Brands are living, breathing things. They require shaping, nurturing, and maintenance over time. Done well, a strong brand has the power to build a business and sustain it well into the future and can make its owner rich along the way.
Brand equity, vs. brand value, has significant power beyond the balance sheet. Brand value is the financial difference between net present value of future cash flow between a branded versus unbranded product. Brand equity is in the relationship, it’s in the minds of others. It is a set of perceptions, understandings, and experiences that create demand and preference for a product. Brand equity builds the promise of future performance, enhances negotiating leverage, and increases multiples. It’s what the brand is in the eyes of your customer. Strong brands bind employees to the cause improving employee satisfaction. It drives market preference and customer loyalty… the list goes on. These are the intangibles of brand, the equity, the goodwill, the power of the brand that can be measured in multiples against revenue. Equity build value. Branding gets you there.
An important way for a brand to build equity is to have purpose and meaning, to stand for something and own it. Something to share in the heart and minds of your constituents. Owning something goes way beyond just talking about it or touting your brand’s position in advertising. Brands must live and breathe it consistently over time, it must be authentic and credible.
So how have we become so accustomed to lying? Ever since doctors and Santa Clause recommended cigarettes, brands have been deceiving and lying. Take Volkswagen for example or Activia1… Those brands, and many others, traded equity for cash. See, brands are a personal thing based on emotion. When brands lie, it hurts and it scars. When the consumer embraces a brand it is a direct reflection of the brand on a personal level. Consumers identify with and embrace those brand values as their own. It’s a publicly facing badge they wear. And brands better be true to them or pay the price. Volkswagen lost 50% of its market cap right after the emission scandal. Activia settled a class-action suit for $45M over lies about some special bacteria.
It’s not unlike what you’d expect in any healthy relationship. Be true, don’t lie. Do what you say you’re going to do. When you make a mistake, apologize, and change. Be transparent and honest. Be consistent. If you win my heart, don’t break it.
The Stronger Your Brand Equity, The Better Able You Are To Withstand And Overcome Problems.
When Nike and Apple were confronted about their factories in China, the low wages and horrendous working conditions, as trusted brands with great equity, they were quickly and quietly forgiven and forgotten. And we’re still buying iPhones and Air Jordan’s. And in Volkswagen’s case? The strength of their equity allowed them to bounce back with record sales in 2017, having recouped all of their capital losses the same year.2
Not so fortunate for the likes of BP. They built a brand around a lie. A bright sunny flowery logo was created to make us believe that they were a green environmentally responsible company positioned as “beyond petroleum”. After the 2010 Gulf spill and many millions of dollars of branding, the curtain was pulled away. The veil of lies about green energy and the environment was lifted and we saw BP’s true colors and it wasn’t pretty. The brand was irreparably damaged and it will never return to the place it had hoped to go. BP will forever be “big oil” with a fake logo.
One simply cannot separate brand image and positioning from brand behavior. As in BP’s case, there’s nothing worse than when a brand’s actions make them liars. Today, it’s more personal than ever before. In our social media-driven, real-time, 24/7 global forum, brands can’t hide. We live in a world of connected consumers that can punish a brand in front of millions in seconds. Challenge this and you play a dangerous game. All consumers ask is for companies to be authentic and true to what they say. It doesn’t seem too much to ask.
Big Brand Or Small, It’s All The Same.
Whether you are a big brand or small, it all works the same. Building a sustaining, genuine relationship with your constituents takes focus, commitment, and truth. It requires defining brand values from which you will not waver. It takes steadfast consistency over time. Long-term loyalty is a two-way street and demands a long-term approach. A brand needs to decide how its identify manifests in its own purpose and actions, and it’s got to show up at all points of engagement.
Consumers are a fickle bunch and have more access to interconnected data in the cloud than ever before. They have power. So be warned. Be true to consumers, and they’ll be true to you. Do this and they will be your advocates, apostles for your brand. And that loyalty will deliver equity, goodwill and projectable lifetime value.
Lie to the consumer and….well, just don’t.
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