Brand Equity: The Measure of Your Value to the Customer

Commercial organizations exist to generate profits, and measurements are made to determine how successful profit objectives are. And from a financial perspective, in turn, contributes to measuring the value of the organization. This is the bottom line that an organization, shareholders and other invested stakeholders care about.

So how does what a customer, or individuals who may not even be your current customer, think or believe about an organization has anything to do with its value? How would this impact the current and future value of an organization? How would you measure this, and what can you do with that knowledge?

But let’s start with: what precisely is the value of an organization?

  • Is it derived from what the organisation values in its customers – from which the organization’s financial value is hence culminated from the current and projected financial value of its customers?

OR

  • Is it the measure of what the customer values in an organization?

And why is this differentiation important?

Do these 2 values refer to the same thing? And if not, which should come first, or how should they come together?

Let’s address each value perspective respectively.

What An Organisation Values In Its Customers

Many organizations measure what it values in its customers from a financial perspective primarily, and use that as a measure of the value of the customer. This could be the projected lifetime value of the customer (LTV), potential value of new customers, product cost & profitability, etc. As a result, often, the CFO becomes a formidable figure at the centre of business strategies and how businesses are conducted. And this in turn usually determines how customers are consequently treated.

There is absolutely nothing wrong with this approach – after all, a business exists to generate profits that must secure its financial wellbeing. But how would this change if it was combined with a perspective that resides on the other side of the coin? And is there an innate organizational capability to develop that dual approach, and how could that be a strategic game-changer?

From a financial perspective, summarily, the model customer is one who has a combination of several factors including recency, frequency, high spend volume, generate fee and interest income, has long customer vintage, low service needs, etc.

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Many organizations may segment their customers in accordance to how many of these criteria they meet. In the process, deliberately or otherwise, a significant part of the customer journey and experience is defined through the value of rewards, service, incentives, etc. that are respectively extended to a customer or a customer segment. And with that, the organization has just defined its value to the customer. To which there should be expected a resultant outcome, and there is a scientific law to this:

The above is just a symbolic explanation of Newton’s 3rd Law of Relativity which demonstrates that “forces always act in pairs: when an object is pushed, the object pushes back with equal force”. And sometimes, as we all know, mitigating circumstances generate an even bigger return force culminated from various factors and sources.

There is a definitely a delicate balance to any approach, and difficult decisions are made daily within many organizations who juggle the many balls of financial responsibility, customer satisfaction, social responsibility, legalities and compliance, to state just a few.

But the key questions are: what equal and opposite reaction are we willing to bear? And how would that impact the organization in the short and long terms?

Marketing: Your Belief Is Not My Perception

Organisations create their brand based on their defined mission, ideals, goals and objectives – and that is what they believe their brand to be, what it stands for, and what it is supposed to be understood as by the rest of the world.

Then a bunch of consumers come along and decide that that organisation brand means something else to them. And in today’s world of consumer-led digital and social connectivity especially, a brand getting sufficient attention (positively or otherwise) can be almost redefined overnight, and sometimes with implications that may be immediate or insidious.

Perceptions create beliefs, regardless of whether those beliefs are valid. And the perceptions of individuals are borne out of their personal natural and nurtured experiences and conditioning.

As such, our belief is not necessarily someone else’s perception, and this can be despite all our efforts to convince them otherwise.

So, what is the role of Marketers, and what can they do about this? And what precisely is “brand”? It certainly is not a picture or logo that represents an organization, although these can be strong symbolizations of what the organization stands for.  You will find that there are many different definitions of what brand means to different individuals and organizations.

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But in a nutshell, we cannot escape the fact that the brand of an organization is fundamentally a consolidation of what it values and what it sells.

What an organization values and what it sells is reflected in the way it conducts and presents itself in any form of public representation and communication. This organically creates an image of the organization, which is funnelled through the perception of the customer, and eventually emerges as the value that the organization is delivering.

And this is where marketing, branding and communications play critical roles in contributing to the brand equity of an organization. A product or service can be enhanced or distorted in how it is presented and communicated. As such, the best product or service can lose its true and potential value, whilst conversely, a poor product or service can acquire an enhanced image, all through the “magical” lens of marketing, branding and communication efforts.

Marketers and brand leaders need to be able to see not just both sides of the coin, but a 3rd perspective which is the entire coin, all at the same time:

  • do the actions and what your organization sell uphold the values it professes to stand for?
  • are these actions and values delivering to what the customer values?
  • are both the organization and customer profiting respectively?

Essentially, a brand exists to represent an entity (an organization, or a product, etc).

But its realised value comes from the alignment of being recognized, accepted and appreciated as such by the consumer who converts.

Analogically, a chef who cooks to please only his own taste buds without consideration of his most important audience – the diners – may fail to reap value from his efforts. But a chef who cooks to please only the diners may also not be able to realize his fullest potential.

With that understanding, it is now quite obvious that a Marketer has to have the ability to see both sides of that proverbial coin, be the champion of both the Brand and the Customer, and perform that juggle successfully. In short, this is not a chicken or egg scenario – but both being equally important considerations that must be innate in developing the appropriate marketing & brand strategies and campaigns.

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What A Customer Values In An Organisation

In a brand performance study, certain broad value attributes often form the mainframe in gaining an insight into what drives a brand successfully, or otherwise, from the customer’s perspective. These are based on:

  • What a customer perceives the value of a brand is across a range of corporate, product, service attributes
  • What a customer values in a brand
  • Comparative and competitive value perception

The broad brand drivers that evaluate consumer perceptions include the following

  • Awareness: Can I see you?
  • Familiarity: Am I comfortable with you?
  • Preference: Do I like you?
  • Consideration: Do I like you enough?
  • Conversion Propensity: Would I choose you?
  • Referral Propensity: Do you matter to me?

What You Sell, And What The Customer Buys

What an organization sells is not necessarily what the customer buys. And this is what brand is all about. Unless you understand what the customer values, you cannot sell what the customer wants to buy.

An organization can be great at what it does, but is that what matters to the consumer?

It is critical not to just ask the customer what they think you are doing well at:

But, even more importantly, is that what they value.

With the brand performance evaluation framework, and with the right questions asked, marketers can possess an arsenal of knowledge that can enable them to develop strategies and campaigns that make financial and brand sense to both the organization and the consumer.

A common scenario is still persistent even in today’s environment of consumer-centricity: many promotions still focus on “rewarding” consumers with what the organization wants to give or possibly worst still what it can afford to give (without considering what consumers value). In the process, not only is the investment wasted but along with it comes various opportunity costs including damage to the brand and ultimately customer satisfaction and loyalty.

Whilst this may have been done with good intentions, from the perspective that at least we are making effort to give something, the point remains: the consumer’s perception is what matters.

Obviously, you can’t afford to give all your customers what they want all the time, and you may not even have the capability of giving your customers everything they want. But your customer is going to appreciate less with more thought, than more with poor thought.

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Your Brand Or The Customer’s Brand?

When we start thinking of a brand as being the organization’s brand, we stand the possibility of losing the perspective of shared vested interests – because it is not just the organization here which has stakes.

When a customer makes a purchase, in essence the consumer pays for a piece of your brand equity and makes a financial investment in your organization, which in turn is an investment in the interest of the organization.

And in today’s world, the consumer wields significant power over brands through the digital-social ecosystem. And alongside the fiercely competitive environment organizations operate in, the consumer holds even greater dictatorial power.

The Impact Of A Brand On The Customer Journey & Experience

To deliver along the customer journey and experience, consider the brand drivers and how your marketing strategies and campaigns are aligned against each of them. In the previous blog on “Traffic & Leads: Accounting for your Accountability”, two key sections addressed this alignment with the customer journey & experience along with media and creative strategies and approaches.

The development and application of media and creative need to consider the understanding that the marketer has of each of these driver performances. Where does your corporate, product or service brand stand – on its own, and competitively, for each of these drivers? And how does this affect each other, or new products and services?

Lastly, product life cycles are shortening, under the duress of many factors that include the speed of technology and competition, consumer speed of changing needs and wants.

The durability of a brand is what will make a significant impact and difference in business sustainability. And every marketing investment dollar must not only be striving to achieve short-term campaign returns but continually and insidiously building the brand equity.

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The Cambridge Judge Business School-UpGrad Executive Education in  Strategic Digital Marketing Program comprises a section on Brand that delves deeper into strategies and tactics alongside case studies.

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