Brand Value: What Is It and How Can You Measure It?

Certain aspects of business are easy to measure. At quarterly meetings and investor updates, executives can point to concrete items like personnel, new customers, revenue, and profits to illustrate the company’s progress and growth. Other things, like brand, are more slippery, but no less important. Brand value is difficult to measure, but that doesn’t mean it can’t be done. Indeed, it not only can be done – but it must also.

What Is Brand Value and Why Should You Measure It?

So why is it so important to measure brand value? Firstly, it can be an important part of an argument building a business case for branding. The idea of a brand is intangible and not directly connected to sales. Therefore, it can sometimes be difficult to convince other team members to invest in branding activities. When you can attach monetary values to your current and future brand, you start to speak their language. And that’s when it becomes easier to gain buy-in.

What’s more, brand value should be measurable. Business success relies on setting goals and tracking your progress toward them. You can only know if your brand investments are working – or worth it – if you’re measuring your brand value correctly.

So, this all begs the question: what, exactly, is brand value? The definition is, of course, part of the challenge, because the concept of ‘brand’ is nebulous. It’s a feeling, an impression, a reputation, a ‘vibe’. However, there are ways to define it in terms of specific, material elements. In this vein, brand value can be thought of as anything that consumers associate with your brand or that influences consumer behavior.

This can be your:

• Trademark, logo, and tagline

• Visual assets

• Marketing and advertising strategy

• Digital assets

• Customer retention

• Social media engagement levels

6 Methods to Measure Your Brand’s Value

Having a definition helps nail things down a bit. And because the definition of brand value can be fuzzy, the challenge of measurement is still a big one. What’s more, brand value will mean different things to different people in different contexts. This doesn’t mean that it’s useless to calculate your brand’s value. What it does mean is that there are several different possible approaches to measuring it. Your company should pick the one that makes the most sense for your identity, circumstances, and goals:

Cost-Based Valuation

This method calculates brand value based on how much it costs to build the brand. So, you’d add up all the expenses incurred in brand-building from the very beginning. Things like contracts with branding agencies, promotions, trademarks, salaries of employees who focus on brand, marketing, etc. This measurement gives a value based on what you put into your brand. It’s important to remember that it doesn’t necessarily reflect the current brand value in the public sphere. Based on the success of your branding investment, as well as other industry changes, your brand value could be higher or lower than this number.

Market-Based Valuation

This method looks estimates the value of your brand based on the current market climate. You can easily assess market-based valuation by looking at the sale price of similar brands. You can also look at valuation, stock performance, or ask leaders in other companies what they would pay for your brand. By gauging a variety of different market measures, you can land on a realistic estimated market value for your brand.

Income-Based Valuation

This method looks at the income generated by your brand currently. In other words, what money is your brand bringing in for the company? This takes some discernment, as you need to look at all the financial streams of your company. Then, you must assess which parts can be attributed directly to the reputation and awareness earned by your brand. While it’s tricky to land on a number, it’s a useful frame for understanding brand value.

Revenue Premium Valuation

In some ways, this method is a more specific form of income-based valuation. It compares your brand to non-branded alternatives to decide how much people will pay for a recognized brand. How can you get a clear and specific measure of brand value? By seeing if people pick your brand based on brand identity alone and extrapolating from there.

Customer-Based Valuation

This method involves assessing the number of current customers, predicting numbers of future customers, and assigning lifetime values to each. This lifetime value can be an average that encompasses the typical customer, or customers in different categories with different values. Customers are a good measure of brand value, as loyal customers stick with a brand they identify with and like.

Net Promoter Score (NPS) Valuation

“Net promoter score,” in essence, is a measure of how well your brand does at inspiring organic, word-of-mouth promotion. You can calculate it by asking customers how likely they are to recommend your brand to someone they know. You can calculate the score by subtracting the percentage of detractors from the percentage of promoters. Do you want someone to recommend a product or service to someone in their community? Well, they need to know, like, and trust the brand, so this is a great measure of brand value.

Selecting the Right Method for Your Brand

All of these methods have pros and cons. This is natural, given the intangible and subjective nature of a brand and its value. Regardless of what method you choose, the exercise of measuring your brand’s value will clearly illustrate its monetary impact on your company. Use it to inform your goal-setting and brand strategy going forward.

Explore the Branding Series:

Employer Branding: What Do Great Brands Do Differently?
How to Build Brand Trust Through Social Media
Brand ROI: What Is It and How Can You Measure It?
Is Brand Consistency Important?
Cognitive Dissonance in Branding: What Is it and Why Does it Matter?
Tame The Chaos of Constant Output to Achieve Better Outcomes

Are you looking to maximize the value of your brand? Lytho helps you streamline your entire workflow and harmonize all brand collateral under a single, uniform platform. Feel free to reach out to us by scheduling a demo and learning how our creative solutions can boost the effectiveness of your creative projects. We look forward to speaking with you!