How Sustainability Builds Brand Value

How Sustainability Can Build More Brand Value

In an earlier article, we looked at how brand equity is tied to your company’s sustainability initiatives. Here we will take a deeper look at the rising importance of companies becoming more sustainable and how that can build your brand value.

Customers, investors and even potential employees are gauging their views of your company by your efforts to reduce emissions, increase diversity and hold yourself accountable for general social good.

As a society, we are becoming increasingly aware and concerned about the effects of our choices on the environment, as well as the problems that arise from emitting GHGs into our atmosphere. As more consumers realize the power they have in shaping what types of businesses thrive, they’re demanding that companies take responsibility for their impact on the planet. But before we tie the two together, let’s look at the importance of brand equity and its relation to brand value.

What is Brand Equity?

Brand equity is a term that was first introduced by marketing professionals in the 1980s and sometimes confused with brand value. It refers to the value of a brand name, which is based on how much consumers are willing to pay for a particular product or service. Brand equity can also be thought of as the difference between the market price and the cost to produce goods or services.

It refers to a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable, and superior in quality and reliability. Mass marketing campaigns also help to create brand equity. Higher brand equity commands a higher price, and leads us on the path to building higher brand value. Think of off-brands and how they compete – it’s almost always on price.

When a company has positive brand equity, customers willingly pay that higher price for its products, even though they could get the same thing from a competitor for less. Customers, in effect, pay a price premium to do business with a firm they know and admire. Because the company with brand equity does not incur a higher expense than its competitors to produce the product and bring it to market, the difference in price goes to their margin. The firm’s brand equity (what the consumer thinks) enables it to command higher brand value (the price that consumers are willing to pay), hence why it is so important.

The Importance of Brand Equity and Brand Value

Think of a few examples of widely known brands such as Apple, Google and Walmart. Each of these is a well-known brand, but it goes beyond just recognition and equity in the consumer’s minds. These brands stand for something, and that alignment with the customer is valuable – very valuable! For example, Apple’s brand value is estimated at $355 B. That’s not hard assets, or quantified purchase orders, or even real estate. That is solely the value of Apple’s brand name!

Since “Brand” is a significant asset to the company, it has the power to maintain their customer base, attract new customers, and increase sales. Successful brands cannot sit on their hands once they reach a significant point in the customers’ minds; they need to be protected for them to retain that value. This is why we see the most successful brands continue to promote, advertise and maintain awareness in the business arena.

Brand is value, brand is trust and in the business world, brand is everything.

Building Brand Value is Important for Your Organization Too

You may not be competing directly with Apple, but chances are there are many other competitors in your space. So, you don’t necessarily need to out-market Apple, but you should be evaluating your competition and looking for any area to elevate your business in your customer’s (and prospect’s) eyes. By aligning your products with expectations, offering exceptional customer service and giving your customers all the information they need to solve their problems (after all, solving customers’ problems is the reason you’re in business), you can build brand value to outpace the competition.

Brand equity can be built through various channels of advertising and marketing, word-of-mouth, etc. These are all good ways to create a strong brand, but we feel the differentiator is thought leadership. If you are the referent expert in a certain business area then you become the thought leader, and when customers bump up against challenges, they will look to you first to help them overcome them. Today, many businesses know they need to be more sustainable, but not all know how to achieve that. If you can offer a clear path to sustainability, it’s more likely your clientele will rely on your products/services and in turn become loyal customers.

Buyer Loyalty Towards Sustainable Brands

Customer loyalty is the key to the success of any business. For a brand to survive in the competitive market, it needs to establish strong customer loyalty. It is not only about providing excellent products and services but also about giving customers an experience that far exceeds their (rising) expectations. 

One key to developing customer loyalty is obviously by providing quality products and services. However, the buying decision is influenced by the customer’s perception of the product or service as well as their perception of you and your company as solution providers. The solutions may not always be in the form of a tangible product. Customers many times are looking for information, training, insights and a “leg-up” on their competition. This all adds up to the customer’s experience with your brand.

Where Sustainability Fits into Today’s Business

In the era of sustainability, it is important for every company to take responsibility for its own actions. Brands need to be aware of their social and environmental impacts and make sure that they are not harming the society in any way. According to Forbes, 90% of CEOs agree that sustainability will be vital to their company’s success.

In the same article they pose that 88% of business students believe environmental issues are paramount. However, it’s reported that less than 60% of companies actually have a sustainability strategy, and far less than that can report carbon neutrality. With figures like these, it’s easy to see why sustainability is such a hot topic, and why there is such an opportunity to help others on their sustainability journey

In order to foster a positive impact on society, companies need to think about whether their products and services are sustainable and whether they have an ethical supply chain. but how do you know if your supply chain is sustainable and/or if it is on the path to reduce CO2 emissions? It’s a tough question and it will require more cooperation between businesses to sort it out. Here lies the opportunity to not only be more sustainable, but to share that progress with your customer base. 

How to Build a Strong Brand Through Sustainability

Sustainability is the future of building brand value. The word “sustainable” has been tossed around a lot lately, but it can mean different things to different people. Some consider is energy transformation (renewables vs. fossil), or community involvement (sponsoring a youth league), and others feel it’s elimination of discrimination in the workplace. We believe it’s all the above and more. A great saying is simply – Do things right and do the right things!

Today, a company can be said to be sustainable if it meets these criteria:

  • It is profitable (Doing Well).
  • It creates a healthy environment for its workers, customers, communities, and it uses resources responsibly (Doing Good).

This all means conducting their business without harming the planet, society or individuals.

How do forward-looking companies achieve this? Well, first by creating a sustainability strategy. A good first action for many businesses is hiring a sustainability champion. Many times, this position is at the director level or higher. Most Fortune 500 companies now boast a Chief Sustainability Officer in their boardroom.

This position is focused on strategies such as:

  • Responsible Energy Use
  • Reduction of Waste and Waste Materials
  • Efficient Shipping and Transportation
  • Community Outreach
  • Diversity and Inclusion
  • Recycling and Resource Use
  • Materials Innovation

The idea of sustainability is often associated with environmentalism or corporate responsibility. However, sustainability goes beyond that and includes social responsibility. Many companies are now building sustainability into their mission statements and publicly reporting on things like ESG mandates/efforts.

What if you not only became a carbon neutral company, but along the way shared those values with your customers and in turn, helped them become more sustainable too?

It is important for businesses to be cognizant of the impact they have on society. If you are seeking to create a positive impact, consider these strategies.

1) Create a business plan with a clear vision of the company’s long-term sustainability goals

2) Organize operations to not only meet customer demands, but reduce your impact on the environment

3) Continuously improve operational efficiencies all along your value chains

4) Take care of your employees

Reports show that consumers are willing to pay more for products from companies they consider are doing social or societal good. That means the more sustainable your business is, the more customers are willing to buy from you, and that they are willing to pay more too. This is the essence of brand equity and brand value!

Thought Leadership and Sustainability

The quest for sustainability lies in leading the charge. You could find more efficient ways to use electricity, look to local supply chains, or seek out more natural materials. These are certainly steps in the right direction, however what if you didn’t just accomplish these things internally, but rather shared accomplishments with your customers. Wouldn’t that add value? Wouldn’t your customers find this helpful? Wouldn’t this position you as a sustainability thought leader?

As a default, if you become more sustainable as a company, your customers become more sustainable by purchasing your products and services. Why not market that advantage and why not position yourself against the competition accordingly? By being a thought leader, you will reinforce the power of your brand and add value to your company. You will build credibility, trust, and most likely establish a following of evangelists for you and your business. 

Think about the brands you place the highest value in. Do you trust them? Yes! Do you tell others about them? I would guess again, yes! Are their values aligned with yours? Certainly! Sustainability is rapidly becoming a fundamental aspect of business today, and if you can help your customers achieve it, you’ll both reap the rewards. 

Join us as we make a world out of hemp.

Heartland Team