Saturday, December 13, 2014

Four Ways To Measure Brand Equity

Brand Equity is defined as:

"Brand equity is a phrase used in the marketing industry which describes the value of having a well-known brand name..." by Wikipedia.

"The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent." by Investopedia.

As someone who specializes in marketing, I still feel these definitions are highly conceptual, perceptual, and perhaps even theoretical. The general challenge most marketers have in their work is the translation of what we do best (the conceptual) into what the number crunchers want (the measurable).

When we think of the word "equity," must of us probably think about real estate. This is actually quite an accurate perspective. Much as in buying property, intrinsic value is not innate to any particular plot of land - the same goes for company brands. The value is what has been done with the land, what is being done, and what can be done -- it is the utility of real estate which makes it valuable. That is why we always hear: "Location. Location. Location!" If the location is meaningful, then the location is valuable.

Still, I prose: How do you MEASURE it? "The Market" isn't exactly selling brands the way it is selling houses, plots of land, etc.

Therefore, it is with great pleasure that I introduce Four Ways To Measure Brand Equity.

Four Ways To Measure Brand Equity

1. Brand Separation.
Brand separation is the difference in asset exchange one brand needs to subsidize to a consumer to change brands for a single purchase.

"How much of a discount do I need to give you to buy Dunkin' Donuts instead of Starbucks coffee?"

The intriguing thing about brand separation is that it is short term. The average person is more than willing to swap out one brand for another if the it is temporary, and, if it's done at a discount... or even free! Can't say "no" to free, right? Brand separation is the litmus test in seeing how your brand equity compares to a competitor's. Surveying this numerical disparity can be quite enlightening.

2. Brand Conversion.
Brand conversion is the difference in asset exchange one brand needs to subsidize to a consumer for the product loyalty of the competing brand. 

"How much must I pay you for you to switch from an Android phone to an iPhone?"

What I find interesting about brand conversion is the essential difference between this and brand separation; permanence. When people need to commit to something for the long term, things get serious. In fact, things may get so serious that a discount may not be enough to drive someone to convert to a different brand. You may need to end up paying them for them to use your product and brand. What can be seen in brand separation is likened to the cost per unit of market entry any particular product's life cycle. The numerical survey for brand conversion can be interpreted as market repositioning. How much must your firm pay out to elevate your brand above the competition?

3. Lead Time Loyalty.
Lead time loyalty is a two dimensional construct; the length of time for which a customer is willing to wait for their favorite brand before switching to a less favorable competitor, and, the asset subsidy a firm must supply the consumer to switch to a competitor for a single purchase.

"Would you buy Dunkin' Donuts if I could get you your coffee faster? How much of a discount do I need to give you for you to buy Dunkin' Donuts in that time frame?"

Waiting sucks. How many times have you gone into a store to buy something, saw the line was long, gave up, and left? I know I've done that plenty of times. Now as we expand this on thought, lead time is really based on the "time is money" principle. If you need to get into an emergency room and the wait is 4 hours, but, the urgent care down the street has only a 30 minute line, would you drive to that urgent care? More importantly, if you were paying cash, the emergency room may cost you several hundred dollars but the urgent care visit would only be maybe one to two hundred. Does that further tip the scales towards going to urgent care instead?

Lead time loyalty really breaks things down to the heart of the matter. Why should I wait for you? What value does your brand and/or your products bring that makes it so worth it to wait? This parametric measure gives you four basic quadrants of where your brand is either weak or strong when compared to competitors. Where you are strong, that is where you have much brand equity. Where you are weak and quickly abandoned, this is where your brand (or product) doesn't really bring any value to the consumer. Because measuring lead time loyalty is two dimensional, there exists four possibilities to where your brand may currently exist:

  1. Valued & high end
  2. Unvalued & high end
  3. Value & low end
  4. Unvalued & low end

It is your job to optimize that space you occupy -- or better yet, to move your brand's trajectory to a more favorable destination.

4. Lifetime Loyalty.
Lifetime loyalty is the asset exchange subsidy which a competing firm must give to a consumer for the consumer to switch from a favorite brand to the competitor for the lifetime of brand use.

"How much must I pay you for you to switch from Android to Apple, FOREVER?"

Similar to brand conversion, lifetime loyalty is all about the long haul. Can you stay with me forever? Will you stray, just for convenience, perhaps? Scandalous! But really, lifetime loyalty measures the long term growth potential and market penetration costs to ousting a competitor's brand and replacing it with yours. The difference between this and brand conversion is the word "forever." Brand conversion may be a swapping dance, back and forth between top end brand products. However, lifetime loyalty is something that dabbles in the space of goodwill. To this point, there's another question you could ask in terms of time, for measurement and comparison:

"How long are you willing to stay with Android if Apple allowed for similar software freedoms starting right now?"

Lifetime loyalty is the most correlative of these four ways to measure brand equity, however, just like brand separation, it gives you a very good initial glimpse at what you're up against -- or perhaps, where you've lucky enough to be situated.

Some Other Considerations Regarding Brand Equity

Market Positioning:
Where on the grocery shelf are you compared to your competitors? Are you on the top shelf, valued and priced the most? Or, are you on the bottom, sold in bulk with a low price point? Doing a SWOT analysis gives you a framework to which you can examine your position. For more on this, please take a look at this post: Consumer Awareness & Access to Physical Therapists (Part 1) with Part 2 linked at the bottom of said post.

Corporate Social Responsibility (CSR):
CSR has become a huge deal these days. Only in the early 2000's the US stock markets saw CSR behaviors by firms as an unnecessary financial burden -- wasting assets which could have been better used turning a profit elsewhere. However, NOW, CSR is seen as standard and expected. Companies who announce or are exposed for mishaps are proportionately rewarded or punished by how socially responsible the market perceives them to have been. Typically, the fluctuation in shareholder wealth is a function of company reputation, CSR ranking by media, and general public exposure.

Which leads us to the last consideration I'd like to discuss today...

A company's goodwill is pragmatically unmeasurable. Marketers can certainly correlate and estimate the value of a firm's goodwill. However, truth be told, goodwill is simply that... it is the amount of favorable willpower to which the market at large is willing to serve as benefactor toward any given brand.

Sure! In accounting and in law, there are formulas to "calculate"goodwill, estimate really... Here is a popular equation available.

In any case, I think the most honest measure of goodwill is public support of a brand compared to another brand. How many people do you see walking around with Starbucks cups versus Dunkin' Donuts? How many people do you see driving a certain brand of car of care versus another? How many people do you hear casually conversing regarding physical therapy versus chiropractic care? This could go on for a long, long time.

Some Closing Thoughts:
Measuring brand equity is a very important consideration for long term business success. I feel that it is often neglected for attention garnered toward operations, finances, accounting, supply chain, etc. However, a brand is the personage of a firm. As we watch the information age quickly mature several times over, we've appreciated that we have returned how we connect with businesses, brands, networks, collaborations, and each other as individuals in a very social way -- through relationships. For lack of better terms, brand equity is the quality of relationship you have with your consumers. If you want them to value you, you must first demonstrate that you value them.

To use these four measures most effectively, one should use brand separation and lifetime loyalty as the bread to sandwich the juicy center of brand conversion and lead time loyalty. Brand separation and lifetime loyalty demonstrate short term and long term considerations regarding a brand's market mobility. Brand conversion and lead time loyalty describe a brand's leverage within the market itself. More importantly, the center of this sandwich also frames the greatest opportunities for your brand.

I hope you have found these four ways of measuring brand equity both interesting and useful. More importantly, I hope that these will serve as valuable tools -- as solutions for your success.

Wednesday, December 3, 2014

Engaging Consumers with a Visible Brand

I'm very happy to share with you a guest blog I wrote for StriveLabsa firm on the cutting edge of patient-provider platform engagement for musculoskeletal disease.

I encourage you to check out their site and enjoy this guest post to which I had a LOT of fun writing:

Monday, December 1, 2014

Building Your Personal Brand

Let's all face it. Resumes and references are mattering less and less these days. Business journals and media outlets are repeatedly publishing articles for how common it is for resumes to lie and for references to actually be imposters. In fact, it has been commonly suggested that traditional  resumes, references, and even curriculum vitaes will soon disappear.

As this is the case, we have moved into an era of personal branding. After all, the job market is a MARKET. And, just as we shop in a store and trust brands, hiring managers have already begun to sift through their applicants in a similar manner. It won't be long before personal branding IS your resume.

This post is all about building your personal brand, how to strengthen key elements of it, and how to protect it.

Building Your Personal Brand

1. Your Image.
The first and perhaps most important thing to any brand is their image. Not the image the brand hopes to present, mind you. It is all about the image which the consumer envisions in their mind before they actually lay eyes upon you. Your image is comprised of physical, social, individual, real, and imagined interactions made visible to anyone and everyone.

This spans between the way you interact with your customers, your colleagues, your co-workers, etc. This also includes your "speech" in social media, the content you share, the links you retweet, and anything else which may comprise your digital footprint. And, while this may be unfair -- this also has to do with the way you physically present yourself. This has to do with something in psychology called the "Halo Effect" which basically states that attractiveness and familiarity gives a favorable bias to your brand. If you look the part, you ARE the part. This only needs confirmation from the fact that you can act the part. After all (unless there are samples!) when in a grocery store, don't we buy first, then bite? This is how we confirm the brand we just bought. If we like how the food tastes, we'll go back for more. If not, we'll move on.

To build your image, be sure you act the part, look the part, and sound the part in everything that you do, in all the media outlets that you have, and, most importantly in how you live your life. Someone is always watching. Give them a show which speaks positively and accurately to who you are.

2. Your Experiences.
Your collective actions, conversations, observations, and collaborations comprise your experiences. The manner in how you have connected with the world constructs the lattice in which your brand is fleshed out. Think of this as the foundation and framework of a building. For a hiring manager, they look at both your work experience and your life experience. I can guarantee you that people will be more willing to hire someone with interesting stories  versus "by the book" blandness.

Your experiences certainly include your past jobs, the brand of your education, where you have traveled, volunteered, and what your hobbies are. Certain experiences can serve as a strong brand multiplier. This can include graduating from top tier programs, interning/working at internationally acclaimed firms, and having meaningful media exposure. These days, hiring managers are being ever so encouraged to make sure the "right stuff" in an applicant is calculated by the sum of their experiences rather than the fact they have a certain amount of experience.

It's no longer about the length of time you've done something. It's about how well you do it. In other words, "It's not what you do, it's HOW you do it." Excellence will elevate your brand.

3. Your Personas.
Everyone has multiple personalities depending on outlet, context, social circles, etc. Sometimes we're the alpha. Other times, we're hanging back. There are moments when we provide the shock value and there are other situations for which we are just the observer. Regardless of who you are personally, how you behave defines the identity of your brand's persona. More importantly, this is ultimately defined by how others PERCEIVE you to be and WHY they wish to (or wish not to) connect with you. This can include sociopolitical postures you present on social media, your physical posturing in person when you interact with co-workers, and the manners in which you serve a customer. It is here that emotional valences are most pronounced. If you come across as a positive person, people will view this favorably. If you come across as a negative and perhaps critical, it may not be so favorable.

Manage your personas carefully as they play an important part in defining your personal brand. Managers hire likeable people. Be likeable. Be kind. Be gracious. Such will grow your brand equity.

4. Your Relationships.
We've all heard it before: "It's not what you know, it's who you know." Who you are and have been associated with plays an important part in branding. Such pairings can serve as a brand multiplier. Other times, it can really hurt you.

Let's just examine the effects with this list:
  • Pizza + Beer
  • Wine + Cheese
  • Baseball + Hot Dogs
  • Bar + Wings

(okay I'm a little hungry right now... those are the examples I have, LOL!)

In any case, it's important to safeguard who we allow to be associated with us and who we aim to associate with. It is just as important to pursue meaningful relationships in the same vein. Our relationships all bring with them their own images, their own experiences, and their own personas -- and, all of these facets ultimately paint the finishing strokes upon the artwork of your personal brand.

You can either choose to have smears upon your canvas, or masterful brush strokes. Be favorably relatable and choose good, healthy, meaningful relationships to nurture. This is the final element of building a personal brand. It can just as easily make your brand... or break it.

Some Closing Thoughts
We're heading into a time in human history when information is so rampant we don't even know what to do with it anymore. This transcends our personal, professional, and even the private facets of our lives. Personal branding goes beyond just the business itself. It will certainly impact our relationships, our families, and every possible social and business circle in the future. There are definitely profound implications to the youth of our times in this regard. There are also encouraging strategies to regain control of personal brands so that who you are and who you are known to be eventually become one in the same.