Customer loyalty and perception are key to a brand’s value and longevity. When customers have a strong positive attachment to a brand, they advocate for it. They become more willing to pay higher prices, try new products from the same brand, and recommend the brand to others.
Customer-based brand equity is marketing’s most valuable asset because it comes from real customers, not marketing hype. Read on to learn how you can leverage this technique to improve your client base and brand equity.
How Does Customer-Based Brand Equity Work?
Customer-based brand equity is the value and strength of a brand that is built through the perception, attitudes, and behaviors of its customers. It is the power that loyal and engaged customers give to a brand. Building strong customer-based brand equity is crucial for companies, leading to greater brand loyalty, premium pricing, and resistance to competitors.
Customer perception and brand loyalty are the foundation of customer-based brand equity. When customers perceive a brand positively and feel a strong, emotional connection to the brand, they become loyal advocates. These loyal customers then spread the word about the brand through recommendations and word-of-mouth marketing. Their patronage and praise give the brand more value and clout in the marketplace.
In turn, the company can charge higher prices for its brand and products because customers perceive them as superior. Premium pricing, therefore, increases the company’s profits. Loyal customers are also less likely to switch to competitors, even if offered discounts or promotions. They become walking, talking endorsements for the brand.
Components of Customer-Based Brand Equity
Certain factors come into play as far as customer-based brand equity is concerned. Here are some of the components.
- Brand Awareness: This refers to how recognizable and familiar a brand is to customers. Strong brand awareness means customers easily recall the brand and can identify the brand’s products. High awareness leads to consideration of a brand during purchase decisions.
- Brand Associations: These are the attributes, characteristics, benefits, and experiences that customers associate with a brand. Strong, positive associations mean the brand is viewed favorably and represents something meaningful to customers—quality, reliability, and popularity.
- Perceived Quality: This reflects customers’ perception of a brand’s overall quality and superiority compared to other brands. The higher the perceived quality, the more premium and superior the brand is viewed. Quality associations lead to trust in the brand and a perception of value.
- Brand Loyalty: It refers to the level of commitment and attachment that customers have to a brand. Loyal customers repeatedly buy the brand, recommend the brand to others, and are less likely to switch to competitors’ brands. Loyalty is the ultimate goal of building brand equity, as loyal customers provide ongoing revenue and word-of-mouth marketing for a brand.
Customer-based brand equity is a brand’s true value and strength, built through insightful and engaging customer experiences over time. It is the sum of all the moments that matter most to customers in their relationship with a brand. To discover how much brand equity your company has with its customers and how to build more, find out more about unlocking the power of customer-based brand equity.