June 10, 2023
How to boost your brand equity and valuation
Brand equity has become essential to business value. For almost every business, being able to build and maintain strong brand value impacts your profitability, customer loyalty and overall business performance.
Owners, leaders, advisors and strategists are well-positioned to boost brand equity – but only if you understand how brand drives business performance.
Why brand equity matters
Brand equity is the power of your brand to reach and engage current and future markets in the value you offer. Businesses with high brand equity enjoy stronger cashflow and revenue growth. They can borrow capital or find investment at a lower interest rate. Plus, they sell at a premium on the market. To put it simply, brand equity is great for business. Why?
Strong brand equity allows you to reach a bigger audience and charge more for similar products and services than competitors. This means you can generate higher returns for stakeholders. When customers are willing to spend more for your brand compared to the rest of the field, your business has more objective value and will attract a higher sale price.
However, brand equity can be fickle. If you don't focus on how your brand is performing, it can slide fast. To prevent this from happening, invest attention and resources to ensure your brand's ongoing relevance and impact in the market. And, measure your brand equity regularly, so you can take fast action when it isn't performing as well as it could be.
How to build brand equity
Taking these 5 steps will help you improve brand equity and your business value as a result.
- Conduct a brand audit.
Start with a brand audit to assess how your brand is performing right now. To do so, measure your brand's reach, relevance and customer engagement. Make sure you have a clear definition of the customer segments your business is trying to reach.
Now ask: how strongly is your brand performing compared to other brands vying for your target customer's attention? Tracking brand sentiment can be a powerful cue. So can examining the engagement trends of customers who use your brand.
To make your brand audit comprehensive, look beyond the top of your customer funnel. Evaluate the full customer experience. This includes how your customer buys from you, how long they remain a customer with you, and what their experience is like when they engage with your brand prior to and during their customer experience.
- Craft strong brand foundations.
Once your brand audit is complete, you're ready to review your brand's foundations.
Start with two key questions: do you have well-defined core brand values? And, is your unique value proposition clear and compelling to you, your team and - most importantly - your target customers?
To go a step further, check whether you can articulate the promise that your brand is making to your customers. Is your promise so strong that it's consistent to the customer throughout their journey with you? Taking the time to answer these kinds of questions help you establish brand foundations and improve brand equity.
Business-to-business brand strategies often consider the impact of their value proposition on the customer's efficiency, effectiveness and the overall return on investment they get from working with you. Business-to-consumer brands generally focus more on emotional connection with the brand and lifestyle benefits to the consumer.
Remember: at the end of the day, a human being is buying your brand promise. Your brand identity - that is, what the brand means to that person - is critical whatever your business model. When you start with the 'why' of your brand, you create the strongest possible foundation.
- Avoid the 'logo and social' trap.
Many businesses design a logo, build a website, manage their social media - and that's it. That's the end of their brand strategy. Building strong brand equity requires you to go much deeper.
Strong brand equity relies on having a clear brand identity linked to your core value proposition. For a brand to drive real performance, it needs to be consistent, distinct and relevant. And, just as importantly, it has to form a part of the whole journey your customer takes. Ensure your brand story is both relevant to your target market - and also distinctive. Having brand artefacts that distinguish you from competitors is key here.
Obviously, this requires effort and resources. Expertise helps too, which is why working with brand or business strategists can be helpful. Seek support that goes beyond marketing and social media management. A brand audit will likely surface many opportunities for you to deepen and extend your brand.
In the long run, your logo, website and social media may have little to do with the value you create in your brand. It's what your brand really stands for that matters to customers and investors. Digging deep and demonstrating the value that your business can uniquely offer is more than worth it.
- Improve brand consistency.
Having a cohesive and consistent brand is crucial to building brand equity. Your brand story must be embedded throughout your customer experience, from start to finish. If what customers hear in your brand messaging isn't consistent with their experience, they'll be inclined to disengage.
A brand-aligned, values-driven culture contributes to positive brand experiences, which also strengthens long-term brand equity. For example, if you promise to make life easier for your customers, having a complicated sign-up process will likely leave them confused: "I thought this was meant to make things easier, and it's already hard". They'll be less inclined to trust your brand - and more likely to turn to your competitors.
- Measure and track brand analytics.
Now that you have the brand foundation in place, measure and track your brand to gather up-to-date intelligence. You'll want to know whether your brand is still effective and relevant, and whether it's driving performance, now and into the future.
One obvious measure is your price premium - that is, whether you can charge more than your competitors and maintain sales volume. Another set of measures relate to customer behaviour - whether customers refer you to others, buy from you exclusively, spend a higher proportion of their budget with you, and how much they spend with you over their lifetime. Measuring customer engagement through their journey with you is another way of benchmarking your brand equity and identifying opportunities for improvement.
While relevant, social media channels are not everything when tracking your brand equity. Focus on measures like your social licence to operate, your reputation and your trustworthiness, too. These can be indicators of your brand sustainability. No brand equity lasts forever, so it's good to stay on top of where your brand is headed.
Invest in brand equity for higher valuations.
Brand equity can form a significant proportion of business value. It can account for as much as 50% of an overall valuation, and rarely drops below 10%. Ignoring your brand, leaving it to chance, or focusing too narrowly on social media, logos and websites will see your brand underperform and damage your business value.
To deliver performance in your business - and a premium valuation - the message is clear. Build your brand equity.
