As long as retail has existed, marketers have studied the power of brand value. What makes consumers willing to pay more for an iPhone than for other smartphones? How can Tiffany command thousands more for their diamonds than lesser-known jewelry companies?
Branding has been going on since businesses literally inscribed their company names into wooden crates and barrels with branding irons. A company’s established brand has a huge influence over how consumers perceive products, and how much they’re willing to shell out for them. Brand loyalty also affects how amenable customers are to changes in the product line, or to pricing increases.
Marketers typically refer to the creation of this coveted, high-end reputation as establishing “brand equity.” According to Investopedia, this “refers to a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable, and superior in quality and reliability.”
A strong brand can create many benefits for retailers, including:
Better margins – From Abercrombie to Waterford, retailers with premium brand equity can command higher prices than lower-tier competitors. For many consumers, brand names are a symbol of status or prestige. Shoppers are often willing to pay more to leverage the universal acceptance of a high-brow brand. Yet brand equity isn’t always status-related. Companies have built strong identities based on characteristics such as enduring quality, eco-friendliness, or charity alignment.
Enhanced customer loyalty – Brand equity impacts more than just how much people will pay for products. It also affects how amenable they are to changes in that product line, and how steadfast they are with their preferences. Take Coca Cola, for example. Consumers have a range of retail beverages to choose from, many of which are less expensive than the well-known product. Yet people remain loyal to Coke, making it one of only 16 U.S. companies that has consistently increased dividend payments to shareholders for the past 57 years straight.
Efficient marketing – A stronger brand becomes self-fulfilling. It helps companies market more expediently, allowing them to leverage a defined style that builds on existing impressions.
Through all this, the question remains: How does a retailer achieve this? How can a merchant elevate their brand? Some tips:
Define your target market –The first step toward a strong brand is identifying your desired position in the market. No company should try to be everything to everyone—it’s impossible, and is a quick route to failure. What do you do better than anyone else? What does your company stand for? These questions will help you define the brand’s position.
Focus on the customer experience –Brands aren’t tangible, they’re perception-based. A brand involves thoughts and emotions that are associated with a particular product or company. Keep that in mind when designing your customer experience. The images and words you select for your website and in-store ambiance, the quality of your merchandise, the demeanor of your sales reps, the quality of your customer support – all these contribute to the perception that ultimately becomes your brand.
Be a storyteller –Build a narrative around your business. Create a compelling story around how and why your company came to be, what you stand for, and what audience you address. Use those themes throughout your brand messaging.
Think beyond the sale itself –Every touchpoint, interaction, or engagement with your customer is an opportunity to brand-build. For instance, help shoppers early in the purchasing process, providing them with valuable information and guiding them toward choices that meet their needs. Similarly, always deliver outstanding customer support. Consumers understand that mistakes sometimes happen. The ability to find fast and effective resolutions through courteous support allows merchants to turn mistakes into branding opportunities.
Red Bull’s sponsorship of competitive athletes is a great example of thinking beyond the sale. These efforts infused fun, excitement, and high visibility into their campaigns. The strategy also clearly identified their target audience, connecting with young, active consumers on a more personal level.
Choose financing partners that keep your customers coming back – The right ecommerce financing partner can also help you increase brand loyalty and recurring revenue. Brick-and-mortar retailers, particularly larger ones like Target, Macy’s, and Nordstrom have leveraged this for many years by implementing private label credit cards. These cards encourage customers to return to stores to make regular purchases.
For online retailers, a new class of Buy Now Pay Later (BNPL) financing companies have emerged which provide more convenient ways for ecommerce customers to finance purchases. This helps build brand loyalty, particularly when the BNPL platform supports revolving credit, meaning that the customer applies once for a credit line which can be used again and again when returning to the website to make subsequent purchases. This delivers similar benefits (increased recurring revenue and brand loyalty) as brick-and-mortar store cards.
Although it requires creativity, strategy, and sustainable impression-building, the ability to establish brand equity is within reach of any company. This is especially true now that accessible tools like social media platforms make communicating directly with an audience more available and less costly.
Now that you’re armed with some brand-building knowledge, get out there and start enhancing your brand. It’s an essential way to increase margins, expand profits, and deepen customer relationships.