Customer Engagement and Loyalty: Two leading Indicators for Brand Equity.
By Laura Patterson is president and co-founder of VisionEdge Marketing, Inc.
Thursday, 14th May 2015

Every marketer is tasked with increasing engagement and consideration among current and prospective customers; 

So, we were not surprised to get the question 'Is there a way to link engagement to brand equity?' as a follow up to our CEO Refresher article on Measuring Customer Engagement.

Given a quick search on Amazon surfaces over 4,000 books on the topic, we decided to answer this question in our blog.

Our experience shows that Best In Class (BIC) marketers have learned to improve brand equity by improving two key contributing/leading indicator factors: customer loyalty and engagement.

This article walks you through the six steps to create a model that will enable you to improve your customer engagement and loyalty, ultimately improving your company’s brand equity.

The link between engagement and brand equity was explored in a study conducted by The Advertising Research Foundation (ARF). The specific purpose of the study was to understand the level of brand engagement that results from advertising and communications efforts and the impact of engagement on the brand’s equity. Both engagement and brand equity were defined in the study as follows:

  • Engagement: “the consequence of any marketing or communications effort (through any media touch point) which results in an increased level of ‘brand equity’ for the brand”.
  • Brand Equity: “the degree to which a brand is believed by the target audience to be able to meet or exceed consumer expectations they hold for the category in which the brand competes.”

The study found that the more engaged prospects and customers are, the more attention they will pay to your messages and the more highly they will consider your brand and be predisposed to purchase and/or use.  This, and other, research helped establish that emotional engagement and loyalty metrics are what we would call “leading indicators,” something that signals a future event or outcome.

A common example of a leading indicator is traffic lights: an amber traffic light indicates the coming of the red light. These two metrics, engagement and loyalty, indicate the pattern of how a customer will behave toward a brand " positively or negatively in some time frame down the road.

So, if you want to positively impact brand equity in the future, you need to positively impact engagement and loyalty NOW. By the way, the results suggest the reverse is also true. If engagement and loyalty decline NOW, over time brand equity will decrease.

If your company has a business outcome tied to brand equity, marketing can move the needle by improving engagement and loyalty. So, what do you need to do to build your model and put this construct into play?

  1. Know the current levels of customer engagement, loyalty and brand equity, ideally by customer segment.
  2. Analyze your current engagement and loyalty data and determine what marketing programs are impacting both of these.
  3. Understand the brand equity target, again ideally by customer segment.
  4. Establish how much engagement and loyalty need to change in order to achieve the equity target.
  5. Define what channels and touch points will best impact engagement and loyalty and establish performance targets for these.
  6. Document, implement and monitor your plan.

Many organizations rely on their brand equity to survive and thrive. If your organization is in a familiar position, and seeks to drive the Brand Equity Needle, it is important to remember that first you need to improve loyalty and engagement.

Laura Patterson is president and co-founder of VisionEdge Marketing, Inc., a recognized leader in enabling organizations to leverage data and analytics to facilitate marketing accountability. Laura’s newest book, Marketing Metrics in Action: Creating a Performance-Driven Marketing Organization (Racom: www.racombooks.com ), is a useful primer for improving marketing measurement and performance. Visit: www.visionedgemarketing.com     

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