For a little while, the folks at BrandPerspectives.com had a great little blog on Branding. They haven’t posted to it in a very long time, but some of the stuff they did post there is still up and well worth a look, so go check it out.
One of their last topics dealt with Developing a Culture of Brand Performance Accountability (which… was actually the title of their post. Ahem.)
Here’s the meat of the post:
“Just as with financial performance, measurement is critical to
improvement for brand initiatives. Creating a culture of measurement-driven
brand assessments will help executives better understand how to derive the
greatest return from their investments. (…)Simple steps based on increasing your understanding of your
customers, and their interactions with your brand, can be implemented through
ongoing research.
For instance, the ability to quantify gaps in organizational alignment
behind your brand, or discontinuity in the customer experience (including
metrics such as loyalty, drivers of satisfaction, service levels, etc.) by
segment, region or product, can – and do – have profound impact at the executive
level.”
There you have it. Too few companies focus on assessing where their brands stand… And it’s obvious which companies do it, and which companies don’t. For the first batch, think Starbucks, Whole Foods, Target, Apple and Virgin, for starters. In the other batch… well… throw-in the companies you’ve never heard of.
There is, however, one thing that struck me about the post. In its original version, it mentions (customer) loyalty twice. Hmmm… Loyalty… That tricky little word.
There seem to be two schools of thought in regards to customer loyalty, these days: The first believes in it. The second thinks it’s dead. Both sides have very smart and insightful things to say on the subject. But… who’s right?
Is there such a thing as brand loyalty anymore?
The answer is yes. Absolutely. Think sports teams. Think Ford vs. Chevy. Think Playstation vs. X-Box. Think Apple vs. Microsoft.
Think dog people vs. cat people.
Think Republicans vs. Democrats.
Yeah, brand loyalty is alive and well. But unless you have two superbrands battling it out and inviting you to take sides, forget it. There’s no such thing. It doesn’t exist.
Without the element of archetypal supercompetition, without a corporate nemesis, brand loyalty is simply irrelevant.
Here’s a simple example: Most people love Google… Most of the searches that lead people to this blog come from Google. But because Google doesn’t have an arch-nemesis, no one is driven to be loyal to it. People simply use it. Loyalty isn’t an issue.
What you might mistake for brand loyalty is a lot more likely to be about customers’ habits, penchant for convenience, and comfort.
Remember that customers are people. People like patterns.
Once customers find something they like, something they can incorporate in their routine, that’s exactly what they do. Even I, Mr. Agent Of Change, Mr. Try Something New, shop at the same stores regularly. I read the same blogs. Return to the same TV shows every week. Hang out with the same friends. I even like to get gas from the same places.
You get the drift.
We’re humans. Ergo, we are creatures of habit.
Here’s how it works: You have your routine. One day, your routine gets disturbed. You alter it and try something new. (The store was out of your usual brand of olive oil and this forces you to buy another brand. Your favorite airline doesn’t have any flights available, so you have to book with another one.)
Outcome A: You like the new brand better and adopt it.
Outcome B: You don’t like the new brand better and return to your usual one next time around.
In other words, it takes a significant event for us to CHANGE our habits.
It takes a catalyst.
That catalyst could be a glowing recommendation from someone we trust. It could be a really cool ad. It could be the result of an unexpected shortage in the original product. It could be an accidental discovery. It could be the influence of a cultural phenomenon.
Check out the wheel of brand interaction. What it shows is a complex but repetitive pattern of purchasing behavior. The slinky-like spiral is a brand exposure/interaction pattern we go through either daily or weekly. Some brands are closer to our comfort zone (and lifestyle) than others. (Some brands, we have only superficial contact with, while others we have regular contact with.)
Occasionally, a catalyst will force one of the tentacles of slinky-like spiral pattern to either shift, or reach out a little further than normal.
Marketers spend most of their time focusing on designing some of these catalysts: Think POP displays. Advertising. Package design. PR. Promotions. Coupons. “Branding”. “Co-branding”. Licensing. Sponsorships. Establishing a presence at trade shows and special events… or just across the street from your office. Sampling. Buzz marketing. Giveaways. Swag. New product features. New product styling. New technology. Special edition releases. You get the idea.
It’s kind of a three-tiered cycle:
Phase 1: Building the brand’s contextual foundation – The idea is that exposure to brands will make us more likely to incorporate them into our routine. Familiarity, after all, breeds trust and comfort. (As in “oh yeah, I’ve never tried it, but I know that brand.”)
Phase 2: Triggering the change in purchasing habits – Give people a reason to try your product, and make it easy to do so. (Note: Some companies purposely bypass Phase 1 and focus their energy on impulse buyers.)
Phase 3: Cross your fingers and hope the product is as good as you claim it is. You only get once chance to make a good impression. The best marketing in the world won’t save you if your product isn’t everything it’s cracked up to be. Read ground zero brand-building to know what I mean.
People buy what they know, like and trust. They also tend to crave what they think will make their lives better. (That could be a red BMW convertible or a chrome-plated iPod or a new pair of Rudy Project sunglasses.) More often than not, purchasing habits are based on perceptions, expectations and experience, not loyalty.
Put simply, we tend to buy what we know only until we find something we like better. Brand loyalty is really brand comfort.
So the question you have to ask yourself is this: What are you doing to make your customers not want to consider switching over to other brands?
(Or if you’re trying to attract new customers, what are you doing to make your competitors’ customers want to consider switching to you?)
Does your brand evoke the same level of excitement and customer comfort as Target, Starbucks, Apple, Whole Foods and Virgin?
If not, why not?
Gosh Olivier, this one is good!
I believe consumers are much more oriented by the right side of the brain. Therefore, they make most of their decisions through intuition. This applies particularly to purchase decisions. Of course, the mixture of logic and intuition varies by category, but it is safe to say that most companies would be smart to use more emotional elements such as design, storytelling etc… That’s the key to build strong brands in the minds and hearts of consumers and all the others stakeholders.
Consumers 2.0 are like kangaroos. They jump from choice to choice quickly, easily and without much regret. In addition, they change their behavior just as easily.
Big challenge to build a ‘sexy’ brand today. Glad i’ve found some guys that are up to the challenge!
Cheers
Gabriel Rossi- Brazil
Because information is so readily available today (thank you internets, but mostly, thank you SEARCH) finding alternatives to brands, products and merchants for a specific category makes that hopping around much easier. Ten years ago, even if ten companies made the same product as company ABC, six of them did it better, and three of those offered it cheaper, chances are that nobody knew about it. The larger the company, the more media exposure it could afford to buy, and the less likely it was to ever be displaced by a new entrant in the category.
Access to information about competition (brands, quality, features, price and availability) has changed the game.
If you don’t have something pretty compelling to sell – something unique, better, faster, stronger, cooler, smarter, etc. – then you are just another “also in.”
People will line up around the block to buy the first iPhone or MacBook. This flies in the face of convenience, price sensitivity, and typical brands-as-a-commodity behavior.
When you can get people to line up in the rain to buy your product, when they gladly let you put them on a 6-month waiting list for a table or a car or an appointment, you know you have a strong brand.
When, in sharp contrast, people shop for the cheapest alternative to what you have to offer, your brand has just about hit rock bottom.
Great comment, as always.
The timing for this is impeccable (looked that word up
)considering our project coming up Monday. The difference between comfort and loyalty is indeed profound, but there are instances where the comfort creates the loyalty. When comfort is centered around personal relationships as opposed to convenience and familiarity, finding a way to create dissonance is paramount.
As I type this, I am going to make a sway slightly towards the whole debate that got us introduced to each other: Can a person be a brand? I can’t say “no” 100% of the time, because when the brand loyalty is created by personal comfort and relationships (ergo – the product is the relationship, not the services or goods), the person is indeed the brand.
I dare say disrupting this “brand loyalty” may be one of the most challenging – and rewarding – of all paradigm-shift marketing…
John,
I think all people are brands. It’s kinda unavoidable because we own ideas inside people’s mind. People have gut feelings about our style, reputation, character, personality…
When we leave the room, others will talk about us.
Cheers
Gabriel Rossi- Brazil
Brilliant post Olivier.
Okay, now that I’ve recovered from Tom’s comment (I’m VERY psyched to see you comment here, Tom,) let me address Jon’s admission: I told you!!! Before it’s all said and done, you’ll believe in the personal brand idea. Heck, your comment shows you’ve made that transition.
If Ronald Reagan can be a brand, then so can John Smith the attorney or Todd Jones the web designer.
I completely agree that comfort can in time lead to real loyalty.
Interesting article Olivier – you’re quite right to say that brand loyalty is less about the emotional side (as demonstrated by an either/or decision for Coke & Pepsi / Apple & Microsoft) and more about the “auto-pilot” that people operate in – picking the same brand or store because they know it and trust it.
Brand Comfort is a good term for this – Brand Inertia is another term I’d use. It would be wrong however to mix Brand Loyalty with Loyalty Programmes. The former is a measure of share of wallet (or shelf), the latter is a pro-active attempt to protect and grow customer assets.
I’ve been involved in many brand loyalty programmes and know from personal experience that these can increase existing customer engagement (purchasing more & interacting more).
In your three tiered cycle its important that phase 2 ties in closely to phase 1. We call this Acquisition for Retention whereby all acquisition efforts are focused on recruiting the “right” kind of customers for a brand, not just any customer. Phase 3 is obviously important – your product has got to be at least as good as your competitors.
However I’d suggest a Phase 4 -Retention – this is about continually giving customers a reason to purchase – offsetting those threats presented by a “catalyst”. This is a Brand Loyalty Programme.
I am leaning evermore (said the raven) towards agreeing with you Olivier – to an extent
Arrogance can lead to an individual brand, but the general public would still (IMHO) consider the individual a personality, not a brand…
ANYHOW!
Keep thinking on the commitment/loyalty vein. That’s where we need to be focusing to hit the target …
Very thought-provoking post and comments. I think most of your points are right on.
In addition to a brand’s product, I’d add that a company’s people and story can make customers consider switching, and more likely, consider staying.
Obviously, it helps to have all three and I think the product can do it on its own. But the latter two are nothing to sneeze at. In fact, they’re a way companies can differentiate themselves and why all brands that don’t join online conversations to offer assistance or share their perspective are missing out big time.
One more thought…People definitely are brands. They’ve got their own personal brands and they represent the brands. Consider all the stories you hear about a company. They involve people, right? Or they’re something you heard from an employee, customer. WOM is a powerful tool and the stories people tell me has always had a significant impact on whether I consider switching.
Look forward to future posts.
Look at all these awesome comments! Thank you.
Mark, yeah, I agree with you about customer retention. I would be careful not to limit customer retention to “loyalty programs,” which can often be more about incentives (discounts, special offers) than actual value-based loyalty.
The reason I say this is that I see many companies/brands launching “loyalty programs” and fall flat on their faces. In most cases (not all, but most,) loyalty programs actual erode brands by creating a special discount expectation AND interrupting the regular rhythm of transactions. (I really want that pair of shoes now, but I’d better wait until the next offer.)
In other words, brands really need to rethink their loyalty programs. From miles to points to whatever, the formula tends to be a bit ineffective.
Justin, great point about bringing people and stories into the equation. Absolutely. Sprint’s decision to have their CEO become their spokesman in their TV ads, use a conversational tone, and put it all in a familiar, human context is a great version of that idea. (There are many other ways of doing it, but I really like that one.)
Jon seems to agree with the personality thing too, so I’m just going to shut up and nod. And smirk a little bit. (As Borat would say, SUCCESS!!!)
Thanks for the comments.
In our research at Brookeside, customer loyalty is driven by relationships.
In the world of consumer commodity products, like Apple vs. Microsoft, we would argue that where loyalty exists, it is being driven by the relationship between the brand and the consumer – the purchase of brand X some how makes the consumer proud by way of association.
In the case of business to business services, like financial services product, we would tell you that where loyalty exists, it is being driven by the sales agent creating a real and lasting relationship, not unlike a friendship, with the purchasing agent(s).
The most interesting aspect of the b-to-b relationships (to me anyway) was the importance of the variable “so and so makes me proud to do business with them” in our research findings. It was surprisingly similar to the consumer brand loyalty influences we see “buying xyz makes me proud.”
Far from being “dead” I think customer loyalty is more important than ever in helping companies keep afloat in these interesting financial times. Afterall, the cross industry average of 74% customer retention means that on average most companies have to sell 35% more business each year just to hit a 10% growth target. Imagine if you had a 90% retention rate, that same effort would lead to 25% more sales year over year.
Not focusing on customer loyalty costs most firms a great deal of money year over year.
That is a great comment, Alex. And to some extent, I agree. I myself am deeply loyal to certain brands because I happen to have a relationship with a person there. Hincapie Sportswear is a personal example. I know the people there. I’ve known Rich Hincapie for years, in fact. And they happen to be based in Greenville, where I am, so they’re kind of like the home team when it comes to cycling apparel.
Could I get really good (maybe even better) cycling clothing from Assos, Specialized, Nike or Descente? Maybe, but I remain loyal to Hincapie Sportswear because of that relationship.
So in that context, I absolutely agree.
BUT – If that relationship were to sour or disappear (change of leadership, change of attitude, change of venue), brand loyalty would cease to exist, and preference would take over.
Now let’s transpose that “relationship” to most brands out there: What kind of relationship do you have with the people who work for your favorite brand of toothpaste? Or your favorite brand of running shoes? See what I mean?
So… Yes, relationships can create real loyalty in B2B and B2C models. No doubt. It’s just difficult to scale, I suppose. This may be why so many small companies are so much better at what they do than very large ones.
Fantastic point. Thank you so much for making it.
At ICCDS, we are a company that focuses on the customer’s experience with both brands and retailers. In order to build customer loyalty, the brand and retailer must understand the “needs” and “desired” outcome from buying.
We do a ton of research on purchasing behavior patterns, shopper insight, brand loyalty, etc, and you are dead on the money – it’s all about the “relationship”.
Successful brands and retailers will foster a “relationship” with a consumer. A relationship built and fostered on trust.
Next year, we’re going to try to plant the Hincapie Sportswear brand somewhere between Heineken and Charmin…ha ha.
I was thinking more between Yves St. Laurent, Perrier and Porsche.
Loyalty is created and supported through the emotional attachment a customer has for a particular brand. Logic and intellect can make them think about its utility or functionality but emotion makes them purchase and purchase and purchase.
Thanks Olivier, for also re-validating the distinction between organic loyalty programs which work and frequency schemes which do not.