Who Gives a Hoot About Brand Loyalty?
March 24th, 2015 | Tony Altilia, Partner, Maxim Partners Inc.
Brand loyalty is dying and, some would argue, on its last breath.
The fundamental reason CMOs and their legions of marketers exist is to create brand loyalty, but this in and of itself is becoming an irrelevant and dated concept.
Increasingly, especially in Canada, it appears marketers are becoming devoid of brand zealots, who define and passionately champion and protect their brands.
This is partly attributed to the repatriation of packaged goods marketing to America. At one time Canadian offices of American multi-nationals recruited and trained brand managers to champion their brands in Canada.
Often these folks rose through the ranks and ultimately led their companies and all its brands. Marketers led. But as brand marketing moved south of the border fewer marketers were recruited and fewer were trained in brand stewardship. Increasingly, Canadian companies are being led by people who grew up in finance or operations but not marketing.
No wonder some claim brand loyalty is on the wane.
Brand loyalty has historically been key to fueling shareholder value. It works this way: A great brand makes a promise and keeps it. Consumers then reward the brand for keeping that promise by choosing it over other brands more often than not. They are on their way to becoming brand loyal customers, but brand loyalty has to be measured beyond purchase frequency alone.
True brand-loyal consumers have an emotional connection to their brands. They have an affinity for them. They choose them over others. When unavailable, they search for their brands rather than substitute them with others. As brand loyalty intensifies, marketers raise price, improve margins and the share price heads north.
But this is old and dated thinking. The concept of brand loyalty is waning. As long ago as 2005 the Ivey Business Journal featured an article by Jean-Noël Kapferer, who wrote:
To say that brand loyalty is in decline today is, at the very least, an understatement. A common, unequivocal conclusion emerges from almost all research. Consumers are more versatile and less loyal than they have ever been.
There is much evidence to suggest brand loyalty is waning:
- Deloitte’s annual American Pantry Study shows close to 9 in 10 consumers are choosing private-label or store brands over national brands.
- Mindshare’s latest “Culture Vulture” report shows that the majority of brands are seeing their relationships with consumers weakening.
The ultimate goal of brand loyalty can’t be abandoned. The need to add shareholder value isn’t going to go away any time soon.
But marketers must abandon the old concept of brand loyalty and begin thinking in a new way.
Consumers are increasingly promiscuous in their brand and media choices. They can access and interact with a myriad brands through a myriad channels in ways never before imagined. The constant explosion of media fragmentation is one of a CMO’s biggest challenges.
Long gone are the days of simple one way marketing communication. Marketing monologues are being replaced by multiple dialogues across multiple platforms, often on a one-to-one basis.
Adding shareholder value in this environment will not be achieved through the single-minded pursuit of increasing purchase frequency or moving consumers up a brand’s loyalty ladder.
Rather it will be achieved by an on-going affirmation that consumers have made the right choice in their brand selection.
A CMO’s goal will increasingly be to build brand trust by eliminating any dissonance its customers experience. CMOs must continually affirm their customers’ experiences at every point along the path to purchase, whether the purchase is made at a bricks and mortar location or via a digital interaction.
Brand loyalty must be replaced with new thinking.
Brand loyalty must be replaced with brand affirmation.
Brand affirmation goes beyond brand loyalty.
Brand affirmation leapfrogs brand loyalty.
Brand affirmation facilitates and encourages on-going dialogue with customers.
Affirming a consumer’s decision at every contact point along the path to purchase makes a customer feel smarter for having made the right brand choice.
Affirming a consumer’s decision at every contact point along the path to purchase makes a customer feel welcomed, valued and appreciated.
Affirming a consumer’s decision at every contact point is the only avenue to being truly a customer-centric enterprise.
Brand affirmation will annihilate purchase dissonance.
Are there any companies who have embarked down the road to affirmation? Some have.
Sephora has done so by:
- Recognizing that the store is still the most critical channel, and uses digital to support the store.
- Identifying mobile’s ability to merge the online and offline experiences and has built its digital strategy from that foundation.
- Using digital to reinforce its “see, try, buy” philosophy of beauty retail.
- Utilizing knowledge of the customer journey to understand where, when and how shoppers require support to make and affirm their purchase decisions.
- Understanding how customers use devices and integrates this knowledge into their digital strategies.
Canada needs more brand zealots. Brave champions who are trained in the art and science of championing brands.
These folks must forget about pursuing the old way of thinking about trying to build brand loyalty. Rather they should focus their efforts on brand affirmation. Their customers will love them for it and so will their shareholders.
Tony Altilia is a partner in Maxim Partners Inc., a Canadian boutique brand consultancy, and is a former President of DDB Canada. He is also author of the book I Wish Someone Had Told Me That. Follow Tony on twitter @tony2altilia.