THERE IS NO SUCH THING AS BRAND LOYALTY

Brand loyalty is now hard earned. But brand loyalty still exists and it still pays.

For years marketers have obsessed about brand loyalty. They yearn for millions of consumers to buy their brands, only their brands and always their brands. During the 1990s and the early 2000s, the desire for such devotion to their brands made marketers talk in almost religious tones about the adoration in which they wanted their brands to be held. There were whole books exploring this phenomenon, such as Patrick Hanlon’s Primal Branding: Create zealots for your brand, your company and your future. We have written elsewhere in this book about the quest for ‘fandom’, for a sense of almost tribal belonging, a shared sense of identity with the brand that brand owners seek. There are a few books about that too, such as Tribal Marketing, Tribal Branding: An expert guide to the co-creation process by Brendan Richardson.

Why brands want you to be loyal

The economics of brand loyalty are simple and compelling, which is why marketers search for it. Loyal customers who repeatedly buy your products or services are more profitable than new customers because they no longer have any costs of acquisition associated with them. Furthermore they will do your marketing work for you, recommending or advocating and even sometimes ensuring that other people buy or try your brand. A study by Bain and Company published in the Harvard Business Review found that by increasing customer retention rates by 5%, profits could be increased by between 25% and a staggering 95%.

However, in recent years doubts have been cast over the concept of brand loyalty and whether it exists any more. The argument goes that as more and more sectors and segments face greater competition and more commoditization, so pricing drops and factors such as ease and convenience become more important. So how important is brand other than as a simple badge to help you find a product or service?

In addition some brands – such as Amazon, Facebook, Google or YouTube – are virtual monopolies. What is the direct competitor to any of those? So how can there be any meaningful brand loyalty in those categories?

Did brand loyalty ever exist?

Moreover, some brand loyalty is not loyalty but a form of bribery. The loyalty schemes and club cards to which brands want you to sign up use the language of loyalty but the mechanics and principles of rewards. If you buy from us, you’ll get discounts or points you can use to buy more from us. That is not really loyalty, is it?

And some loyalty is not loyalty: it’s a trap. Banks, telecommunications firms, leasing arrangements with carmakers often tie you into them through contracts. Or they make it so difficult to switch that inertia takes over and you stay with them while regularly berating the standard of their service.

Judging by the amount of switching that is now occurring in those sectors, as government regulators have become even more champions for consumers and insist that companies make it easier to leave them, there’s little love toward the brands in evidence.

But there is plenty of evidence that brand loyalty still exists. Moreover this loyalty is genuine loyalty, customers who are really fans of the brand, so much so that they will play a disproportionate role in the development of that brand.

However, that brand loyalty is hard to achieve, probably harder than ever because it requires an enterprise-wide focus on delivering a consistent brand image and experience.

Evidence of the enduring phenomenon of brand loyalty can be found in the use of and results of the Net Promoter Score (NPS). This has become a favourite metric of many organizations to help them predict the levels of security of demand from their customers and also to identify and adjust elements of the brand experience that need fixing.

NPS is a very simple metric that can also be collected simply; those are among the reasons why many companies favour it. Essentially it asks customers to rank on a scale of 1 to 10 or 1 to 5 how satisfied they are with the brand overall or with a specific experience of that brand. By adding up the numbers of people scoring highly (9 or 10, say) and then subtracting those scores which are low (6 and under for example), you arrive at a net score which indicates how prepared generally consumers are to promote you or recommend you to someone else. That is seen as a good proxy for brand loyalty. Repeatedly, research indicates that only people who are scoring you 9 or 10 out of 10 or 4 or 5 out of 5 are genuinely consumers or customers who are so happy with you that they would not leave you and would probably buy more from you. Anything less than that and that customer or consumer is not loyal and is indeed at risk of leaving you for a more attractive proposition.

The popularity of the NPS has become such that unfortunately it is being overused to the point of counter productivity. You may well, as we have, become frustrated by the number of emails or texts you receive asking you to rate how satisfied you were with almost every interaction you have had with a company, often within seconds of having it. The true value of NPS, in our opinion, is in understanding how people think about your brand in its totality, rather than at every single touch point. By bombarding people persistently with desperate requests to ‘rate my service’ you risk irritating them or, worse, you may get skewed results and also a much less happy customer.

Nevertheless, NPS is a good indication of which brands have loyal customers. In the banking industry, for example, First Direct bank has a consistently high NPS which correlates to other evidence that shows people love and are loyal to that bank, including the number of times that they actually recommend the bank. It is reported that First Direct customers recommend the bank to someone else once every fifteen seconds.

We’re still loyal to brands we truly like

Other evidence of brand loyalty is the Meaningful Brands Index. This is a survey conducted by Havas, an international media group, every two years. It asks over 300,000 consumers around the world to rank the brands that they use according to how important they are to them. They have regularly found that consumers have no real loyalty to around 75% of the brands they buy. If those brands were unavailable for any reason or no longer existed, consumers would happily find an alternative. But there are brands which are very important to consumers. These are brands with whom they have such an affinity, a sense of shared or common values, that they are almost indispensable to them in their lives. These are the brands Havas calls the ‘meaningful’ ones. In the most recent survey, Havas discovered that these meaningful brands produced strong economic benefits to their owners. They outperformed on marketing key performance indicators (KPIs) such as showing a ninefold increase in share of wallet. The businesses that owned them also outperformed the stock market indices by around 206 per cent. The important conclusion that Havas regularly makes in its Meaningful Brands survey is that consumers will have a strong affinity and a desire to repurchase a brand, which does more than provide simple convenience and ease or other kinds of transactional functions. They want an ongoing interaction with a brand that does something special for them and for the world in which they live. These are brands with purpose. Apple, Lego, Harley-Davison and Patagonia are such brands.

Brand loyalty, then, may be harder to achieve now but once earned it is more ‘sticky’. Brand loyalty now also manifests itself in different ways than in the past.

Previously, consumers would demonstrate their loyalty by publicly wearing the brand badge as well as with their repeated purchases. There are still people who will wear a brand with pride, including Harley-Davison owners who will happily tattoo the Harley-Davidson logo on to their skin. But more interestingly, loyal customers also want to become involved in the development, improvement and communication of their favourite brands.

Loyal customers now co-create with brand owners

One example of this is Lego and its influential group Adult Friends of Lego, which originally stemmed from a couple of enthusiasts on the internet forming the Lego Users group in 1997. These were adults who were passionate users of the brand. Eventually Lego gave these people the name Adult Friends of Lego or AFOLs. Lego began to tap in to the insights and experiences of these consumers, using basic channels such as email. They discovered that many of these adults were professionals who could give very specific advice on how to make the Lego toys as relevant or true to life as possible. They were, for example, doctors, ambulance workers, fire workers, pilots, even architects. The user group evolved and with the advent of social media and the expansion of digital technology it became an even more popular and creative community. So valuable were they in both product development and brand advocacy that Lego made them Ambassadors and created the Lego Ambassadors programme for them. Listening and working with them, the company understood that its brand was not restricted only to real bricks but could be taken into digital design and moreover across a range of constructive play media, including films. It was in fact the Adult Friends of Lego and the Lego Ambassadors Club which helped to develop the idea of The Lego Movie. This $60 million two-hour advert for the Lego brand has made over $400 million at the box office as well as stimulating new product lines and therefore revenue streams. It was also a critically acclaimed and much loved movie. It was the ultimate example of a fan’s fantasy – indeed of a brand manager’s fantasy. Brand loyalty was translated into a co-created product and marketing strategy and campaign, which were almost guaranteed to be successful because the people who would consume it created it. In 2014 Lego redeveloped the Lego Ambassadors club into a new type of network community. The Ambassadors have helped drive Lego’s growth. In 2016 it sold 75 billion parts and recorded $5.38bn worth of sales.

Loyal customers become great advocates

Another brand which has been built through the repeated behaviour, purchase and communications of its customers is Primark. This fast-fashion retailer has experienced exponential growth since 2008, with sales rising from around £1.6bn to £7.1bn in little over a decade. Stores have mushroomed across Europe and into America. Primark has invested little in advertising to achieve its brand recognition. Its growth has been driven by its customers who flock through its doors to buy bagfuls of the ‘amazing fashion at amazing prices’ it stocks and to enjoy the bustling atmosphere and experience of the stores. The products, the stores and the incredible advocacy by its customers online and offline have turbocharged its growth. Shopping at Primark has become something of a social ritual. Meeting friends, chatting online about going, then going to the store and later chatting online about what you have bought has become an almost communal experience of extraordinary importance in its customers’ lives.

Just like Starbucks and Metro Bank who we mentioned in Chapter 7, Primark understands that its stores are the best advertisements for its brand. Large, open, glass-fronted buildings, situated on high streets and secondary streets as well as shopping centres, act like living billboards for the brand. The distinctive and sturdy brown paper bags which customers fill with as much fashion items as they can, and which can then be seen carried around towns on buses, through streets or on trains or subways, provide a fantastic advertising space for Primark. The slogan ‘amazing fashion, amazing prices’ is emblazoned on the side together with a clear message that the bag is recyclable. Customers have also been building the Primark brand through advocacy on social media, in particular through a ritual which has become known as the Primark Haul. Customers, particularly teenage girls, go to Primark and buy a whole selection of fashion items. They then return to their bedrooms, switch on their webcams or smartphone cameras, and record a video of themselves talking about what they have bought, why they have bought it, the price, and how and when they intend to use it. These Primark Haul videos have become so popular that one vlogger called Zoella had over a million followers by 2014. That’s a million dedicated members of Primark’s target market watching completely unpaid-for advertising and advocacy for the Primark brand. So popular is the brand with its customers that they have developed their own language with regard to how it fits into their lives. Customers like to mix and match Primark clothes with clothes from other usually more expensive fashion brands. This behaviour they call Primani – that is, mixing an item of Primark clothing with an item of Armani clothing in an act of dressing called layering.

Primark does not commission a great deal of television advertising. The expansion of the stores and the buzz that is generated among consumers do all the work for them. The opening of a new Primark store in a town or city is accompanied by a frenzy of expectation. When Primark opened its first store in Paris there was a queue of thousands waiting overnight to get in. When it opened. the rush of customers inside was similar to what you might find at a rock concert.

Primark has built its brand around its core product, its retail experience, a heavy investment in stores on key locations through cities and towns across Europe and now America, and the devoted following of its customers and their online and offline habits. It has also stubbornly refused to become an online retailer. It has experimented with online shopping but the economics of a fast-fashion retail business just do not work in an online channel. Online is great for showcasing the fashions, and for customers to share their photographs and videos via Pinterest, Instagram and YouTube, among others. There is simply not enough profit margin to justify the expensive process of packaging and despatching products. In any case, as Primark understands very well, the joy of the brand is in the experience of going to, browsing through and buying in store.

Get as close to your customers as possible

Primark and Lego show you have to earn loyalty. You achieve it by allowing and positively encouraging closeness to your target customers, getting to know them and trusting that they want you to succeed and may have great ideas to help you.

One sector which relies heavily on such ‘customer closeness’ is the professional services sector. Long-term brand loyalty can be built here through the close attention to building personal relationships. Bear in mind, though, that the trick is to ensure that the loyalty is to the professional services brand, not to the individual consultant, creative or salesperson representing the professional services company.

We believe that businesses that have consumers or customers can learn something from those businesses that have clients. They can learn intimacy or closeness.

In the book How To Win Friends and Influence Profits, there is mention of a study of professional services conducted by the Rim Group (Individual Marketing Efforts, Selling Professional Services). The book reported the response to the question: Which of the following marketing tactics has your firm found to be the most effective at generating new revenue? Websites, newsletters, collateral material, bylined articles, speeches and seminars accounted for only 27%. By far the biggest contributor was ‘going to visit clients’, which received 61%. There was simply no better way to unlock revenue than spending time face to face with clients, having a meaningful dialogue about their needs and requirements, ideally when you have a specific way of helping in mind. And as is often the case, just by being there with them opportunities to help arise. As Woody Allen said: ‘80 per cent of success is just showing up’. Client loyalty is important for professional services, just as consumer or customer loyalty is for other businesses. There are a number of reasons why. But perhaps the most important is that it is easier to sell new goods and services to clients who are already fans of your brand than it is to sell existing products to new clients. Of course professional services firms must always seek to win new clients to their brand, but even that is best achieved by showing how existing clients have bought old and new services. People are reassured that people like them have liked you enough to buy something from you.

Consumer or customer (service-led) brands should emulate the degree of intimacy and knowledge that the best client-led companies show. They seek to help rather than to sell. And they can only help if they know their clients well enough to understand how they can help. Moreover, the very best of them allow their clients to help co-create and so own the final solution. Just as Lego, intentionally, and Primark, perhaps with a more hands-off approach, have allowed their customers to build their business.

Brand loyalty is now hard-earned. But brand loyalty still exists and it still pays.