As a culture, as producers, and as marketers, we have created an environment that has commoditized nearly all of our brands and categories to a point where we have devalued brand loyalty.
We can ask ourselves, how did we get here? For the past few years, we blamed economic conditions for consumer shopping and buying behaviors. The truth is, we have so over-saturated product variations and created such a constant rotation of sales and discounts that consumers are led to the troth based on price and little else.
All things being equal, consumers can understand why a product is relevant to them. But for the majority of categories, they buy based on what they are willing to pay for an item, rather than on the value of the experience associated with that brand.
The fact of the matter is, unless the products are consumables, many consumers visit retailers for the showroom effect. They go to the store to get the look and feel of the item/product/brand they want to buy, but more often than not they aren’t buying on that occasion because they know they can either search online for a lower price or wait for a sale or special discount.
We have entered a new phase that requires us to redefine and revisit how we establish and build loyalty. The purchase path is no longer a funnel, but rather a constantly rotating infinity loop. Consumers are weaving in and out of the process, continually looking for better bargains and deals, while still including the brand as part of their evaluation process. This not only affects our communications and marketing strategy, but also how we evaluate and gain brand loyalty.
While shopping dynamics have changed, we continue to determine brand loyalty and future brand success by relying heavily on the past. The tools we use to gauge and measure the success of a brand and brand loyalty is based on research into historic consumer behavior.
We look into shopping occasions and frequency relative to a particular brand or category. We segment shoppers based on their habits or beliefs. Even though our intentions are good, we often end up disregarding the research because the insights are too ambiguous to act on, failing to provide enough differentiation between consumers, or clues as to why they are choosing our brand.
When we think about what creates loyalty, we tend to think in conventional terms, starting with loyalty programs. For decades now, airlines have locked in passengers with frequent flier programs and today the retailer without a loyalty scheme of some kind is the exception, not the rule.
With the rise of Big Data, such programs are becoming more robust and tailored to consumer wants, needs and motivations. But they inherently offer external rewards that pay us for our loyalty as opposed to earning it with an experiential, emotional bond. Then there’s the loyalty program’s evil twin, otherwise known as the mobile phone contract, where loyalty is a prison, with a chance of parole only every two years.
True loyalty, however, is the kind of loyalty that is rooted in the brand experience itself, like the sort of loyalty Pixar enjoys. While we typically wouldn’t think of a movie company as a brand that has built strong loyalty, Pixar embodies both the innovation and brand experience that drives the strongest ties to brand loyalty today.
Costco has also designed a strong experience that has generated tremendous brand loyalty, largely due to the unexpected delight delivered to each shopping occasion. Costco has created an environment filled with discovery and fun with an interesting and wide range of items, and has won over customers with a generous return policy and a friendly, accessible, and well-trained staff.
For both Pixar and Costco, price is neither a barrier nor a consideration because, again, it’s about the quality and experience. Both of these brands have built strong brand perceptions among their consumers. Their focus on brand perceptions further differentiates them from the competition and therefore reduces their need to compete on price.
The Pixar and Costco kind of loyalty is essential for any successful brand today not only because it creates a bond between the brand and the consumer, but even more important because it nourishes the consumer’s network of family and friends. As we all know, people will share their brand experiences, the good and the bad, across communities both terrestrial and digital.
In a world of constant connectivity and communications, brand loyalty is defined by consumer-speak and not by key measures. The Word of Mouth Marketing Association has indicated that the typical American mentions specific brand names 60 times per week in online and offline conversations. Additionally, 54 percent of consumers say that hearing what people are saying about a product is a driving force in their purchase decisions.
What consumers tell their “network” about you is worth more than the paper on which your packaging is printed. Brand loyalty is no longer defined by the claims you make, but instead by the associations consumers make beyond what your advertising says. The measures we employ should be more predictive, future-focused, and incorporate the power of the social network.
This rapidly unfolding reality is only growing stronger over time, and opens up a world of new avenues to brand loyalty. At the recent PMA Digital Shopper Marketing Summit in beautiful, downtown Stamford, Connecticut, trend-tracker Piers Fawkes of PSFK outlined two broad and closely related trends, both of which hold significant implications for the future of building and sustaining brand loyalty.
Piers termed the first of these trends, “the new brand champion,” and it concerns the potential to harness the power of a brand’s most ardent loyalists and expand its network of followers. He cited a range of mostly-online examples, such as Mulu.me, a site that lets consumers create their own online store of favorite products and earn commissions on sales. He also spoke about Needle.com, which taps into a brand’s existing fans, trains them to sell the products they love, and then connects them via online live chat to offer product recommendations to their fellow consumers.
This type of peer-to-peer retail experience may seem exotic now, but it’s not hard to see how it could become the norm very soon. Without question, it can be a catalyst for building brand loyalty.
The other trend Piers called “retail on-demand,” and it’s about tailoring the shopping experience on an individual basis. His examples included a Neiman Marcus app that applies personal data on its shoppers to create a personal shopping experience. This starts online with fashion recommendations based on established personal preferences, and ends in-store with a personal shopping assistant at the ready with a range of options based on those preferences.
Other examples included MotoMethod, a do-it-yourself motorcycle repair shop, and Glimpse, which uses Facebook “likes” to create custom catalogs. Lenbrook America offers an audio pop-up retail experience that gives consumers one-to-one guidance on high-end audio gear. Sayduck uses augmented reality to show consumers how pieces of furniture would look in their home.
It is easy to dismiss some of these ventures as gimmicks — and some of them might be. But all of them speak to our newly networked marketplace, and no marketer can afford to ignore this. So much of what passes as “social media” marketing today does indeed seem squishy, unlikely and faddish. But these two trends are very real, and go right to the heart of what it now takes to build a circle of trust for your brand.
Even more important, as I wrote in the last issue of The Hub (Emerging Behavior, September/October 2012), we can create data-driven representations of shopper interactions at every level of today’s omni-channel marketplace, pinpoint where the experience is good, bad or indifferent, and re-calibrate as needed at each and every touchpoint.
Loyalty cannot be created in a vacuum; it is now a networked event that can be improved, measured, and, based on those measures, improved again and again.