How to measure brand value

“As mar­kets have matured, we have realised there are now a mul­ti­tude of impor­tant com­po­nents to brands and as a con­se­quence there is some dis­agree­ment about what the term ‘brand’ actu­al­ly means,” says James Cronin, lec­tur­er in mar­ket­ing at Lan­cast­er Uni­ver­si­ty.

“While once upon a time experts could pin the term down to a sig­ni­fi­er or an iden­ti­fi­er of one pro­duc­er from the next, and mea­sur­ing results sim­ply came down to aware­ness and sales, brands now have been defined accord­ing to more com­plex con­structs like emo­tions, imagery, men­tal asso­ci­a­tions, sym­bol­ic mean­ings, trib­al mean­ings, loy­al­ty and acces­si­bil­i­ty.

“While this pletho­ra of the­o­ry has deep­ened our under­stand­ing and appre­ci­a­tion of brands, the recog­nised com­plex­i­ty has made it extreme­ly dif­fi­cult to agree on how results should be mea­sured. In short, our advanced knowl­edge has made it more dif­fi­cult to swal­low a ‘one-size-fits-all’ approach to mea­sur­ing per­for­mance.”

Indeed, almost every­thing is becom­ing brand­ed, from sup­pli­ers of com­modi­ties and mate­ri­als to ser­vices, such as uni­ver­si­ties and hos­pi­tals, and even ideas and caus­es, polit­i­cal par­ties, cities and entire nations.

Then there’s social media. “Until social media came on the scene, brands enjoyed a heav­i­ly pro­tect­ed mono­logue with the world, guard­ed by fierce brand police,” says Jamie White, direc­tor of Over­ture Lon­don. “Then it all changed. Dia­logue-dri­ven brands sud­den­ly looked like the way for­ward. Evo­lu­tion and flex­i­bil­i­ty have now become as impor­tant as authen­tic­i­ty and con­sis­ten­cy.”

Helen Rowe, UK head of brand and com­mu­ni­ca­tion at TNS, argues that dig­i­tal has made mea­sur­ing brand equi­ty eas­i­er. “But with it comes a pletho­ra of data that is often over­whelm­ing and unwieldy. Good research is about going beyond ana­lyt­ics from mon­i­tor­ing to mean­ing, which in turn can dri­ve action. Get­ting to this ‘mean­ing’ requires a lot of ground-work through both data clean­ing and apply­ing intel­li­gent analy­sis,” Ms Rowe says.

Thanks to a whole range of new tech­niques, mar­keters are able to get clos­er to the truth of each brand moment. “Researchers now have both ‘the tele­scope’ and ‘the micro­scope’, which enables them to iden­ti­fy new, unex­pect­ed com­peti­tors, and also iso­late pre­cise oppor­tu­ni­ties for build­ing brand equi­ty and future pre­dic­tions,” she says.

Cesar Las­tra, man­ag­ing direc­tor of Bash and Build, agrees that dig­i­tal has been the real game-chang­er in mea­sur­ing brand equi­ty, par­tic­u­lar­ly when it comes to the rise of mobile. “So while tra­di­tion­al­ly we would mea­sure brand equi­ty by their affir­ma­tion of brand vari­ables in a ques­tion­naire – ‘This brand makes me feel…’ and ‘This brand is for peo­ple like me’ – today peo­ple are telling brands what is impor­tant to them and how the brand should act or respond to them,” he says.

It’s also rel­e­vant that brands are now able to build brand equi­ty faster than ever before, says Mr Las­tra. “The tra­di­tion­al rules of brand-build­ing have been dis­rupt­ed by star­tups,” he explains. “By cut­ting out the mid­dle­man, dis­rupter brands such as Uber and Airbnb have become instant­ly rel­e­vant to con­sumers in a valu­able way and, as a result, become part of our every­day lex­i­con,” he says.

It’s worth remem­ber­ing that the tra­di­tion­al mea­sure of val­ue is quite sim­ply price over expe­ri­ence

“Brands can now even get investors to part with their wal­lets long before they have been launched or con­sumed. Take, for exam­ple, Google’s $500-mil­lion invest­ment in their aug­ment­ed real­i­ty ven­ture, Mag­ic Leap. Here’s a brand that no one has ever seen and already it has gen­er­at­ed what could be thought of as a dis­pro­por­tion­ate amount of brand val­ue.

“The ques­tion then becomes how should we val­ue these dis­rup­tor brands ver­sus the tried-and-test­ed brands?  How much empha­sis should be placed on the busi­ness mod­el and the brand promise ver­sus the val­ue that the brand actu­al­ly cre­ates in con­sumers’ lives?”

Despite the chang­ing land­scape, it’s worth remem­ber­ing that the tra­di­tion­al mea­sure of val­ue is quite sim­ply price over expe­ri­ence, says Mr Las­tra. “If you want to gen­er­ate val­ue, you need to cre­ate a com­pelling brand expe­ri­ence that peo­ple will be will­ing to pay for. That may sound old fash­ioned, but with the rise in com­plex, pro­pri­etary black-box algo­rithms for mea­sur­ing brand val­ue, it could be easy to for­get that in the end it’s about peo­ple invit­ing the brand into their lives and hav­ing mean­ing­ful inter­ac­tions.”

Cus­tomer ser­vice cham­pi­ons, such as South­west Air­lines and Dis­ney, nev­er lose sight of this, he says. They know that brand val­ue is mea­sured one bril­liant cus­tomer expe­ri­ence at a time.  They also know that by wow­ing their cus­tomers they will get a rip­ple effect. And they are not shy about cap­tur­ing feed­back at every point along the way.

A brand’s strength and endurance in the mar­ket­place does not equate with con­sumer recog­ni­tion, sales and mar­ket share alone, Lan­cast­er University’s Dr Cronin agrees. “We have known for quite some time that there needs to be some kind of par­ti­tion­ing of brand equi­ty into a cus­tomer-based approach and a finan­cial or cash flow-focused approach,” he says.

“This comes down to a recog­ni­tion in mar­ket­ing thought and prac­tice that notions of short-term exchange and volu­mi­nous quick-fire sales have less to do with how a brand is per­ceived out there in the mar­ket­place than prin­ci­ples like ongo­ing con­sumer loy­al­ty and endur­ing rela­tion­ships.”

Fur­ther­more, in the infor­ma­tion age, the per­for­mance of brands is increas­ing­ly being bench­marked by exter­nal stake­hold­ers against their role and impact in soci­ety. “This is for indi­vid­ual or image-based rea­sons, such as what kind of con­sumer iden­ti­ty is attached to using a par­tic­u­lar brand to more social oblig­a­tions, such as their role in local com­mu­ni­ties and nation­al economies,” says Dr Cronin.

“Thus a brand’s rep­u­ta­tion as an employ­er, its treat­ment of work­ers and con­sumers, its upkeep as a good cor­po­rate cit­i­zen, and its capac­i­ty to main­tain and devel­op pos­i­tive rela­tion­ships with its cus­tomers all become impor­tant fac­tors in cement­ing a par­tic­u­lar image and aware­ness in the psy­che of the pub­lic.”

The notion of employ­er brand is par­tic­u­lar­ly sig­nif­i­cant in the light of the huge role employ­ees can play in per­form­ing and con­vey­ing a company’s brand iden­ti­ty to the out­side world. The baris­tas at Star­bucks and the floor staff of the genius bar at Apple reveal how employ­ees are the emis­saries of a brand and, for many organ­i­sa­tions, lit­er­al­ly bring brand images to life at the cus­tomer-con­tact point.

The fact that con­sumers no longer con­sid­er them­selves sole­ly as indi­vid­u­als, but more mem­bers of a wider brand com­mu­ni­ty, is also rel­e­vant to brand equi­ty, Dr Cronin adds. “In an increas­ing­ly con­nect­ed world, there is recog­ni­tion that con­sumers are seek­ing prod­ucts, ser­vices and expe­ri­ences not just for their use val­ue or their sign val­ue, but also for how they can help link us to one anoth­er,” he says.

Gam­ing is the pro­to­typ­i­cal exam­ple here. “The dom­i­nant brands in the home con­sole gam­ing mar­ket, Sony’s PlaySta­tion and Microsoft’s Xbox, have nur­tured their own ded­i­cat­ed and loy­al com­mu­ni­ties, com­mit­ted not just to the brands them­selves, but to the online social net­works that cohere around mul­ti­play­er gam­ing, news and activ­i­ties,” Dr Cronin says.

“For a lot of gamers, choos­ing a par­tic­u­lar brand stakes out their alle­giance to a par­tic­u­lar social field and their oppo­si­tion to anoth­er – you are either in the PlaySta­tion camp or the Xbox camp. A com­pet­i­tive­ness and dynamism is inject­ed into the whole mar­ket when it feels as though it is not just com­pa­nies who are com­pet­ing, but also the com­mu­ni­ties of real peo­ple who use their brands.

“The impor­tance of brand com­mu­ni­ty mem­bers’ abil­i­ties to evan­ge­lise and act as ‘cit­i­zen mar­keters’ for the brand they are loy­al to can­not be under­stat­ed, par­tic­u­lar­ly in the cur­rent age of social media, user-gen­er­at­ed con­tent, con­sumer reviews, vlogs and so on.”

Kei­th Glan­field, senior FME fel­low and lec­tur­er in the mar­ket­ing group at Aston Busi­ness School, goes so far as to argue that these brand com­mu­ni­ties mean con­sumers are actu­al­ly co-cre­at­ing brands, tak­ing it upon them­selves to devel­op and shape the brands they care about with oth­er like­mind­ed peo­ple.

Rep­u­ta­tion mea­sure­ment, not brand mea­sure­ment, should be the focus for com­pa­nies

He also argues that the notions of brand com­mu­ni­ties and employ­er brand are becom­ing inex­tri­ca­bly linked. “Con­sumer mem­bers of brand com­mu­ni­ties are start­ing to see mem­bers of the brand’s organ­i­sa­tion not as employ­ees but as fel­low com­mu­ni­ty mem­bers. This com­plete­ly changes the way we mea­sure the cau­sa­tion of brand equi­ty,” says Dr Glan­field.

Regard­less of how much you mea­sure, for Kasper Ulf Nielsen, exec­u­tive part­ner at the Rep­u­ta­tion Insti­tute, it will nev­er be enough. Rep­u­ta­tion mea­sure­ment, not brand mea­sure­ment, should be the focus for com­pa­nies, he argues, with com­pa­nies includ­ing Walt Dis­ney, BMW and Google among the 15 per cent that have caught on to this.

“The brand strength can be mea­sured up against the tar­gets you have defined your­self. And that also ques­tions the rel­e­vance and val­ue. You might be able to show that peo­ple can repeat what you want­ed to tell them. But if that does not trans­late into sup­port­ive actions, then what is the point?” he says.

Your rep­u­ta­tion strength is some­thing else. “This is the lev­el of trust, admi­ra­tion and respect your stake­hold­ers have of you as a com­pa­ny. This emo­tion is based on a num­ber of dimen­sions, such as your prod­ucts, your peo­ple and the way you treat them, your lead­ers, your finan­cial per­for­mance, and how you engage in soci­ety,” says Mr Ulf Nielsen.

“And a strong rep­u­ta­tion dri­ves sup­port. We see that if you are able to improve your rep­u­ta­tion by five points, the will­ing­ness def­i­nite­ly to rec­om­mend your com­pa­ny goes up by 5.7 per cent. That will have a direct impact on your finan­cial per­for­mance and this link is why com­pa­nies are focus­ing more and more on their rep­u­ta­tion as a sig­nif­i­cant dri­ver of val­ue.”