The biggest challenge facing CMOs today: Building, measuring, and maintaining brand equity
Teradata recently had the pleasure of partnering with the Wharton Customer Analytics Initiative (WCAI) for the fifth year in a row, on an annual event in San Francisco titled, “It’s a Modern Marketing World: Creating a Frictionless Customer Experience.”
During our discussion, host Professor Eric Bradlow, faculty director of the WCAI, brought up a key point that struck a chord with me. “Marketing builds brands. Time kills brands.”
Bradlow’s statement is rooted in his research. From my perspective, it is also proven from experience. It is a stark reminder that brand equity, the commercial value that is derived from consumer or customer perception of the brand experience (rather than the product itself), is both dynamic and fluid. Regardless of industry, size or standing, building and maintaining a brand still remains the biggest challenge facing any CMO.
Measuring brand equity
The study of brand equity has long been of great interest to marketers, CFOs and CEOs. Strong brands are often associated with financial and marketing advantages including greater consumer loyalty, less vulnerability to competition, improved margins and less sensitivity to price changes. In fact, brand equity has been largely recognised as one of the most valuable assets of an organisation.
Bradlow’s research illustrated that a company with an excellent brand equity, has the power to charge a premium price for its products because of its brand. This direct link to pricing and consumer preference makes brand building, and understanding how brand equity impacts customer choice, a critical function of marketing that leads to better marketing strategies for businesses.
He went on to state that, at its most conceptual level, many marketers accept the broad definition of brand equity to be “the added value to the firm, the trade, or the customer with which a brand endows a product.” While this definition may be accepted as an industry standard, it has not been reflected in most analytical models concerning brand choice.
The old way of approaching brand equity from an analytics perspective was to simply state that strong brands are “more preferred.” Bradlow’s point is that modern thinking now shows there is more to brand equity than just favorability. This includes:
- Understanding how brand equity impacts customer choices
- Customer experience is the new brand
- Appreciating that strong brand equity leads to better marketing productivity
Ensuring that brand equity is being calculated accurately, using these factors, determines how much a company will invest in marketing. A data model which ignores these variables can lead to substantially different pricing decisions that can impact your bottom line.
When taking into account Bradlow’s assertion that brand equity is dynamic and changes over time, marketing executives must be thinking about ways this fluidity impacts their data models - a complex, but important task to ensuring your brand, and your business, stays relevant.
For the CMO, the challenge is not to wrestle with and compound these complexities, but rather to simplify and reduce them to deliver accurate and timely answers - insights that directly impact the health of the business. This is something we are helping our customers solve on a daily basis.
Making it personal
When I first joined Teradata a year ago in March 2018, we were a nearly 40-year-old brand with a rich heritage. Yet, for all the years spent building and nurturing brand equity, time seemed to play the biggest role in chipping away at the company’s perceived position in the market. We have always had great products, amazing employees and incredible global customers, but we needed to focus on restoring some of the brand equity that was lost, or eroded, over time.
We decided to simplify – to shift back to our core capabilities and double down on our purpose: helping the world’s most visionary companies find answers to their toughest challenges. We started with a transformation strategy (a multi-year effort) that was well on its way when I joined the company. The timing was right to support a repositioning and rebranding, which included “Voice of the Customer”-driven research into our vision, mission and purpose. Why did we matter? Why should our customers care?
In order to successfully reposition the company, we had to first bridge two brand gaps:
- Brand perception: We allowed time to erode our brand. While our strategy, offerings and company had changed, the market perception had not
- Brand awareness: We had not invested in brand equity for many years and the awareness of our brand had eroded
Understanding and quantifying our brand value in the market through data and analytics was a key component to this undertaking. We’ve operationalised as a marketing function what we preach as an organisation – leveraging data to solve our largest business problems and gain insights that give us a competitive edge.
Why is customer experience the most important investment a brand can make?
Now that we have completed the initial work of repositioning, rebranding and rebuilding brand equity around the new Teradata, our challenge is to maintain and build upon the initial work we’ve already done. But this work is just table stakes – today 89% of companies compete primarily on the basis of customer experience, compared to just 36% in 2010. While 80% of companies believe they deliver “super customer experiences,” only 8% of customers agree.
Everything a brand does – the way it markets, conducts research and communicates, in both physical and digital environments – plays a role in shaping the customer’s experience.
Focusing on customer experience may be the single most important investment a brand can make in today’s competitive business climate and will be the building blocks and focus of our brand strategy moving forward.
The positive feedback we are hearing from our customers leads us to believe we are on the right track. However, we need to remain steadfast in our commitment to be insightful, forward-looking stewards of Teradata brand and. more importantly, customer experience.
While there were many answers gleaned from our discussion at Wharton, the key takeaways for me centre around how brand equity is built by marketing, eroded by time and that customer experience is the new brand.
Moreover, data and the massively important role it plays in building brand equity and maximising customer experience is keenly important - particularly as marketers strive to become “Sentient Marketers.” This means leveraging data to sense and respond intelligently to customers. In short, our vision for customer engagement and experience is powered by data, scaled with automation and personalised at scale.
Find out more about Digital Marketing World Forum (#DMWF) Europe, London, North America, and Singapore.
- » Staying competitive in tomorrow’s retail space: Seven technologies for 2020 and beyond
- » The CMO’s blurred lines: Power without influence means innovation is needed to secure value
- » Key areas of focus for retail advertisers in 2020: Cross-channel strategies and delivery models
- » The Domino’s effect: New personalised advertising campaign sees tenfold return
- » How web accessibility will improve your eCommerce website’s performance