The concept of equity
Equity in financial terms refers to the amount of money that would be returned to shareholders or owners of a company if the assets were liquidated.
Equity is about how much value you can extract after all’s said and done.
How does that relate to branding?
What is brand equity?
Brand equity is a marketing term that refers to the value of your brand itself in relation to your business.
Brand equity is about the monetary potential of your brand itself.
It consists of tangibles as well as intangibles.
Brand recognition – Brand recognition is how many people know who you are when someone brings up your brand name, product/service, or industry. You can look at brand recognition as far as overall popularity as well as being known within your specific industry.
Brand reach – Your brand’s reach is closely related to brand recognition. Brand reach is more about how many people you can influence and market to. This is directly impacted by your ability to reach people on television, in publications, on your website, and on social media.
Inbound lead generation – Your ability to get inbound leads, where customers seek you out instead of seeking them out, can increase when you have stronger brand equity. If you’re trusted as the go-to solution provider for a certain problem, you’ll have business coming to you.
Customer loyalty – Customer loyalty is all about how many customers you can keep. Loyal customers mean free marketing and word of mouth for your business, increased referral numbers, and positive reviews and testimonials for your brand.
Customer lifetime value – CLV, also known as lifetime customer value, is the financial impact of a particular customer on your business. It’s an important number for any business looking at customer acquisition costs and retention. One simple way to calculate the CLV is to take the annual revenue generated by a customer, multiply it by the average customer lifespan, and subtract the initial cost of acquiring them.
How to build brand equity
Building brand equity and building a good and reputable business go hand in hand.
There are fundamental things you need in place before you should even be worried about something like your brand equity.
Do good business
You can’t have a bad product or poor service and expect to build brand equity that grows your business.
When it comes to your marketing, sales, and overall customer interaction, make sure things are as pleasant and straightforward as possible for the customer.
Treat people well and deliver on what you promise.
Build social proof
People need to trust you and your business on some level before they want to do business with you. Social proof is one way to do that.
If you have things like testimonials, case studies, reviews, and any examples of brands you’ve worked with successfully and delivered results to, it can be a huge boost for your brand.
Even metrics like customers served and the engagement you get on channels like social media can influence how other buyers perceive your brand.
Potential buyers want to know that other people trust your brand.
Increase your digital presence
Now a days there’s something that every business has access to that can potentially even the playing field or launch them far ahead of their competitors.
Increasing your digital presence is a great way to build your brand equity now that so much personal and business activity is conducted solely online.
Especially with increased work-from-home and remote education due to coronavirus shutdowns increasing that trend.
Brand equity can offer more business opportunities
A strong brand name gives you more options when it comes to all types of partnerships/sponsorships, product/service offerings, and other business opportunities.
Have you considered the possibilities of partnerships and sponsorships?
Your brand can attract attention from other businesses and organizations that might be interested in partnering with you or sponsoring you.
Whether that’s being pitched compensation to be sponsored or another business wants to collaborate on a joint offering or referral program.
Brand equity allows you to more easily pivot to a different offer because of the size and trust of your audience.
It’s much easier to pitch a new service or product when you already have an audience.
It’s also a lot easier to sell to someone who already trusts your brand.
A business with strong brand equity is more adaptable and flexible because the name alone can be leveraged.
The better your marketing, the easier your sales
One of the biggest benefits of having stronger brand equity is it can make your entire sales process easier.
Because a strong brand already has a reputation for certain benefits, features, and level of quality.
Apple and Nike don’t have to break down peoples doors to sell them products.
People will camp out on sidewalks and parking lots days in advance for the latest edition of the iPhone or newest pair of Jordan’s.
A sales rep for a brand that’s a leader in its industry and a sales rep for a brand that’s an unknown start-up often have two completely different sets of objections they deal with.
When your brand’s popularity and reputation are already well established, you’re not likely to spend as much time on educational or introductory communication.
However as a newer or lesser known brand, you might spend several touches just trying to explain to people who you are and what you do.
Generally speaking, the better brand equity you have, the less objections you’ll need to overcome during the sales cycle.
Brand equity boils down to your reputation
When you put it in its simplest terms, brand equity is your brand’s reputation. It’s how people know you, how people perceive you, and how that perception impacts your business itself.
If you have a good reputation, it usually means you’ve done something well enough to earn it.
And a good reputation can pay off in ways that are both tangible and intangible.
Your brand reputation can impact the monetary value of your brand, how much brand equity you build, it can help your business increase its opportunities, and it can make your sales process easier.