The most common understanding of brand value is a percentage of financial value assigned to the brand’s name. It is an educated guess based on how much more a customer will pay to be associated with the brand.

Let’s move past the educated guess part and toward the trust factor associated with the brand.

Nike, BMW, Pampers, and Southwest Airlines all covet their brand value because it represents a repeatable and trusted experience associated with the brand. In essence, it’s the brand’s reputation.

What happens when the brand’s value starts to decline?

Take the Boeing 737 MAX for example.

The Boeing brand is taking a hit both financially and emotionally. In the first three months of this year, Boeing’s earnings fell 21% due to the grounding of the MAX. Boeing now says it cannot stand behind its earlier financial outlook and has ceased stock buy backs to preserve cash.

In addition, not only is Boeing feeling the financial effects from the global grounding of the MAX jet, emotionally the Boeing brand is suffering due to their customers’ loss of trust in the air-worthiness of their planes. – This loss of trust has also cost the airlines that are now allowing customers to change their reservations should they not want to take flights that would require flying in a 737 MAX.

This is what can happen to a mega-brand, so what can happen to a small manufacturing company brand?

When I speak with small business owners about building their brand value, their initial reaction is “why should I worry, much less invest, in this? We have long-term relationships with all of our customers, we know everyone in our market segment, and we deliver a quality product”.

To me, this is like knowing a blizzard is coming and not filling up your gas tank. There are always threats to the brand’s reputation, from an unforeseen mistake in production, to a price cut from a new competitor, to external forces beyond the owner’s control. Investing in brand marketing reinforces the brand’s value proposition and social standing, and is just as important as maintaining a positive balance sheet.

Premium pricing is the result of the customer’s perceived value of the brand. The perceived value is a subliminal emotion the customer derives from interaction with the brand. Beginning with the customer’s first experience with a brand’s representative, to the product packaging, to the instructions for use and the look and feel of the delivered product, all of these encounters reflect on the brand’s value.  Even shipping a box full of precision machined parts that falls apart in transit because the packing was substandard will affect the customer’s perception.

Brand value is an extremely important aspect of an ongoing business strategy and should be worthy of the owner’s attention and resources to support and protect it.