How to Build Brand Equity

What would your company be without your brand? A strong brand makes or breaks a business and holds a lot of value.

Brand equity refers to the value of a company’s brand, which could directly tie to the overall consumer perception. This perception is shaped by the customer experience offered by the brand. 

Clutch surveyed 416 consumers about their thoughts on brand loyalty, and found that 98% of respondents would repurchase from a brand. Shifting loyalty patterns indicate that brand equity is no longer built solely on recognition. 

Now more than ever, companies seeking growth should prioritize the strength of their brand. But where should businesses looking to rebrand or startups finding their rhythm start when it comes to developing a strong brand equity?

Discover the essential factors, key elements, and steps for building a strong brand identity and creating positive brand equity.

Importance of Brand Equity For Businesses

Brand equity directly impacts the long-term success and financial performance of a business. Here are some key reasons why brand equity is equally as important as brand name:

1. Sales
2. Customer retention
3. Profit margin
4. Consumer perception

Sales

Brand equity drives increases in sales. Everyone wants their new product to be the “best” on the market. One way that happens is through fostering your brand perception. If your product or service has a perceived quality that outshines competitors, this will drive sales.

There are a lot of beverage brands out there - but very little are outshining Coca-Cola.

The brand is valued at $300 billion and is one of the only brands to see an increase in brand value each year. How does Coca-Cola do it? Their brand strategy and advertising.

Coca-Cola spent over $5 billion in 2024 on promoting its products through traditional and digital marketing campaigns. Their customer base has nothing but positive experiences to report about the product, which drives continued sales.

Customer Retention

High positive brand equity also delivers high customer retention, meaning that customers come back again and again. Positive experiences lead to repeat purchases, positive word-of-mouth, and a buffer against more competitive pressures.

For instance, Coca Cola is consistently listed as the country’s top soda brand. In fact, Coca-Cola holds a 46% market share of the global non-alcoholic beverage industry in large part to their strong brand positioning.

“Trust follows consistent performance, not transparency proclamations. The best approach: identify one specific, measurable promise you can keep every single time, then keep it without fanfare," said Adam Bird, Director of Strategy at DEKSIA. 

Customer loyalty and trust will ultimately contribute to sustained revenue streams for businesses.

Profit Margin

When a business has high positive brand equity, the perceived value of its products and services rises significantly in the minds of consumers. This perception often extends beyond the actual functional or material quality of what the business offers. Even if competing products are objectively similar—or sometimes even superior—customers are more likely to choose the brand they trust, recognize, and have an emotional connection with.

This perception of added value becomes a powerful driver of the brand’s identity and market position. Strong brand equity conveys reliability, prestige, and desirability, enabling the company to command premium prices and maintain customer loyalty even in highly competitive markets. Consumers are not just buying a product; they’re buying what the brand represents—its reputation, its values, and the status or experience associated with owning or consuming it.

Consumer Perception

All of the above factors of brand equity lead right back to consumer perception. If a consumer thinks negatively about your brand, it will, sometimes in time, impact your company’s bottom line.

Consumer perception can be mapped into two categories: 

• recall & recognition
• emotions

Do people remember your brand without being prompted? If they need more aided prompting, there might be some gaps in the market to help build strong brand awareness.

Emotions are key – failing to address any negative associations with your brand can be costly.

With overall consumer perception being one of the most powerful components of brand equity, it’s extremely important that your current and potential customers think highly of your brand and its products.

Negative v. Positive Brand Equity

There are two types of brand equity - negative brand equity and positive brand equity. These are on the opposite ends of the brand management spectrum.

Positive brand equity is straightforward – positive brand associations help with consumer perception, marketing efforts, and have a positive financial impact.

Negative brand equity involves the negative feelings that might come up with a brand that would lead a consumer to have an unfavorable opinion or perception. This negativity can lead to decreased sales and a loss of customer trust.

In 2015, Chipotle experienced high brand equity in a negative way – restaurant locations across several states dealt with an E. coli outbreak, causing stores to close and existing customers to become skeptical of the food chain’s healthcode practices.

Following these outbreaks, Chipotle made some changes, including a new marketing campaign that focused on the “freshness” and “quality” of their ingredients.

While they have had similar setbacks since, Chipotle has tried to improve its image through increased marketing campaigns, implementation of more food safety policies, and the creation of a loyalty rewards program.

Managing brand equity can be tough for businesses – figuring out how to demonstrate the value of a brand in troubling times can be a tough test, but if your brand is selling high-quality products and focusing on strategies for customer satisfaction, they are on the right track for positive brand equity.

Brand Equity & Customer Journey

Positive brand equity is important for companies, and it develops alongside a customer’s journey with a brand.

1. Awareness: The stage where prospects first learn about a brand or creator through advertising or other areas of marketing.
2. Recognition: This stage is where a customer knows about the brand, but needs to be more familiar. It is up to the brand to engage with their target audience to increase brand recognition.
3. Trial: The stage where consumers begin engaging with the brand by using their products and services.
4. Preference: This stage is where the first sign of brand equity - whether positive or negative - begins to take shape. If the customer has a positive perception, they’ll opt to buy from that brand over others.
5. Loyalty: If customers have continued strong experiences with a brand, they become loyal customers.

Loyal customers are critical for brand promotion. Positive brand equity relies on that assistance.

Steps to Achieve Positive Brand Equity

1. Understand Your Mission
2. Test Your Messaging
3. Drive Awareness
4. Be Consistent
5. Deliver for Your Customers

Understand Your Mission

When attempting to achieve positive brand equity, understanding your company’s mission is critical.

All businesses should have a well-defined mission statement that serves as a guiding light for your brand’s decisions.

A mission statement helps with aligning your company’s values with goals, communicating your brand, and differentiating your brand in the market.

A well-understood mission statement can align employees with the brand's purpose, fostering a sense of unity and dedication to achieving the brand's goals. This can positively impact brand perception and equity.

By recognizing the importance of your brand's mission in achieving positive brand equity, you can effectively shape consumer perception, drive meaningful engagement, and differentiate your brand in the competitive landscape.

Test Your Messaging

By recognizing the significance of testing your messaging, brands can create compelling, resonant communications that contribute to the development of positive brand equity.

Testing your messaging ensures that your brand communicates a cohesive identity, meets customer expectations, and sets your brand apart from competitors.

Regularly testing and refining your messaging also demonstrates your commitment to understanding and meeting consumer needs, thereby cultivating trust and loyalty, fundamental components of positive brand equity.

Drive Awareness

By increasing brand awareness, your company is ensuring that your brand and brand reputation is recognized by a larger audience. This brand recognition lays the groundwork for brand equity.

When consumers are aware of your brand, they are more likely to perceive it as valuable and trustworthy. Brand awareness acts as a catalyst for other marketing strategies that can be used to engage audiences.

Driving awareness lays the foundation for brand preference and consumer trust.

Be Consistent

Maintaining brand consistency is crucial when it comes to achieving positive brand equity.

Consistency in branding elements such as logos, color schemes, and messaging helps consumers recognize and remember your brand. When a brand maintains a uniform identity, it signals reliability and professionalism, key elements in fostering positive brand equity.

Consistency also helps with standing out from competitors, reinforcing brand positioning, and creating an emotional connection with consumers.

Deliver For Your Customers

This might be obvious, but delivering for your customers is paramount when looking to achieve positive brand equity.

Delivering on promises, providing high-quality products and services, and being responsive are all pivotal aspects of customer experience management, which directly impacts brand equity.

If customers are satisfied, that will naturally reflect in overall business performance through greater returns and new customers.

Keep your promises to maintain customer satisfaction.

How to Measure Brand Equity

Companies measure brand equity in a number of ways. Here are some core drivers your team can track when measuring brand equity:

Financial Metrics:

• market share
• revenue
• growth rate
• cost to acquire new customers
• profitability

Growth Metrics: 

• customer loyalty
• retention
• purchasing behavior
• brand awareness
• social media metrics

These measurements can include growth metrics such as brand awareness, customer loyalty, purchasing behavior, and even financial indicators, including the premium price consumers are willing to pay for a branded product over a generic one.

Navigating the Evolving Brand Landscape 

The ever-changing landscape requires brands to adapt and innovate in order to build and sustain their equity. While 98% of consumers repurchase from brands annually, shifting loyalty patterns indicate that brand equity is no longer built solely on recognition. By prioritizing consumer trust and fostering authentic, meaningful connections, brands can safeguard against the rapid erosion of equity that occurs when customers perceive a brand as image-first or inauthentic. 

About the Author

Anna Peck Content Marketing Manager at Clutch

Anna Peck is a content marketing manager at Clutch, where she crafts content on digital marketing, SEO, and public relations. In addition to editing and producing engaging B2B content, she plays a key role in Clutch’s awards program and contributed content efforts. Originally joining Clutch as part of the reviews team, she now focuses on developing SEO-driven content strategies that offer valuable insights to B2B buyers seeking the best service providers.

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