Among the major challenges marketers face in the year ahead will be creating and retaining a loyal customer group. It is a challenge because of the difficulty of brand building in an era with fast-changing media, much under audience control, and because e-commerce and digital communication make it difficult to integrate messages and deliver on-brand customer experiences.
How to Build a Loyal Customer Base
How do you create, manage and leverage a loyal customer base in this environment? To empirically address that question we leveraged the database associated with Prophet’s Relentless Relevance 2015 study in which 400 brands from 29 categories were assessed on more than 20 measures of brand relevance. The goal was to determine what drives two loyalty levels: the satisfied and the committed.
The satisfied are those who buy regularly, often out of habit, because they are satisfied with the brand’s performance over a long time period. They perceive the brand to be familiar, dependable with consistently good experiences and easy to buy. The brand has become a comfortable habit and there is no reason to change. For some low-involvement products, the satisfied are the core loyalty group.
The committed have a more intense, involved relationship to the brand. They are more likely to have an emotional attachment, to receive self-expressive benefits and to have a use experience that goes beyond merely functional benefits. They are also more likely to be brand supporters, even telling others about the brand and its use experience. For some high-involvement products, a brand should aspire to have a committed group.
How do these groups differ with respect to what drives their formation and nurtures them over time? From the Prophet study, indicators of the two loyalty types and five potential drivers of loyalty were identified. The extent to which each of these five indicators impacted (explained variation in) the two levels of loyalty were explored statistically.
The “satisfied” group was represented by the phrase, “one of my favorite brands,” which reflects satisfaction and a lack of motivation to change to another brand. The “committed” group was represented by the phrase, “I can’t imagine living without,” which suggests there is a functional or emotional attachment that is so intense that the absence of the brand would be upsetting.
5 Drivers of Brand Loyalty
There are five variables that have been uncovered to be potential drivers of brand loyalty; several have multiple indicators that are combined. These variables are:
Dependable: described as “always deliver to expectations,” “I can depend on,” “I trust” and “consistent experiences”
Better: described as “better than others,” and “only brand that does what it does”
Social media: described as “has interesting and engaging content online”
Light emotional connection (LEC): described as “makes me happy”
Heavy emotional connection (HEC): described as “connects with me emotionally,” “makes me feel inspired” and “has a purpose I believe in”
Satisfied Brand Users
Consider the satisfied model. The “dependable” variable has more than three and a half times the explanatory impact as does the “better” variable. This confirms the hypothesis that satisfied loyalists are driven by habit, familiarity, comfort and satisfaction, and being better is not as important as delivering the brand promise. They are instead going to stick to the brand as long as it delivers. Controlling for “dependable” and “better” (perceived superiority), the “light emotional connection” variable has a meaningful role, about equal to that of the “better” variable, while the “heavy emotional connection” variable has zero impact. Finally, the “social media” variable, as expected, was not a driver, essentially zero.
The satisfied group included brands that do not engender much passion or emotional connection. Of the top 50 brands of the Relentless Relevance 2015 database, 15 were classic brand names that largely delivered functional benefits and were extremely high on the dependability measure. Leading the way with positions in the top 25 were Betty Crocker, Band-Aid, Clorox, KitchenAid and Folgers. All were extremely high on the “dependable” and trust dimensions as well. That reinforces the hypothesis that delivering to expectations may not be glamorous, but it can drive a brand’s ability to create and keep a loyal segment, which can be the basis of a healthy long-term business. There’s also likely some emotional benefit linked to the nostalgia of growing up with these brands. They become part of the fabric of people’s lives.
Committed Brand Users
Next consider the committed model. The “better” variable has a large impact, about equal to that of the “dependable” variable. The “heavy emotional connection” variable has an explanatory power equal to the “better” variable and more than twice that of the “light emotional connection” variable. Finally, the “social media” variable is now more of a player, albeit smaller than the other variables.
The committed customer group is necessary if you want to be a leader in more involving categories. This is the group that can deliver social buzz and net promoter scores. And it can defend you when you have an unfavorable incident. But to create and nurture this group, it is clear that brands must get beyond “dependable” to “better” and get beyond happy to deliver a meaningful emotional feeling that connects and inspires. The top brands on the committed scale such as Apple, Microsoft, Netflix and Chick-fil-A, also score high on the emotional connection, inspiring and having a purpose. Apple, in fact, is in the top two on each of these dimensions. They are clearly more than functional, high-use brands that deliver satisfaction. Social media also became relevant. The committed will likely include people that are influencers on social media, and they have an impact far beyond their number.
The strength of the “dependable” dimension to explain the committed status of a brand is noteworthy. Many of the top brands on the committed scale such as Apple, Netflix and Microsoft ranked extremely high on dependability and ease of use. Amazon, added to the study in 2016, was also extremely high in the committed and dependability measures. The ability of these high-tech, innovative brands to deliver an astonishing level of performance on the dependability dimensions is a crucial and largely unrecognized element of their brand strength. In general, they deliver on their brand promise without frustration or disappointment.
Patrick Barwise and Sean Meehan argue in their book, Simply Better, that success is determined by simply delivering basic category benefits better than others. Even for complex products or in high-tech settings, it is not just about strategy and innovation, it is about execution, consistently making customers satisfied.
Loyalty is not a simple concept; it has levels. How to develop and leverage a loyalty asset very much depends on whether you are after the satisfied or committed group or both, but in either case, the brand does need to deliver the basics.
This blog was originally published on ama.org.