Brand Equity: How eCommerce Brands Can Build It in 2023
Brand Equity: How eCommerce Brands Can Build It in 2023
Everyone knows that the Coca-Cola Company is worth way more than any store brand cola maker. The same goes for Dollar Shave Club and non-branded razors. Or Johnson’s and generic baby shampoo. Much of this extra value is tied up in brand equity.
Below, we highlight how to measure brand equity and everything else your eCommerce business should know about it.
What is brand equity?
Brand equity is the added value that a brand name brings to a product. In other words, it is the level of sway and good standing a brand has.
It’s about how recognisable, valued and positively thought of a brand is in the minds of consumers – and the added value that this brings to products.
It’s worth noting that brands can have negative brand equity too. When consumers think highly of your brand, it has positive brand equity. However, when consumers actively avoid a brand name or warn others against it, its brand equity is in the red.
The two dimensions of brand equity
There are two key elements that make up brand equity: brand perception and brand experience.
The first is all about the image you portray, the promises you make, the marketing campaigns you run and the eCommerce branding you design.
It also encompasses brand recognition and awareness because, without these, consumers won’t have any perception of your brand. This means it won’t have any brand equity either.
The second is all about the first-hand experiences consumers have had with your brand. Did the product perform as expected? Was your customer service team helpful? Was your website user-friendly? Did your returns procedure work as promised?
While no company is perfect, shoppers should be pleased overall after they’ve interacted with your brand. Their experiences will impact your reputation, reviews, word of mouth recommendations and, ultimately, your brand equity.
The benefits of brand equity
Positive brand equity is hugely valuable for businesses. Once you’ve built it up, it should increase customer loyalty, recommendations and market share.
Let’s take a closer look at three of its biggest benefits:
1. You can charge a premium for your products
Because brand equity means your business is recognisable, reliable and trustworthy, many shoppers will pay more for your products.
In fact, 90% of consumers surveyed say they’re happy to pay extra for products made by a trusted brand.
Businesses with a valuable brand are also more likely to build loyalty among consumers and sell more. So higher price tags won’t necessarily affect sales volumes either.
2. A better reputation requires less ad spend
If your eCommerce store has a good reputation, people will seek out your brand. They’ll head directly to your store, type your name into Google and follow you on social media.
Having a recognised brand name also means your product listings will stand out as consumers browse the likes of Amazon, eBay and other retail sites. And Google will probably boost your rankings too.
All of this means that eCommerce companies with positive brand equity aren’t reliant on PPC ads or other paid marketing to attract sales.
3. It adds value to your eCommerce company
Positive brand equity can boost a company’s stock price. It also adds to the value of your business, if you ever want to sell it.
That’s because positive brand equity makes your business more durable and flexible. Thanks to the value of its name, you’ll be able to face any difficult circumstances by relying on loyal customers, licensing intellectual property or pivoting your product range.
How to measure brand equity
Measuring brand equity can be tricky, because many of its effects are intangible. However, some impacts can be tracked.
Here’s how to measure brand equity in six different ways. Together, these measurements should offer a clear picture of your brand’s value.
1. Company value
You can gauge brand equity by subtracting the value of all of your brand’s assets from the company’s total value. This will give you an idea of how much your brand is worth.
2. Product value
It’s a good idea to compare your products with those of generic competitors. Looking at price differentiations and sales volumes will give you an idea of how high your brand equity is.
3. Market share
Market leaders are more likely to have high and positive brand equity, so it’s a good idea to regularly calculate your market share.
Simply divide your revenue by the industry’s total revenue and multiply by 100. If your market share is on the rise, it is likely that your brand equity is too.
4. Share of voice
While market share is a helpful brand equity metric, it can be impacted by product availability, stockists and other elements unrelated to branding. That’s why you should also track your share of voice.
This compares your advertising budget with overall industry ad spend to gauge your brand’s visibility within the market. The bigger your share, the better.
eCommerce brands can also calculate their share of search, which compares the number of online searches for your brand against all the searches for brands in your industry. This is a reliable indicator of brand equity. You can also look at popular search terms to gauge consumer sentiment and decipher if your brand equity is positive.
5. Other brand awareness metrics
Monitoring the likes of direct traffic, brand search volumes, brand impressions and other brand awareness metrics can help you understand the value of your brand.
You can also run surveys and conduct in-depth analyses of earned media mentions, social media content and search terms to understand public perception of your brand.
6. Brand experience metrics
The other key element to brand equity is the experience customers have. So it’s essential to keep track of metrics that help you understand how satisfied they are.
Tracking churn rates, purchase frequency, Customer Lifetime Value, cart abandonment, return rates, support ticket levels and loyalty programme subscribers can all help with this.
For more insightful, qualitative data, you can use social media monitoring tools to track consumer sentiment, heatmaps to assess your website’s UX and a Digital Shelf solution to analyse your online ratings and reviews.
Brands can also use online surveys to monitor the likes of brand recognition, brand sentiment and customer support satisfaction.
Tips to help build brand equity
There are countless ways to improve your brand equity. But here are four tips to help you get started.
Drive up awareness
Building brand awareness is the first step on the road to improving your eCommerce label’s brand equity.
Some key activities include PPC advertising, traditional marketing, brand partnerships, influencer collaborations, PR, referral programmes and SEO.
Brands that are consistent on all their online platforms enjoy 23% more revenue. That’s because it shows consumers that they are reliable and trustworthy.
So be sure to implement brand guidelines and educate your team about your brand assets, tone of voice and values.
Provide a great experience
73% of shoppers say customer experience plays a central role in their purchase decisions.
So eCommerce brands need to ensure they provide well-designed stores, mobile-friendly pages, detailed product descriptions, quick checkout options, plenty of payment choices, personalised experiences, easy returns and Where to Buy buttons that allow them to check out on their preferred retail platforms.
Promote your brand’s purpose
Recent research suggests that 62% of shoppers don’t buy from brands with beliefs that don’t match their own.
So be sure to find out what matters most to your target audience and incorporate those values into your operations and eCommerce marketing. This could mean implementing sustainable practices, supporting good causes or simply elevating your cool status.
This is key to building brand equity as generic brands don’t stand for anything.
When building brand equity, be sure that the perception you create matches the real experience. Because if your company doesn’t follow through on its promises, you may end up with negative brand equity.