Depending on the sector and the particular exemplars involved, brands sell for a premium that ranges from a few percentage points to several multiples as compared to their unbranded equivalents. For example, in prescription drugs according to the FDA, branded products sell for approximately a four-fold premium to generic products. In general, people are willing to pay more for branded products and services because of the associated perceptions, emotions, beliefs and attitudes associated with the brand—something we collectively refer to as PEBAs at Six Degrees. The financial value of a brand can be assessed by a variety of different methodologies, depending on the purpose of the valuation. The three major approaches focus on: The future income the brand is expected to generate, the market worth of the brand (what someone is willing to pay right now) and the cost approach (how much was spent on building the brand to date). Books have been written on how to assess the financial value of a brand and which approach to use when. In today’s blog, we focus instead on what you can do to increase the financial value of your brand.
Building and growing the financial value of a brand is a never-ending process requiring persistent commitment. Here are the steps that will, over time, increase the financial worth of your brand:
1. Create a compelling and differentiated brand strategy and identity.
On the basis of good customer and competitor research, as well as your passion and aspirations, clearly and succinctly define your brand purpose, vision/mission and personality. People buy brands, which means your brand must offer functional, emotional and self-expressive attributes that more uniquely and distinctively appeal to your target customers than those of your competitors. Make the effort to understand how and why your brand will appeal to your intended stakeholders and craft the brand’s core story accordingly. Protect your brand by registering your brand name, trade dress and copy—and thoroughly defend your intellectual property against the inevitable abuse by those seeking to piggyback on your equity or, worse, weaken your equity for competitive reasons.
2. Continuously and consistently market the brand.
The purpose of marketing is to bring new customers to your brand while maintaining a good relationship with existing customers. Therefore, invest in marketing and advertising activities to increase your brand’s presence and appeal in the hearts and minds of your target customers. This includes identifying the right channels for optimum reach. It also includes having a strong website as well as social media presence and engagement (i.e., two-way communications). Collaborating with influencers and appropriate brand partners is another way to be a brand that is “seen and heard”. Measure the impact of your marketing efforts and adjust as necessary.
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3. Maintain quality and innovate regularly.
Make sure you provide as good a brand experience as you can. This means providing a quality product or service as well as having good customer service to build loyalty and positive word-of-mouth buzz. Measure quality and quality perceptions with your customers on a regular basis and seek to always improve quality wherever and whenever possible. Resist the inevitable temptation to “milk the brand” by reducing quality for the temporary surge it may yield in profit. The price of such action is loss of customer satisfaction with and loyalty to your brand which will require significantly more to rectify than the short-term gains achieved. Engage with your employees, suppliers and partners to promulgate the brand experience through their advocacy. Finally, stay ahead of trends by innovating your existing offering or adding something new that fits your brand and gives your customers reason to stay with and loyal to your brand.
4. Measure and actively manage your brand reputation.
Keep your ears tuned to the buzz about your brand across online reviews and social media mentions. Address any feedback promptly and transparently, especially negative feedback. Identify metrics to measure and track continually for your brand and never stop utilizing that information to adjust your brand strategy and behaviors. Brand reputation is a lot like personal reputation: It takes time to build but may be lost in short order.
Increasing the economic value of your brand requires a long game of incremental actions. When done well, it yields significant equity, which is, of course, why so many companies invest in brand-building.