In its truest sense, a significant turnover or high sales does not necessarily imply that our brand has value. The ultimate goal of creating brand value is to achieve and maintain a portfolio of loyal customers who “do our job for us.”
- How can we know if our brand has value?
- What essential aspects should we consider?
Brand loyalty
Having many loyal customers is the cornerstone to generating brand value. The vast majority of business decisions of a commercial nature must continue in this direction. In practice, many companies overlook this point with severe consequences. Capturing clients is infinitely more expensive than maintaining existing ones, both monetarily and operationally. The costs of deploying recruitment marketing actions (ATL and BTL advertising, personnel, data analysis, processing, etc.) represent a crucial budget line.
The key question revolves around maintaining a loyal customer portfolio allowing you to take advantage of the benefits of positive feedback loops. In other words, our staunchest consumers will recommend our brand to their closest circle, doing valuable dissemination and notoriety work. In turn, they contribute to projecting our company’s values and our products’ outstanding attributes. Additionally, they confer some financial security insofar as they represent a more or less constant source of income.
There are various levels of loyalty. The most valuable brands on the planet have a large customer base of the highest level (committed customers, CC). These people repeat their purchasing patterns and display their symbols and logos; they are part of clubs and associations. They value, even irrationally, the attributes of the products and the brand in general and promote the company’s values and actions of social responsibility.
The price elasticity
When you increase the price of your product or service and see that demand has not decreased, you can affirm that you have managed to create brand value. Technically, we can say that the benefits of consumer surplus are exploited. A strong brand causes the consumer to be willing to pay more (“premium price”). Logically, the greater the consumer surplus, the greater the benefits for the company. Apple is probably one brand that can “play” with this variable. Since the launch of the first iPhone, its price has been increasing until it surpassed the psychological barrier of $1,000: demand has not only not fallen but has risen. Not surprisingly, it is the most valuable brand today.
One of the keys to the most potent brands is to offer the most significant margin between the total cost and the consumer’s price. It is not about providing the lowest possible price to increase sales or reduce costs (and probably quality) to increase margins. The question is whether consumers buy our product because it is our brand and everything it represents. The subjective component, perceptions, and values are crucial. At this point, we as a brand will have the power to set prices or make certain decisions a priority without our demand being affected, as long as we efficiently manage the loyalty of our customers.
Notoriety and dissemination
Digital media puts maintaining contact with millions of people at a minimal cost at our fingertips. The art of selecting the right attributes we intend to show the public at the right time and through the best channels is the first step in creating value and a sign that our brand is valuable. Greater dissemination and high turnover do not necessarily imply a strong brand, but a high correlation exists.
In this sense, many firms do not even remain on the list that the eventual consumer shuffles. When we think about buying a vehicle, we ignore certain brands, but they stay in our minds regularly. The purchase does not need to take place. For this reason, achieving the greatest possible visibility, and even more, by projecting the values and image that we want and suit us the personality of our brand, is essential to achieve value in the medium and long term.
These are just some guidelines and signs that provide us with an approach to creating brand value. Measuring its value is somewhat complex due to intangibility, factors’ interrelation, and market dynamics.
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