Last week, I wrote a post on quantifying the value your organization provides to stakeholders -- whether they are agents, members, customers, or whatever. This week, I'd like to expand on the concept a bit more. Brand Value, Mystified
A recent blogpost from the marketing world proposed some ideas on how to assign a financial value to a brand:
Brand valuation has been made possible by the following financial approaches – Activity Based Costing (ABC), Discounted Cash Flow (DCF), and Economic Value Added (EVA) and by several other more recent customer purchase tracking techniques, especially online.
The post goes on to mention Interbrand, Dr. Don Shultz of Agora, and BrandZ. The whole thing is somewhat interesting if you're a marketer. But it's likely to be useful to the average person mostly as a soporific for when Ambien isn't working for some reason.
Fact is, much of what these techniques try to do is to shroud the issue of brand value in enough pseudo-science that the findings appear authoritative. For example, here's what BrandZ says with respect to its methodology:
Intangible earnings? Loyalty Pyramid and Category Segmentation, but all of that is from some proprietary research? Brand earnings multiple? Voltage?
Meh. All of this may be valuable to some -- even to many -- marketers, but for the average real estate brand or organization, most of this will come across as mystical mumbo-jumbo.
Brand Value, Demystified
What all these complicated formulas are meant to do is really to answer a simple question: What's my brand worth?
But the answer to that depends on the context of the question.
To someone looking to buy your company, it's more of an indefinite future-value question, which brings all sorts of financial arcana into the picture.
To an agent trying to decide whether she should join your brokerage or not, it's more of an operational concept: are buyers and sellers more likely to do business with me if I have this brand or not?
To a consumer looking for real estate services, the brand value is whether the company that the brand represents does anything better than the companies who don't have that brand.
The fundamental, demystifying question is: Does it make a difference?
Logistics of Brand Value
To answer whether a brand makes a difference, you need to look at three factors:
- Likelihood -- Is the consumer more likely to buy your services simply because of your brand?
- Price -- Are you able to charge more because of your brand? Or, same thing but with slightly difference emphasis: Will the consumer pay more because of your brand?
- Repeat Business -- Will you get repeat business because of your brand?
Last week, I mentioned the importance of being able to quantify the value of your brand, the value of your organization in dollar terms: "Because of your association with us, you made $145,000 last year."
I add on to that the importance of measuring the logistical elements of value:
- People are 25% more likely to use us than our competitors.
- We charge an average of 5.2% commission rate, while our competitors can only charge 4.6% on average.
- 65% of our customers are former customers.
If you do not track this information now, you need to be thinking about how you're going to start. Because it isn't simply about "brand value" but about "organizational value". And in case you're wondering, yes, the whole issue of organizational value is quite a hot one right now.
Image Credit: Wikipedia