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Brand Loyalty is Dead

We’ve always been loyal to the best brands-but that loyalty seems to be dying a slow death

Are we ready to lay brand loyalty to rest?

History of Brand Loyalty

Pre-1950s:
All it took to be successful was a superior quality product

1950s:
Product quality improved across the board
Forcing companies like Procter & Gamble to distinguish their 
products through marketing

1960s:
Nearly identical products fought to win customer emotions
Branded packaging, promotions, and advertisments

1980s:
Modern loyalty programs emerged
American Airlines frequent flier program, Hertz #1 Club Gold program, and Discover Card’s cash back program

Present Day:
Adults are exposed to an average of 360 brand messages per day
90% of companies offer loyalty programs

Brand Loyalty’s Current Condition

Consumers aren’t as loyal as they were
Only 23% of consumers say they have a relationship with a brand

What would make you “break up” with a brand?
57% Negative review remains unaddressed while similar products continue to be offered
53% Data leak and data breaches
42% No live/real-time customer service support
38% No timely sales and promotions offers

Loyalty programs are less effective
2012-2014, loyalty program memberships grew 26.7%
There are 3.3 billion loyalty program memberships in the U.S.―that equals 29 memberships per household

Consumer attitudes
77% retract their loyalty more quickly than 3 years ago
71% don’t think loyalty programs improve loyalty
61% switched brands within the last year
23% have negative reaction or no reaction to loyalty efforts

Sometimes loyalty rewards work in ways you might not expect. In 1999, David Phillips purchased 12,000 Healthy Choice pudding cups
 In return, he earned 1.2 million airline miles

Could Brand Loyalty be Resurrected?

Some Brands Still Command Loyalty

Top brands with loyal followings in 2016:

#1: Google
Lifetime Approach: Google’s ubiquitousness on the Internet cements it as a fixture in every stage of life
“Dear Sophie” ad: Father kept digital scrapbook of daughter’s life using Gmail and YouTube

#2: Amazon
Personal Data: Amazon uses customer purchase history to offer superior service
35% of Amazon’s revenue comes from 2 features:
Frequently Bought Together
Customers Who Bought This Item Also Bought”

#3: Apple
Cult Mentality: The same areas of the brain that light up when people of faith think about religion light up when Apple fans think about Apple
3 out of 5 iPhone owners admit blind loyalty to Apple

Millennials Are Loyal―To a Point

Millennials respect brand tradition…
78% of millennials say brands today have to work harder to earn loyalty than they did to earn their parent’s loyalty
64% of Millennials say they are as or more brand loyal than their parents
63% use many or all of the same brands as their parents

Categories for highest Millennial loyalty
Mobile phone providers: 59%
Clothing/accessories: 56%
Health and beauty: 39%

…But Millennial Love Can Be Fickle

Top reasons Millennials switch brands
56% If there is a change in their financial situation
41% If the brand increases their prices
38% If a family member / friend recommends another brand
37% If a new, more attractive brand comes out
32% If a brand is found to have bad business practices

IS IT TIME TO CALL IT?

The Nail in the Coffin
Causes of Brand Death

High expectations
Between 2016 and 2017, expectations on brands grew 23%―but brands only improved by 4%

Highest expectation growth
Social networking and entertainment: +35%
Technology: +32%
Business to Business Services & Equipment: +30%
Cosmetics: +28%
Personal Products and CPG: +26%

Over-Promotion
Constant emails and social media interactions don’t work
Only 13% of loyal customers have a relationship with a brand because of frequent interaction

More Options
Before making a big purchase consumers can compare prices and products to get the best deals
85% research online
70% research in-store
Spend an average of 63 days gathering information

Why Shouldn’t We Mourn Brand Loyalty?

Levels the playing field
Shoppers aren’t tied down by blind loyalty to old companies
New emerging brands can come steal their hearts

Motivates brands to listen
Customers won’t stick with a brand unless they feel heard
Big data on customer activity improves customer service

Encourages healthy competition
Substandard products won’t last long on the shelves
Competing brands fight for best quality, not emotional leverage —just like the old days

Brand loyalty may be dead, but a new era of consumerism is just getting started -— this time with the customers calling the shots!

brand loyalty

Sources:
https://www.theatlantic.com/business/archive/2011/10/how-brands-were-born-a-brief-history-of-modern-marketing/246012/
http://www.kobie.com/thought-leadership/history-of-loyalty.pdf
https://sjinsights.net/2014/09/29/new-research-sheds-light-on-daily-ad-exposures/
https://www.accenture.com/t20170216T035010Z__w__/us-en/_acnmedia/PDF-43/Accenture-Strategy-GCPR-Customer-Loyalty.pdf#zoom=50
https://info.talend.com/rs/talend/images/pr_en_tld_datadivide_consumersurvey.pdf
http://www.huffingtonpost.com/entry/david-philipps-pudding-guy-travel-deals_us_577c9397e4b0a629c1ab35a7
https://brandkeys.com/2016-loyalty-leaders-digital-delights/
https://www.fastcompany.com/3005384/branded-life-how-companies-google-target-trust-and-loyalty
https://www.marketingweek.com/2017/04/04/brands-need-to-approach-loyalty-like-amazon-says-air-miles-founder/
https://www.forbes.com/sites/chuckcohn/2015/05/15/a-beginners-guide-to-upselling-and-cross-selling/#4ae680832912
http://www.bbc.com/news/business-13416598
http://www.telegraph.co.uk/technology/apple/10632787/iPhone-owners-admit-having-blind-loyalty-to-Apple.html
http://www.adroitdigital.com/files/research/1395184557.pdf
https://brandkeys.com/brand-loyalty-in-america-today/
https://www.helpscout.net/blog/brand-loyalty/
http://newsroom.synchronyfinancial.com/document-library/fifth-annual-major-purchase-consumer-study
http://www.makeuseof.com/tag/brand-loyalty-enemy-productivity/
https://www.ngdata.com/data-mining-improves-customer-experience/