Marketing and Research Consulting for a Brave New World
Subscribe via RSS

Are marketers misunderstanding the true nature of brand loyalty?

Even when consumers prefer your brand, that is, buy your brand more often than they buy any of your competitors, your share of wallet (sometimes called share of requirements) might not be much more than 50% (based on modeling and research results from hundreds of brands I have analyzed).

In brand equity modeling or choice experiments, we researchers are so focused on accurately estimating a consumer’s probability of purchase and choice outcome that we never stop to ask a troubling question:

Why don’t consumers buy the brand they prefer (nearly) all the time?

Are consumers switching for a hot deal?  Is that it?  Are purchases and preferences need-state dependent? Are people essentially indifferent towards a few brands on a short list? The truth is we don’t really know because we don’t focus on this question.

However, from a marketing point of view, this is a really important question; could there be any lower hanging fruit than raising your share of purchases among those who already prefer your brand? What are the levers that marketers can pull to pluck this low hanging fruit?

One clue comes from R&D I spearheaded into customer retention while at the NPD Group in the 90s.  By interviewing the same respondents over two years, we found that brands only retained on average, about half of their loyal consumers from one year to the next.  However, there was a subset of loyal consumers for whom the brand had a strong attitudinal advantage; those loyal consumers were retained at a much higher rate.

So how does a marketer enhance beliefs that its brand, and ONLY ITS BRAND, stands out on benefits that are important to a given loyal consumer?  I believe a new and important answer in a digital, social, and mobile age is to build the largest possible “brand audience”, defined as consumers who have joined your brand in some way…liking it on Facebook, following it on Twitter, signing up for e-mails on the brand website, downloading a branded app, etc. This creates a two way communication channel from kitchen to store and all points in between.  It allows the marketer to flip the loyalty equation and demonstrate their loyalty to the consumer with offers, personalization, and listening to their wants and needs. How does the marketer “listen”? You can see what followers of your brand on Twitter are tweeting about regarding your brand and on other subjects.  Every update on Facebook is a conversation.  Your update in your fans’ newsfeeds is a question you ask of your audience and the rates of “people talking about” (likes, sharing, comments) are their answer as to whether this was interesting to them. Research communities of your consumers offer another way you can gain insight into what would delight them and what they think of your brand as its offers and messaging evolve. And finally, don’t forget to show some love.  Give those in your brand audience gifts such as promotional offers, inside information about upcoming events, and the gift of being heard.

Marketing researchers need to keep a constant eye on three important brand metrics; retention (keeping a customer loyal over time), purchase conversion (the percent of purchases you win from loyal consumers), and the size of the brand audience.

In this day and age, brands are not just products and services, they are media too, amassing their own audiences.  We need to not only monitor brand health, we need to monitor the media health of a brand as well and relate the two.

Tags: , , , , , , , , ,


3 Responses to “Why don’t consumers always buy their preferred brand?”

  1. Mark Truss

    Other considerations of loyalty include the category dynamics and heaviness of category use. In confection, we learned that the most loyal buyers – those for whom one brand satisfies nearly 100% of their Share or Requirements, tended to be the lightest category buyers – buying once a year (often Halloween), and often buying the same brand. The heavy category buyers, those really engaged in confection, tended to be the least loyal to any one particular brand – they used many brands to satisfy their needs for diversity in the category. And while their loyalty to any one brand was low, they were very profitable for many barnds. So one brand’s best customers were also a competitor’s brands best customers. Sometimes it’s not just loyalty that matters, rather how much that customer is worth to me. In confection at least, this would argue for line extensions, portfolio management, speial limited offering products, etc. in an attempt to keep your portfolio in the heavy users’ consideration set.
    Nice topic.

  2. I think the admin of this site is genuinely working hard in support of his site, as here every material is quality based material.