Five ways to build and maintain value
THE VITALITY QUOTIENT (vQ)
Just as there are many contributors to human wellbeing, there are multiple factors that go towards building a strong brand.
BrandZ analysis has identified five key attributes shared by strong, healthy and valuable brands that each reflect the extent to which a brand is delivering Meaningful Difference – a vital contributor to Brand Value.
Brands that score highly on all five aspects are the most successful: they are strong brands. Those that are low on all five aspects are “frail” and the least successful. Brands with a mix of high and low scores are “OK”.
These five key health indicators can be combined into a single score we call a brand’s Vitality Quotient, or its vQ. The average score of all brands is a vQ of 100. Those with a score over 110 – making them at least 10 percent above average – are those we say are strong overall.
Nurturing brand health makes good business sense. A strong vQ score means a brand is meaningfully different, and this can drive growth in brand value. In fact, brands with a high vQ score of 110 or above grow their brand value significantly more than those with a low vQ score:
Some of the best-known and most valuable brands are those with high vQ scores: successes like Google, Amazon and Apple.
The five component parts underpinning healthy brands and contributing to vQ are:
1. There’s a strong sense of brand purpose, so the brand is perceived to make people’s lives better
2. Brands must be innovative, which means they’re seen as either leading the way in their sector and/or shaking things up
3. They must also have strong communications, with creative, powerful and memorable advertising
4. They provide a great brand experience that meets consumers’ needs, and is available when and where consumers need it
5. Consumers come to love the brand, and that helps sustain the brand until the next innovation.
Strong brands are, on average, worth more
Brands can look at how they perform on the five individual indicators when they are seeking clues to improving their overall brand health. When one or more of the indicators is flagging, overall brand health can suffer.
Time to get a check-up
There is room even amongst the majority of brands in the US Top 100 to improve their vitality.
A reasonable 32 percent of the Top 100 Most Valuable Brands 2018 are classed as strong, but the vast majority are in “OK” territory. Among a broader pool of more than 2,234 US brands researched by BrandZ, only 9 percent performed well across all five health indicators and had a vQ score that put them in the strong zone. Most worryingly, 27 percent of all US brands failed their brand medical and are classed as being frail. This makes them highly vulnerable to being undermined by disruptor brands.
Brands with a high vQ are more strongly positioned for future value growth
A high vQ score benefits a brand in several ways. Brands with a high vQ have nearly three times the Brand Power, which is an indicator of their ability to drive sales. They are better positioned to be able to justify a premium to feel “worth it” to consumers.
Brand vitality does not come about by accident, nor is it determined by the category in which a brand operates. It is the result of a concerted focus on investing in the factors that contribute to better brand vitality, and being meaningfully different in the eyes of consumers.
The route to a stronger brand
Brand purpose is what a brand sets out to achieve, beyond making money. It is the way a brand makes people’s lives better – not just the practical, literal things that a product or service does for someone. Having a strong sense of purpose is increasingly important as consumers seek brands that don’t simply do a good job at a fair price, but also do something positive for the community or the environment, and, in particular, for themselves. Brands with purpose make consumers feel that they are getting the best.
Over 12 years, the brands in the US Top 100 with high scores for purpose have grown in value by 193 percent, while those with the lower scores have grown by 123 percent.
The brands shown here all are perceived to be positively making their users lives better. Pampers and Huggies literally improving the lives of the next generation; UPS and FedEx enabling 24/7 shopping habits alongside the powerhouse that is Amazon; whilst our connected lives are enabled and enhanced by the ever resourceful and innovative Facebook, Google and Apple brands.
Innovation is not just the preserve of technology brands. Any brand that is seen as doing something new, or setting trends for their category, will get talked about and tried. When a trial goes well, that can lead to a longer-term relationship and, ultimately love, which correlates strongly with innovation. Innovation can mean developing a product that does something different, providing an innovative service, or expanding into a new category. Crucially, any innovation by a brand needs to be recognised as such by consumers, otherwise it doesn’t count as innovation. Innovation creates a strong predisposition for sales, and the brands that have high innovation scores in the US Top 100 have risen in value by 253 percent in 12 years, compared to just 42 percent growth for the slowest innovators.
Innovation is the strongest growth driver of the vitality aspects (closely followed by brand experience). Disrupters such as Tesla, Netflix and Amazon are redefining their categories and inventing new ones. The other Top 10 innovators score well in terms of disruption but are more focussed on leadership which continues to differentiate them and underscore the relevance of their innovation.
Strong communication has two key elements to it, and neither one alone will be effective. At its most basic level, brands need to be doing sufficient advertising in the right places to be visible and recognisable to the people they’re trying to reach. But being vocal and announcing a brand’s presence is not enough on its own; brands also need something genuinely engaging to shout about. Brands therefore need to do great things, and then tell people they’re doing them. One without the other means wasted resources, but strong communication and share of voice put a brand at a clear advantage. Brands from the US Top 100 that have high communications scores have surged in brand value 191 percent over 12 years, while those that perform poorly on this measure have only grown by 55 percent.
The Top 10 communicators within the US Top 100 Most Valuable Brands are readily recognisable for what they stand for often backed up by visible communications that refresh the brand and continue to differentiate to maintain meaningfulness for today.
A brand not only has to deliver a great experience at every point of interaction, and help consumers at every step, it also has to remind consumers, through effective communications, that it is focused on doing this well. Experience starts long before a person considers buying a product, and lasts well beyond the moment of purchase, and even the moment of consumption. It includes every exposure to an ad, every experience on a brand’s website, and every minute they spend waiting for help at a counter or on the phone. Providing a great brand experience cements the relationship between consumers and brands. Those brands in the US Top 100 that deliver the strongest experiences have grown in brand value by 250 percent in 12 years. Those brands with low experience scores have only increased their value by 67 percent in that time.
Experience is the proof of meaningful difference built by a brand. And it is no accident that seven out of the ten above also rank in the top ten in vQ overall. Delivering and sustaining the brand promise creates the best defence against any newcomer.
Some of the most loved brands in the world are also the most innovative – brands like Facebook and Amazon, for instance. Love in this context is the emotional affinity of a brand, and it’s something that can’t be bought or manufactured. However, the conditions in which love can flourish can be created. If brands take the time and care to invest in promoting a higher purpose, innovating, and delivering a consistently great experience, then love tends to happen naturally. In the times between innovation, love is often what sustains the consumer relationship with a brand.
Among the most-loved brands in the US Top 100, brand value has risen an average of 236 percent over 12 years, while those with poor love scores are up just 49 percent.
Love is not just a nice to have. It is the deserved outcome of meeting consumer needs in the best way. The Top 10 US most loved brands are worth on average more than six times the bottom 10 ($91bn vs $14bn). It pays to be loved.
Stronger brands are younger
The Top 10 strongest US brands are on average 57 years old (started in 1961) whilst the Bottom 10 are 69 years old (1949). But older brands can be very strong (such as Disney - 95 years old, UPS – 111 years old, or Colgate – 212 years old). They need to reinvent themselves for the modern world and demanding consumer in ways that show they are meaningfully different.
But the momentum is with younger brands: