A new book by Nick Wreden, FusionBranding: How to Forge Your Brand for the Future challenges conventional wisdom by proposing that brand equity doesn’t really matter. Customer equity does.
First emerging in the early ’90s, the concept of brand equity was developed to measure intangible assets such as reputation. Wreden suggests that brand equity is inaccurate and outdated — and that customer equity, the lifetime value of a customer, is the metric to match.
While that seems reasonable — companies need to make money — I wonder whether Wreden is shortchanging brand equity. But maybe it’s all shades of grey. Even if someone doesn’t ever buy a product or service, if she holds your organization in high esteem, that has value. The question is: Is that value greater or lesser than a customer who buys once — or rarely?