Hue, a driven entrepreneur, that uncovered the hidden power of Brand Equity—the force that makes customers choose, trust, and even pay more for a brand. Guided by Dex, he learns how to measure and grow his brand’s value through identity, perception, and loyalty. As the conversation unfolds, Hue realizes he’s not just running a business—he’s shaping an experience.
Hue:
Hi Dex! I was reading a book about designing a brand identity the other day and came across this term 'Brand Equity'. It sounded very important. Like a word that investors and shareholders would use often around a boardroom table. So I thought I'd ask you, what is brand equity?
Dex:
Hey Hue! Ah, brand equity—now that’s a term with some serious weight. You’re right; it’s something investors, shareholders, and business owners (like you!) care about because it represents the value of a brand beyond just its products or services.
In simple terms, brand equity is the perception people have of your brand and how that translates into financial value. It’s built through strong brand design, logo design, consistent messaging, and positive customer experiences. The more people recognize, trust, and prefer your brand over competitors, the higher your brand equity.
Hue:
I see. Would it be fair to say that Brand Equity is the market's demand for your brand and the way you increase that demand is by the way your customers experience or brand and how likely they are to refer it to their friends and colleagues?
Dex:
Exactly! You’ve got a firm grip on it. Brand equity is essentially the market’s demand for your brand, but it’s not just about popularity—it’s about perceived value. The stronger your brand identity, logo design, and overall brand experience, the more people are willing to choose your brand over competitors, even if your price is higher.
Customer experience plays a huge role in building that equity. If people have a great experience with your brand—whether through top-notch service, high-quality products, or a brand design that feels just right—they’re more likely to become loyal customers and even brand advocates. And when they start recommending your brand to friends and colleagues, that demand snowballs.
Hue:
I never thought that the customer would play such a big role in establishing brand equity. It sounds like a give and take scenario. You, as the brand, provide a good experience while delivering a quality product and service, while the customer pays you for it, perhaps even a premium, and spreads the word to their friends to experience the same thing with your brand. And the more that happens, the more brand equity you have, right?
Dex:
Spot on, Hue! Brand equity is very much a give-and-take relationship. You, as the brand, set the stage with a strong brand identity, thoughtful brand design, and a consistent customer experience. In return, customers reward you—not just with their money but with their trust, loyalty, and referrals.
The more positive interactions people have with your brand, the stronger your reputation becomes. That reputation builds demand, which allows you to charge a premium, expand your offerings, or even weather tough market conditions better than competitors with lower equity.
Hue:
Ok, I think I have a better understanding of it now. Now that I'm aware of it, I think it's something I should pay more attention to as a business owner that's trying to build a strong brand. I recall reading something in a management book before that goes something like "What gets measured, gets done". Is there a way to measure brand equity or is it just something your revenue reflects?
Dex:
Absolutely! Brand equity isn’t just a feeling—it’s something you can measure, and you’re absolutely right to want to track it. While revenue is one indicator, it doesn’t tell the whole story. A strong brand might have high equity but low sales due to external factors, so you need a more well-rounded approach.
Here are some key ways to measure brand equity:
- Brand Awareness – How well do people recognize and recall your brand? Surveys, social media mentions, and search volume can help measure this.
- Brand Perception – What do customers think about your brand? You can gauge this through customer feedback, reviews, and sentiment analysis.
- Customer Loyalty & Retention – Do customers keep coming back? A high retention rate or Net Promoter Score (NPS) (how likely they are to refer you) signals strong brand equity.
- Market Share – How much of your industry’s pie does your brand own compared to competitors?
- Price Premium – Are people willing to pay more for your brand over a generic alternative? If so, that’s brand equity at work.
Hue:
It feels like I've been missing out on serious business. In order to track my brand equity, its seems that I need to do some research. Some of it can be done through basic customer interactions like asking them to write a review and whether they were willing to pay more to use my brand instead of others. While on the other hand, some of the research will have to be done manually through something like a competitor audit, right?
Dex:
You’re absolutely right. Tracking brand equity isn’t just about looking at numbers—it’s about listening to your customers and studying your market. Some insights will come directly from customer interactions, while others require a more hands-on approach, like a competitor audit.
For customer-driven research, you can:
- Encourage reviews and testimonials—Ask customers about their experience and whether they’d choose your brand again.
- Conduct surveys—Simple questions like “What made you choose us?” or “Would you recommend us to a friend?” can reveal a lot.
- Monitor social media & brand mentions—See what people are saying about your brand organically.
For market-driven research, you can:
- Perform a competitor audit—Analyze their pricing, branding, and customer engagement to see how you compare.
- Track industry trends—Are competitors positioning themselves differently? Are customers shifting their preferences?
- Assess your market share—Are you gaining traction, or is a competitor eating into your space?
Hue:
Now that I have some more insight on how to measure my brand's equity, I'll have to incorporate it onto my process. Measuring is one thing but how can I increase the results? How can I increase my brand's equity?
Dex:
Ah, now you’re thinking like a true brand builder, Hue! Measuring brand equity is great, but increasing it? That’s where the real magic happens. The key is to strengthen the three core pillars of brand equity: Brand Recognition, Brand Perception, and Brand Loyalty. Here’s how you can boost each:
Increase Brand Recognition
- Refine your brand identity—Make sure your logo design, and overall brand design are visually distinctive and memorable.
- Be consistent—Use the same colors, fonts, and messaging across all platforms. Repetition breeds familiarity.
- Increase visibility—Leverage social media, content marketing, and collaborations to get your brand in front of more eyes.
Improve Brand Perception
- Deliver high-quality products/services—Nothing builds equity faster than exceeding customer expectations.
- Craft a strong brand story—Customers connect with brands that have a clear mission and values.
- Provide exceptional customer experiences—A smooth, enjoyable experience makes your brand feel premium.
Strengthen Brand Loyalty
- Build community engagement—Interact with your audience through personalized emails, social media, and loyalty programs.
- Encourage word-of-mouth marketing—Happy customers become brand ambassadors. Make it easy for them to share their experiences.
- Offer exclusivity—Limited edition products, VIP access, or members-only perks make people feel more attached to your brand.
Hue:
Ok great! Thank you Dex. I've learned allot about brand equity today and it makes me excited. It's like this concept that's almost invisible to business owners like me, but very much part of the customers' everyday life. As a customer myself to other brands I'm also now more aware of my role in their brand equity.
Dex:
That’s an interesting realization, isn't it? Brand equity is like the invisible hand (pun absolutely intended) guiding customers' choices—it’s always there, shaping perceptions, but business owners don’t always see it until they start measuring and building it intentionally.
Now that you’re more aware of it, you’re in a great position to not only grow your own brand’s equity but also observe how you interact with other brands. Why do you choose certain brands over others? What makes you loyal to them? Those insights can be gold when applied to your own business.
I love seeing you this excited about brand-building—it means you’re on the right track. Can’t wait to hear what changes you implement and what impact they have!
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