IS BRAND LOYALTY PASSĂ‰ IN THE DIGITAL AGE? I would define a brand as the realisation of a consumer expectation of the gratification of a functional, social, or emotional need; the consumer having arrived at this expectation through experience or evangelism. The success of a brand rests on its ability to propagate itself in the target market, at a rate greater than the growth of the need it addresses or at the expense of its competitors: and the measures of this success are market-share and profitability. In mature product categories and markets, such success is built on the loyalty the brand inspires among its customers and among potential consumers. In the tech world, think Apple, and you visualize the passion its products inspire among both its customers and consumers in general; which translates to consistently high sales of premium-priced products. Another product category that inspires passionate followings is automobiles, where loyalty may not necessarily be founded on the basis of the user experience of the product, but rather on the userâ€™s perception of the product: the Tifosi for Ferrari, the Alfisti for Alfa Romeo, etc. Sports clubs, too, generate a great deal of brand loyalty, which translates to TV rights, merchandise sales, and ticket sales: Barcelona, Manchester United, and Real Madrid have been very successful in building worldwide fan followings.
Figure 1: Brand Loyalty
There has been talk, recently, that brand loyalty is down-trending among consumers. Here are statistics from some recent studies, carried out abroad, that have investigated the phenomenon: In a survey of 1,000 adults about their shopping behavior, Analytic Partners, found out that 48% of those aged between 18-44 were of the view that any loyalty felt towards brands would depend on the experiences the brands created for these users. In a study conducted by Ernst & Young, covering 25,000 individuals across 34 markets around the world, brand loyalty was cited as a determining factor in making a purchasing decision, by less than 40% of those surveyed. For the USA specifically, this figure stood at 25%.
In the US retail space, Deloitteâ€™s annual American Pantry Study, revealed that close to nine in ten consumers are choosing private-label or store brands over national brands. It is difficult to tell whether the drop in brand loyalty is a trend or a blip, and whether the drop in loyalty is on account of the effects of the global recession (remember that most of these studies have focused on Western economies) or on account of a fundamental shift in consumer behavior as a result of the move to the online universe. Does the easy availability of product information, product pricing, and user reviews, thanks to the Internet, create an environment where consumers (mainly young) are less likely to base purchase decisions on the intangibles of a brand? Or, has the drop in disposable incomes (mainly among the young), courtesy the recession, fostered a search for value, over branding? Whatever the reasons, brand-owners, today, have to be prepared to battle for consumer mind-share and wallet-share, constantly. So, how does a brand-owner leverage the online universe to build and sustain brand loyalty: without having to rely on transitory, (online or offline) advertising-fueled purchase surges? Product Differentiation A significant component of the perceived value of a brand rests in its functionality and in its feature-set. Me-too products rarely engender strong brand loyalty, unless the me-too feature-set is delivered at a unique price-point. Brand managers should necessarily tap the online universe for user feedback, product reviews, and consumer insights, in real-time. This information, delivered through a sentiment analysis platform, can be used to assist in framing product roadmaps, pricing decisions, and formulating brand communications. Real-time Discounts and Promos A mobile shopping survey conducted in the US, last year, and sponsored by AisleBuyer, revealed that nearly 75% of consumers would switch brands if offered real-time discounts and promotions on their smartphones, while they were shopping in a grocery/drug store. If loyalty cannot be built, it certainly can be bought. Brand-owners should build the capability to deliver relevant discounts and promos to potential customers at the right time in the purchase cycle. These are best delivered through the mobile platform, and brand owners should have well-defined mobile and tablet marketing strategies for their brands. Communications Strategy Brand loyalty can be nurtured through a communications strategy that tells customers and consumers a story about the brand in different ways. The beauty of digital marketing is that it allows such a story to be told episodically, with consumers having the ability to go back to previous episodes instantaneously, across different media formats (text, video, audio, multimedia, gaming) and different digital platforms (social media, blogs, microsites,) in a seamless manner.
Content marketing, cross-channel content management, and campaign management capabilities are a must for a band-owner looking to exploit the always-on, multimedia features of the Internet. Customer Touch Brand loyalty built much by word-of-mouth and garnished by marketing communications. A dissatisfied customer, today, is going to be heard farther and faster than ever before. It is therefore imperative that a brand-owner always monitors brand chatter. Dissatisfaction may be by way of unfulfilled expectations, a sign that the brand communications promises more than the brand can deliver; or by way of degraded functionality or non-functionality, a sign of potential product issues. As in the case of Product Differentiation, brand managers should tap the online universe for user feedback, product reviews, and consumer insights, in real-time. This information, delivered through the sentiment analysis platform, can be used to resolve problems, refine or amend brand communications, and rebuild or reinforce customer relationship. Brand loyalty has undergone a change, from the days preceding social networking. It isnâ€™t that consumers are no longer loyal to a brand anymore: it is just that the unequal relationship between the brand and the consumer, who was constrained with respect to information and choices, is now more equal. Brand-owners can take nothing for granted, in this digital age, because todayâ€™s brand evangelist could easily be tomorrowâ€™s brand skeptic.