Brand equity or sales equity. Which do you need?

    On: February 09 Author: Tom Cates Categories: sales equity No Comments


    In mature markets, it is extremely difficult - if not impossible - to get your buyers to perceive excess product equity, and thus no one will pay a premium for the product equity alone, even with a successful customer experience. There are just too many businesses offering largely comparable products, at the same price. As a result, most mature industries (likely yours) settle into a pattern of heavy price-based competition, "hand-to-hand combat" between sellers fighting for buyers, resulting in relatively low market returns.

    Likewise, companies spend billions of dollars establishing their brand. Brand equity represents a buyer's "gut feeling" about a product, service, or organization. The brand is an implied promise, a substitute for perfect information, shorthand for decision making. Having a well-known and respected brand can increase the buyer's perception of value and will often drive growth.

    Along the continuum of the customer journey map, when you break down buyer perceptions into value, 3 main sources stand out - brand equity, sales equity and product equity:

    • Brand Equity: The tangible and intangible value a buyer receives from his perception of the brand offering the product or service.
    • Sales Equity: The tangible and intangible value a buyer receives from his perception of the relationship he has with his sales and account service teams.
    • Product Equity: The tangible and intangible value a buyer receives from his perception of the product/service "asset".




    However, relying on brand equity (like relying on product equity) too often does not lead to profitable growth:

    • Cost to maintain a brand is daunting
    • Competitors can fight back with lower cost unbranded offers
    • There are too many strong brands, particularly in B2B
    • It's difficult to measure and hence manage

    When your growth is based on brand equity the cost to maintain your position can become exhausting. And while the top brands fight each other for brand equity in an advertising arms race, there are constant incursions at the bottom from comparable generics/no-names that can compete by offering greater product equity thanks to their lower price.

    What about building brand equity in the B2B space? In B2B, relying on brand equity becomes even more difficult to argue because there are already too many strong brands. Even when brand equity is strategically important, it is equally difficult to measure and hence manage. Many marketing practitioners have developed methodologies to estimate its effectiveness, yet translating these metrics into business results (customer retention, expansion, and acquisition) is highly suspect.

    Sales Equity: A Measure of Buyer Motivation to Invest in a Relationship

    Let’s face it: building and maintaining a business relationship is hard. It takes work on your part, and it takes work on the part of the other party. Both of you must be motivated to invest in the relationship – not simply be satisfied with it – or the relationship eventually drifts apart. Your client relationships are dynamic, and there are forces constantly trying to pull them apart. Life goes on, new relationships are formed, and old relationships are weakened.  A relationship is a fluid process. It is always ebbing, flowing, and evolving. It is based upon our association of another person’s behaviors to our past experiences; it is based on perceptions, not reason and logic.

    Building sales equity is difficult, complex work. Consequently, you need a practical system of scientifically valid approaches and tools if you want to deepen your client relationships and drive revenue growth for your organization.

    When the buyer perceives the value trifecta of productbrand, and sales equity then the perception is there is lots of value and sharing the wealth with you isn’t a hardship, in fact, you've earned it. 

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