When growth stalls for a market leader it can be hard to diagnose the reasons because of what is commonly referred to as “halo effects”.  Halo effects are when you do a quantitative study (for example, brand equity research) and your market-leading brand has higher (sometimes 2-3X) attribute ratings across the board…on every attribute vs. competitors…so where is the problem?

Usually, the plan is to rescale the attribute ratings (like correspondence analysis would do) so you can see some high and low attribute indices to dig your teeth into.  So you think you’re making progress, but actually you might be moving further from the truth.  Why?  You just threw out the brand equity part of your attribute ratings!  That’s what the halo effect is.

Here’s a better way to gain insight into a market leader’s weaknesses.  Compare what your loyal buyers think of you vs. what your competitors’ loyal buyers think of those brands.  When you look at attribute ratings among loyal buyers it levels the playing field for analysis.  Market leaders should have a small advantage in this comparison but now you will see places where the smaller brands actually have higher ratings…those are the trouble spots.

This method has provided the analytic breakthrough for me numerous times.  In one case, when I was at a marketing consultancy, our client was a European market leader in telecom who was losing share and not one of the dozens of studies we reviewed told them why (they all reported the brand was strong which was inconsistent with its business trend).  We used the method I described and we uncovered weak spots that the client had never seen before.  In another case, our client was the number two brand in a food category in danger of slipping into third place.  While their attribute ratings were all higher than the number three brand OVERALL, the loyal user comparison revealed places where there were LOWER ratings among loyal users for the client vs. the brand that was fast gaining on them.  These provided new strategic focus for rejuvenating the client’s brand.

Here’s another reason to focus your analysis of attribute ratings and brand beliefs among loyal buyers; recently, Catalina marketing and the CMO Council proved you don’t have them in your hip pocket! After analyzing tens of millions of shopper patterns over time they found that 48% of loyal buyers do not stay loyal to that same brand from one year to the next. While this might seem to some like a shockingly high defection rate, I co-authored a paper in 1996 in the Journal of Advertising Research reporting something similar.  We also showed why.  Loyal buyers who felt that brand and ONLY that brand stood for certain key benefits were twice as likely to remain loyal. Those who were merely habituated accounted for most of the churn of high loyal buyers. Conversely, your competitors’ defectors who convert to your brand were 8 times more likely to think positive thoughts about your brand even when they weren’t buying you.

Think about the rise of store brands’ market shares where increasing numbers of shoppers are finding that store brands are “good enough”.

Think about a social media world where brands hope to be friended, fanned, and followed, this type of analysis becomes even MORE important.  What makes your brand special?  If it were a person, would your loyal buyers walk up to it in a party or some functionally unrelated brand that they might love more?

Many of you probably have not analyzed attribute ratings segmented by loyalty class but you might want to re-analyze the data you already have and see if this gets you past previous analytic roadblocks.

So, what DO your loyal buyers think?