If someone were to ask you what is Coca-Cola Co.’s single biggest asset, and you say it’s the company’s brand, you’d be correct. Coca-Cola’s brand is worth $58.5 billion, more than the company’s $41.9 billion revenue for all of 2016, according to Forbes’ list of 100 companies with the world’s most valuable brands. In fact, 33 of those 100 companies have brands that are worth more than their annual revenue in 2016.
But what is brand equity? And why can something so intangible be worth billions of dollars?
David Aaker, a professor emeritus of the University of California at Berkeley’s Haas School of Business whose early research frames much of today’s thinking about the topic, defines brand equity as having four dimensions: loyalty, perceived quality, awareness and associations. In other words, strong brand equity inspires customer loyalty, puts your company on customers’ short-lists of go-to vendors, attracts employees, and brings to mind positive attributes.
Brand equity is worth building because it can bring repeat business and new customers, improve the value of the company, and generate higher profits if a company can leverage its brand to command a price premium. Kellogg’s, for example, can charge higher prices for its breakfast cereals than nearly identical but generic versions because of its brand.
“In areas where there’s a lot of competition, such as transportation, you want people to consider you and, ultimately, pick you,” said Denise Lee Yohn, consultant and author of the book What Great Brands Do. “You want your brand to stand out in ways other than price, because price is not a sustainable differentiator. There will always be someone who can undercut you.”
For transportation companies, there are two ways to build brand equity: good products and good practices.
A brand is like a bank account. Good products and practices let you make deposits into your account and grow your brand.”
On-time delivery and courteous drivers are two examples of good product and practice. There’s also a third driver of brand equity, one that’s gaining momentum across multiple sectors—good safety practices. Let’s say you are about to choose between to taxi cabs, both of equal year, make and model. The first cab has multiple dents and scrapes. The second has none. It’s likely you’d choose the one without the dings, because it suggests that its driver cares more about safety and is less collision-prone. Each ding is a withdrawal in the brand bank account. An undamaged car, on the other hand, confers a halo of safety that increases the value of the cab’s “brand account.”
As with real bank accounts, it’s possible to go into the red with brand equity. Fatal accidents that land the company’s vehicle in the news can push its brand equity deep into the red. For Domino’s Pizza, safety ultimately outweighed the fast-delivery guarantee that drove the brand’s success in its early years. In 1993, Domino’s suspended its 30-minute delivery guarantee to encourage safer driving.
Today, it almost goes without saying that the ability to safely get products and people to their destinations is a valuable brand attribute. Grand Island Express takes it to another level, going so far as to put its Compliance, Safety, Accountability (CSA) score on the homepage of its website. The Nebraska company’s emphasis on safety is among the reasons the company has been selected several years in a row for the list of the country’s top 20 Best Fleets to Drive For by the Truckload Carriers Association and CarriersEdge.
Safety, expressed as the CSA score, is increasingly a factor when customers weigh multiple proposals for a big job. Think about a CSA score like a consumer credit score, but for safety instead of creditworthiness. Having a consistently good CSA score is akin to making a big deposit into your brand account.
Of course, safety is more than just a score. When considering who they will do business with, “customers are looking across the entire company and expecting them to have integrity across the board,” Yohn said. That means, if a company makes a stand on safety, it needs to demonstrate how it lives and breathes that core brand value as part of its culture and day-to-day practices.