What Is the Customer-Based Brand Equity Model? (With Benefits)

Updated June 24, 2022

While many companies focus their marketing efforts on attracting new customers, retaining current customers is also important. The customer-based brand equity model helps businesses improve how customers perceive their products or services, which increases brand loyalty. If you work in marketing, then you may benefit from learning about this popular brand-building strategy. In this article, we explain what the customer-based brand equity model is, explore the four levels of the Keller Brand Equity Model and list some of the ways you can benefit from using this marketing approach.

What is the customer-based brand equity model?

The customer-based brand equity model is a set of marketing guidelines professionals use to build popular brands. It helps marketers connect with their audience, increase profit margins, develop brand loyalty and improve brand equity. Brand equity refers to how much name recognition a specific brand has with the general public. Well-known brands have high brand equity, whereas lesser-known brands have low brand equity. For example, an established national restaurant chain likely has high brand equity because a lot of people are familiar with it, while a local pizza restaurant that just opened this year may have low brand equity.

Marketers who use the customer-based brand equity model strive to create positive experiences around a brand to encourage customer recommendations and generate more brand awareness. To accomplish this, the customer-based brand equity model focuses on five key elements:

Value: This refers to how much value customers place on a specific brand, product or service and influences how much they're willing to pay for it.
Performance: The customer-based brand equity model explores whether a service or product meets the customers' performance expectations.
Trust: This element assesses whether customers consider the brand trustworthy and feel safe making purchases from them.
Social image: The customer-based brand equity model also analyzes how customers perceive the brand's social and online image.
Commitment: Finally, the customer-based brand equity model assesses how committed customers are to a brand and whether they're likely to make repeat purchases in the future.

Related: What Is Brand Equity?

4 levels of the Keller Brand Equity Model

The Keller Brand Equity Model is a popular version of the customer-based brand equity model that professionals have been using since the late 1990s. This method focuses on identifying how people feel about a specific product or service and using this information to improve the customer experience. Here are the four levels of the Keller Brand Equity Model and some tips to help you implement each phase of this strategy in your marketing campaigns:

1. Brand identity

Before a marketer can improve the brand equity of a company, product or service, they need to have a good understanding of its brand identity. At this level of the Keller Brand Equity Model, marketers strive to define who the brand they're representing is and what makes it unique. During this stage, marketers often conduct in-depth research on brand salience. Sometimes called brand awareness, brand salience refers to how customers perceive a brand, product or service.

Review what customers are saying about the brand you represent online and research your competitors to learn about brand salience. Then use this information to carefully craft the right brand image. This can provide you with a strong foundation to create powerful marketing strategies and messages that resonate with your target audience. Some of the questions you can ask to assess brand salience and develop a well-rounded brand identity include:

What do customers think of when they hear the company, product or service's name?
What makes this company, product or service different from its competitors?
What specific customer needs does this company, product or service meet?
How can customers benefit from choosing this company, product or service over another company, product or service?

2. Brand meaning

Once you define the identity of the brand you represent, you can develop its brand meaning. While the first level of the Keller Brand Equity Model focuses on who a brand is, the second level focuses on what it is and how the brand makes customers feel. Marketers typically split this level into two parts to focus on both rational and emotional responses to a brand. These two parts are:

Performance: This focuses on the rational and practical responses customers have to a specific brand. Some of the areas marketers may analyze include brand reliability, ease of purchase and customer service.
Imagery: The imagery part focuses on whether a brand appeals to customers on an emotional level. Some of the areas marketers may analyze include logos and visual elements, messaging and social media presence.

Carefully analyze whether the brand you represent meets your customer's expectations. Read reviews thoroughly to identify whether there are any areas you can improve. Then look for opportunities to exceed customer expectations. For example, you might send loyal customers small gifts or discount codes in the mail for their birthdays. You can also assess the brand's online presence during this stage to ensure it feels cohesive and portrays the company, product or service accurately.

3. Brand response

In the third level of the Keller Brand Equity Model, marketers strive to understand their customers better by trying to identify how they feel about the brand and developing a response plan. This level also consists of two parts that address both the rational and emotional reactions customers have to a brand. These two parts are:

Judgments: Customers evaluate brands every time they see or interact with them, whether it is online or in a store. Some of the areas marketers may analyze when trying to determine how customers judge a brand include whether customers believe it is high-quality if it meets the customers' needs and how it compares to competitor brands.
Feelings: How a brand makes customers feel has a strong impact on whether they make a purchase. Marketers may consider whether customers feel positive when purchasing a specific product or service and analyze how they can use this emotional reaction to increase sales.

To understand your customers, analyze feedback from them and identify opportunities to improve the brand so it meets or exceeds the judgments people already have. If customers believe the brand is reputable and associate positive feelings with it, look for opportunities to solidify these reactions and turn your customers into loyal brand advocates. This may involve responding to comments and messages on social media or offering rewards for top customers.

4. Brand relationships

The last level of the Keller Brand Equity Model focuses on building long-term relationships between a brand and its customers. During this stage, marketers analyze brand resonance, which is a measure of how in sync customers feel they are with the brand. Customers with a high brand resonance are advocates for the brand. They're happy to leave positive reviews, recommend the product or service to their friends and continue making purchases in the future.

These customers wouldn't even consider making a purchase from one of your competitors. They may even be active members in social media groups or VIP clubs centered around the brand you represent. If you work with a brand that's reached this point, it's important to do everything you can to keep your brand advocates happy and engaged. Some techniques marketers often use to nurture relationships with their customers include:

Member-only discounts
Industry-specific events
Exclusive rewards programs
Free gifts or upgrades for top buyers

4 benefits of using a customer-based brand equity model

Here are four benefits of using a customer-based brand equity model:

1. Increased customers

Using a customer-based brand equity model can help you ensure each experience customers have with your brand is positive, which can generate more recommendations and reviews. Having high brand equity also improves the likelihood that potential customers may hear about your products or services. Since people tend to trust companies they've heard about over companies they haven't, this level of brand recognition can lead to a steady increase in customers.

2. Improved brand loyalty

Marketers who use a customer-based brand equity model focus on providing value to their customers with each interaction they have. This helps them create positive customer experiences and build long-lasting relationships. The more you nurture your customer relationships by using the model, the more likely they may be to make repeat purchases.

3. Increased revenue

Using the customer-based brand equity model can help you build a popular and reputable brand, which may allow you to charge customers a premium price for products and services. By increasing brand loyalty, you also increase the lifetime value of each customer. In addition to this, customers are more likely to offer positive reviews and recommendations, which can attract new customers and increase revenue.

4. Decreased costs

As the number of loyal customers and advocates a brand increases, so does the amount of organic social media posts about the company, product or service. Customers may use their personal social media profiles to share their positive experiences with the brand on a variety of digital platforms, which helps increase brand awareness. Many companies see an increase in engagement and a decrease in their advertising costs as their customers start to promote their brand for free.

What Is the Customer-Based Brand Equity Model? (With Benefits)