The Key to Deciphering Brand Value

Julia Cupman
B2B Marketing
Current average rating    
Key Takeaways
  • Brand valuation is crucial in maintaining and building upon this status, acting as a tracking mechanism to monitor and measure the strength of a brand year after year, and highlight where marketing resources should be prioritized.
  • It’s key to be clear on what it means for a customer to be loyal to your business.
  • The failure of businesses not assessing the perceived value of their brands creates vulnerability in the marketplace.

A strong brand is one of a company’s biggest assets, providing credibility, helping to differentiate a business from its competitors, and adding value to products and services. Not only does a strong brand command premium prices, it also provides a vehicle for driving customer loyalty and advocacy, which is key to the future success of any business.

Brand valuation is crucial in maintaining and building upon this status, acting as a tracking mechanism to monitor and measure the strength of a brand year after year, and highlight where marketing resources should be prioritized. Only when a business understands its strengths and weaknesses is intelligent brand valuation, and any necessary strategic realignment, possible. After all, how do you improve your position without understanding where you currently are?

However, while companies working across B-to-C markets are well versed in this, the measurement of brand value isn’t widespread in B-to-B marketing. According to our research, more than half (56%) of surveyed B-to-B companies said that they struggle to build a strong brand, and only 39% had a program in place for measuring the value of it.

It’s clear from these figures that many B-to-B companies are struggling to recognize their brand value and track this as part of a wider marketing strategy. Without measurement and close monitoring, building up and maintaining a strong brand is difficult.

The Importance of Customer Loyalty in Va​luation

While a financial figure can be attributed to a brand in order to determine its value, this does not reveal the full picture about its strength. A brand is largely an intangible asset, and its value lies in how its customers feel about it—and its ability to create loyalty and, therefore, maintain demand and profit into the future.

Importantly, it’s key to be clear on what it means for a customer to be loyal to your business. A truly loyal customer is one who knows how good your service is, would recommend it to his business contacts and has enough goodwill to continue working with you if something goes wrong. The way to measure whether loyalty is widespread is by looking at the “likelihood to recommend” in particular. This is because advocacy is the ultimate accolade, and there can be no greater measure of loyalty than devoted, repeat customers willing to tell others about their experiences.

Measuring to Monitor: NPS ​and NVS

The Net Promoter Score (NPS) is useful in determining how likely your customers are to recommend and promote your company. NPS research is a quantitative method where customers are asked, on a scale of zero to 10, how likely they are to endorse a company to others, and the information is collected by market researchers via telephone or online interviews. 

To calculate the Net Promoter Score, the percentage of people giving a score of six or below is subtracted from the percentage of people who gave a score of nine or 10. A score of 100 is the highest possible score (everyone is a promoter) and -100 the lowest possible score (everyone is a detractor). A high NPS (typically above 40), may suggest higher growth potential in the future, and can be an effective measure of future success. Typically, a Net Promoter Score of around 25 is considered the norm for B-to-B brands.

Another tool in brand strength analysis is the Net Value Score (NVS), which can be used to help gauge the success of an organization relative to its competitors in order to provide an indication of perceived value. A simple question is used to determine the value offered by a company versus other players in the market: How would you rate company X on the total value the company offers, compared to the total value offered by other suppliers of similar products or services? Answers can range from: significantly better, somewhat better, neither better nor worse, somewhat worse or significantly worse, and a percentage is assigned to each to calculate a NVS. Excellent scores are above 60, and those below 40 indicate that a brand requires attention. Then, two additional questions are usually askedone on benefits and the other on price. The findings from these questions suggest the action required to improve on the brand’s perceived value, such as raising or lowering prices, or better communicating the benefits offered.

Because the NVS measures value, it is a good predictor of the likelihood of a company winning or losing market share. A company with an NVS that is significantly higher than its competitors will be one that enjoys a strong brand and therefore rising market share.

A Growing Concern

The failure of businesses not assessing the perceived value of their brands creates vulnerability in the marketplace. Investing in a brand assessment can significantly strengthen a brand’s position within a market. And by researching how to improve customer loyaltywhich, ultimately, is the source of greater profitsa company can see where to drive marketing resource to increase its worth in monetary terms. It’s absolutely worth the extra effort and cost in order to reap the benefits and enjoy a high return on investment.

 

This article was originally published in the June 2015 issue of B2B M​arketing.


Author Bio:

Julia Cupman
Julia Cupman is vice president at White Plains, N.Y.-based global B-to-B market research agency B2B International.
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