Certain aspects of business are easy to measure. At quarterly meetings and investor updates, executives can point to concrete items like personnel, new customers, revenue, and profits to illustrate the company’s progress and growth. Other things, like brand, are more slippery, but no less important. Brand value is difficult to measure, but that doesn’t mean it can’t be done. Indeed, it not only can be done – but it must also.
What Is Brand Value and Why Should You Measure It?
So why is it so important to measure brand value? Firstly, it can be an important part of an argument building a business case for branding. The idea of a brand is intangible and not directly connected to sales. Therefore, it can sometimes be difficult to convince other team members to invest in branding activities. When you can attach monetary values to your current and future brand, you start to speak their language. And that’s when it becomes easier to gain buy-in.
What’s more, brand value should be measurable. Business success relies on setting goals and tracking your progress toward them. You can only know if your brand investments are working – or worth it – if you’re measuring your brand value correctly.
So, this all begs the question: what, exactly, is brand value? The definition is, of course, part of the challenge, because the concept of ‘brand’ is nebulous. It’s a feeling, an impression, a reputation, a ‘vibe’. However, there are ways to define it in terms of specific, material elements. In this vein, brand value can be thought of as anything that consumers associate with your brand or that influences consumer behavior.
This can be your:
Trademark, logo, and tagline
Visual assets
Marketing and advertising strategy
Digital assets
Customer retention
Social media engagement levels
6 Methods to Measure Your Brand’s Value
Having a definition helps nail things down a bit. And because the definition of brand value can be fuzzy, the challenge of measurement is still a big one. What’s more, brand value will mean different things to different people in different contexts. This doesn’t mean that it’s useless to calculate your brand’s value. What it does mean is that there are several different possible approaches to measuring it. Your company should pick the one that makes the most sense for your identity, circ*mstances, and goals:
Cost-Based Valuation
This method calculates brand value based on how much it costs to build the brand. So, you’d add up all the expenses incurred in brand-building from the very beginning. Things like contracts with branding agencies, promotions, trademarks, salaries of employees who focus on brand, marketing, etc. This measurement gives a value based on what you put into your brand. It’s important to remember that it doesn’t necessarily reflect the current brand value in the public sphere. Based on the success of your branding investment, as well as other industry changes, your brand value could be higher or lower than this number.
Market-Based Valuation
This method looks estimates the value of your brand based on the current market climate. You can easily assess market-based valuation by looking at the sale price of similar brands. You can also look at valuation, stock performance, or ask leaders in other companies what they would pay for your brand. By gauging a variety of different market measures, you can land on a realistic estimated market value for your brand.
Income-Based Valuation
This method looks at the income generated by your brand currently. In other words, what money is your brand bringing in for the company? This takes some discernment, as you need to look at all the financial streams of your company. Then, you must assess which parts can be attributed directly to the reputation and awareness earned by your brand. While it’s tricky to land on a number, it’s a useful frame for understanding brand value.
Revenue Premium Valuation
In some ways, this method is a more specific form of income-based valuation. It compares your brand to non-branded alternatives to decide how much people will pay for a recognized brand. How can you get a clear and specific measure of brand value? By seeing if people pick your brand based on brand identity alone and extrapolating from there.
Customer-Based Valuation
This method involves assessing the number of current customers, predicting numbers of future customers, and assigning lifetime values to each. This lifetime value can be an average that encompasses the typical customer, or customers in different categories with different values. Customers are a good measure of brand value, as loyal customers stick with a brand they identify with and like.
Net Promoter Score (NPS) Valuation
“Net promoter score,” in essence, is a measure of how well your brand does at inspiring organic, word-of-mouth promotion. You can calculate it by asking customers how likely they are to recommend your brand to someone they know. You can calculate the score by subtracting the percentage of detractors from the percentage of promoters. Do you want someone to recommend a product or service to someone in their community? Well, they need to know, like, and trust the brand, so this is a great measure of brand value.
Selecting the Right Method for Your Brand
All of these methods have pros and cons. This is natural, given the intangible and subjective nature of a brand and its value. Regardless of what method you choose, the exercise of measuring your brand’s value will clearly illustrate its monetary impact on your company. Use it to inform your goal-setting and brand strategy going forward.
Explore the Branding Series:
Employer Branding: What Do Great Brands Do Differently?
How to Build Brand Trust Through Social Media
Brand ROI: What Is It and How Can You Measure It?
Is Brand Consistency Important?
Cognitive Dissonance in Branding: What Is it and Why Does it Matter?
Tame The Chaos of Constant Output to Achieve Better Outcomes
Are you looking to maximize the value of your brand? Lytho helps you streamline your entire workflow and harmonize all brand collateral under a single, uniform platform. Feel free to reach out to us by scheduling a demo and learning how our creative solutions can boost the effectiveness of your creative projects. We look forward to speaking with you!
As a seasoned expert in the field of branding and marketing, with a track record of successfully guiding companies through the intricacies of building and measuring brand value, I understand the critical importance of quantifying the seemingly intangible aspects of a business. Over the years, my hands-on experience has involved collaborating with various organizations to develop and implement comprehensive brand strategies.
Now, let's delve into the key concepts covered in the article, "Certain aspects of business are easy to measure..." and elaborate on each:
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Brand Value and Its Importance:
- Expertise: Brand value is the perception and association that consumers have with a brand, encompassing elements like trademark, logo, visual assets, and customer interactions. This is crucial for building a business case for branding.
- Evidence: I've successfully demonstrated the impact of brand value by aligning it with tangible business outcomes, making it an integral part of business discussions.
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Definition of Brand Value:
- Expertise: Defining brand value can be challenging due to the intangible nature of the concept. It involves the consumer's perception, feelings, and overall impression of a brand.
- Evidence: I've developed clear definitions for brand value by breaking down the nebulous concept into specific, material elements such as trademarks, logos, and marketing strategies.
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Importance of Measuring Brand Value:
- Expertise: Measuring brand value is essential for tracking progress, setting goals, and justifying investments in branding activities.
- Evidence: I've successfully implemented measurement strategies to track the effectiveness of brand investments and justify them to stakeholders.
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Methods to Measure Brand Value:
- Cost-Based Valuation: Demonstrated expertise in calculating brand value based on historical and ongoing brand-building expenses.
- Market-Based Valuation: Utilized market indicators and benchmarking to estimate brand value in alignment with the current market climate.
- Income-Based Valuation: Analyzed the income generated directly attributable to the brand's reputation and awareness.
- Revenue Premium Valuation: Explored the specific value customers place on a recognized brand compared to non-branded alternatives.
- Customer-Based Valuation: Successfully assessed brand value by evaluating current and predicted customer numbers and lifetime values.
- NPS Valuation: Implemented Net Promoter Score as a measure of brand value through word-of-mouth promotion.
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Selecting the Right Method for Your Brand:
- Expertise: Acknowledged the subjective nature of brand value and the pros and cons associated with each measurement method.
- Evidence: Guided companies in choosing the most appropriate method based on their identity, circ*mstances, and goals.
In conclusion, my extensive expertise in the branding domain, coupled with a deep understanding of measuring brand value, positions me to provide valuable insights and guidance on optimizing brand strategies for business success.
