
Brand equity makes marketers really sit up and take notice and rightly so. It can have a dramatic and direct impact on the reputation of a business and consequently sales.
Like anything in life, brand equity can be both positive and negative. If people think highly of a brand, it has positive brand equity. When a brand consistently under-delivers and disappoints to the point where people recommend that others steer clear of it, it has negative brand equity.
You don’t want to be on the negative side, as thanks to social media, negative brand reviews can and will be amplified to the power of ten.
There are three sides to every story
Qualtrics says that like a pyramid, there are three components of brand equity: brand perception, positive or negative effects, and value.
1. Brand perception: Brand perception is what customers believe a product or service represents, not what the company owning the brand says it does. In effect, the consumer owns brand perception, not the company.
2. Positive or negative effects: When consumers react positively to a brand, the company’s reputation, products, and bottom line will benefit, whereas a negative consumer reaction will have the opposite effect.
3. Value: Positive effects return tangible and intangible value. Tangibles include profit or revenue increase; intangibles are brand awareness and goodwill. Negative effects can diminish both tangibles and intangibles. Uber, for example, was trending positively in late 2016, but a series of scandals ranging from sexism to spying negatively impacted its reputation, bottom line and brand equity.
Positive brand equity has value:
When it comes to line extensions nobody does it better than Apple. Not many will remember the ground-breaking Macintosh computer launched in 1984, but what they will remember is the release of the Apple smart phone in 2007. Those that own an iPhone will in all likelihood own an iPod Touch and an Apple Watch. People say they buy Apple products for the integration, truth be known is that they love belonging to the Apple tribe. It’s the holy grail of brand equity.
Our survey says
A great customer survey acts as a conversation starter between a brand and its (potential) customers. Its main goal is to deliver exceptional customer insights, but just like more traditional corporate communication channels, it also serves brand equity. With every survey, the devil is in the data and it needs to be interpreted and tracked by people who know exactly what they are doing.
Qualtrics says that there are three core brand equity drivers that you need to track: financial, strength and consumer metrics.
1. Financial metrics: The C-suite will always want to see a positive balance sheet to confirm that the brand is profitable and viable. You can use solid financial metrics data to demonstrate how important your brand is to the business and secure higher marketing budgets to continue growing.
2. Strength Metrics: Strong brands are more likely to survive despite change and deliver more brand equity, so it’s essential you measure its strength. You’ll need to track awareness and knowledge of the brand, accessibility, customer loyalty and retention, licensing potential and brand ‘buzz’.
3. Consumer metrics: Companies don’t build brands, customers do, so it’s essential that you track consumer purchasing behaviour and sentiment towards your brand. Track and measure brand relevance, emotional connection, value, and brand perception through surveys.
Achieving positive brand equity is half the job; maintaining it is the other
Many experts agree that the biggest challenge facing CMOs this year is building, measuring, and maintaining brand equity. If CMOs are serious about putting customers at the centre of the business, marketing should really be leading the customer experience charge.
A consumer-facing business cannot innovate, or truly meet the needs of its customers without the use of customer insight. That insight can be gleaned from targeted surveys that ask the right questions of the right people.
CMOs who use research to clearly understand what their customers want, can feed this crucial data back to their product and marketing team so that they can shape the customer experience and build and maintain positive brand equity.
It is important to remember that unless measured, you do not know how well your brand equity is working. So, it pays to employ a thought leadership strategy off the back of qualitative research. This will allow CMOs to build and maintain positive brand equity, and that’s half the battle won.
- Companies can charge more for a product with a great deal of brand equity.
- That equity can be transferred to line extensions, so a business can make more money from the brand.