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What Is Brand Equity and Why You Should Care

Branding is a fancy term for the process of understanding what your customers care about most when they buy, and aligning your actions and communications with those customer values that make you unique. When done well, this process can create tremendous financial value. Brands have the power to transform companies. But only if they are based on understanding and delivering customer value.

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By Gordon Hochhalter, Partner
Creativitystrategyconnectivity
twitter/gordonhochhalte
Mobium


If yours is like most b2b companies, people in your organization probably spend more time thinking about their tans than they do thinking about the real value of your brand.
 
And it’s our own fault. We’ve devalued the worth of brands by cloaking them in the mystery of a secret language and conflicting definitions.
 
Lost in the Yada, Yada, Yada
We’ve managed to bury their true worth in a barrage of identity mumbo jumbo, design hyperbole, indecipherable graphs, charts, PowerPoint slides and endless marketing yada, yada, yada.
 
In fact, it’s so bad that in many b2b companies general management, let alone the employees who must deliver the brand, think that branding is little more than logos, business cards and fonts.
 
What Is Branding, Really
Let’s make it simple for a change. Branding is just a fancy term for the process of understanding what your customers care about most when they buy, and aligning your actions and communications with those customer values that make you unique. 

When done well, this relatively simple process can create tremendous financial value by providing focus and consistency to all a company’s activities.
 
The Value Is Inside Your Customers’ Heads
For example, early on Starbucks discovered that a sense of community was a highly valued part of buying and drinking coffee. So they built their brand around a third place in people’s lives. A place of community between home and work.
 
And they created a consistent, unique coffee culture around it. Complete with its own language, appearance and experience.
 
Ka-ching
Despite the fact that I personally want to administer a swift smack in the head to anyone who has to use seven adjectives to order a cup of coffee, it is this Starbuck “brand” that defines the company’s success:
•  It drives product sales.
•  It defines and directs a consistent experience with the company and its representatives that resonate with customers.
•  It reduces the company’s cost of sales by streamlining the marketing, communications, and purchase process.
•  It enables Starbucks to get a premium price for its goods.
 
If you’d like to see how the principles behind a value-based branding approach like that play out in detail for business brands, you should check out BrandWidth, a free eBook from Mobium.
 
From Their Heads to Your Bottom
So what’s the bottom line of all this effort for Starbucks and other companies who understand what brands really are about?
•  21 percent of the total value of The Starbucks Coffee Company, including all its facilities and assets, is directly related to the brand they built.
•  20 percent of FedEx Corporation’s market cap value is in its FedEx brand.
•  For The Coca-Cola Company, the Coke brand makes up 55 percent of the company’s value.
•  The McDonald’s brand accounts for more than 70 percent of McDonalds Corporation’s shareholder value.
 
Even if you don’t reach those monumental levels, the process of value-based branding can align your organization with your customers and prospects around what they value when they buy.
 
Where Value-Based Branding Can Take You
Brands aren’t just about corporate identity or marketing, they are about increasing short-term revenue streams and building long-term assets that dramatically affect a company’s value.
 
They provide value to customers by focusing the company on the products, service and experiences that customers value most.
 
And they generate value for the company by aligning their decisions and actions with the source of their income and intangible assets … their customers.
Indeed, they have the power to transform companies. But only if they are based on understanding and delivering customer value. You do that and everybody in your company will care.
 
But that’s just my opinion. What’s your take?

Need more information?
Gordon Hochhalter, Partner
creativitystrategyconnectivity
http://www.twitter/gordonhochhalte
Mobium
200 South Michigan Avenue, 17th Floor
Chicago, IL 60604
312-422-8960
 

 

GORDON HOCHHALTER is Partner, Creativitystrategyconnectivity at Mobium, the unconventional transformative b2b branding firm. He has won more than 450 creative awards equally divided among print, broadcast and online. His work can be found in The Library of Congress, The AIGA Design Archives, and The University of Chicago Library. Check out his blog at http://www.wasiswillbe.com, follow his tweets at http://www.twitter/gordonhochhalte or email him at ghochhalter@mobiumllc.com. But only if you are living a life of complete and utter boredom and lonely solitude. Otherwise you can make much better use of your time.

 

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