Brand Loyalty November 2011
The critical goal for companies interested in creating loyal relationships with customers is to create offers that consistently deliver identity-appropriate benefits to the right groups of consumers—to create an authentic relationship. When a brand meets or exceeds functional benefits and meets customers' need for certain psychological benefits, the brand engenders brand loyalty. Given the significant company benefits, it's not surprising that companies spend considerable resources to increase brand loyalty. Loyal customers not only consistently buy a brand but also invest time in brand advocacy. Because many brands within a product category are often functionally at parity, the key ingredient of brand loyalty develops when a brand resonates with a customer's identity. Loyalty arises from a potentially deep relationship between the customer and a brand: "This brand is for me!" The resulting brand attachment (loyalty) can mimic an attachment that a person has with other humans.
In recent years, brand attachment has been at the center of an increasing amount of research activity; the goal is to uncover some universal truths about drivers of loyalty. These efforts are particularly important because of the ever-increasing demand for companies to offer genuinely appealing—authentic—consumer products. In an era of social media, when the customers' voice is particularly loud, a misstep could derail brand loyalty, brand equity, and sales.
One area of study about the connection between authentic appeals and loyalty involves company histories. For example, many of today's successful companies have origin stories that border on the implausible; any garage-technology start-up that is now a multi-billion-dollar multinational firm had to beat incredible odds. Research headed by Hal Ersner-Hershfield at Northwestern University shows that customers who actively imagine the start-up failure of a favorite company experience an increase both in sadness about what might not have been and in happiness about what is. These feelings of poignancy ultimately increase loyalty. Similarly, research by Neeru Paharia at Harvard University shows that in a sea of large competitors, companies that project an underdog personality generate higher levels of customer loyalty than do companies that present a dominant, mainstream personality. References to humble (garage) origins, restricted access to financial capital, or a citation of "passion and determination" are all effective components of an underdog personality.
Jennifer Aaker (Stanford University) suggests that people prefer to deal with brands and products that project warmth in addition to competence, skill, and reliability. Ben & Jerry's Ice Cream's "warmth" strategy demonstrates Aaker's point. Ben & Jerry's communicates that it is unlikely to engage in moral-code-of-conduct violations—such as harming the environment, lying, or producing inferior products that may harm people. Recent efforts to promote corporate social responsibility and sustainability via warm communications are part of an overall business strategy to increase brand loyalty. An effective increase in customer awareness and connection through warm initiatives can add up to increased customer admiration for firms and brands; poorly executed perceptions of green washing can erode brand loyalty.
Because brand loyalty depends on a strong and sustained fit between the identity or motivational profile of consumers and brand personalities, the ability to identify and develop specific loyalty profiles reliability—profiles focusing on the psychological benefits different types of customers are seeking when interacting with brands—is extremely useful. The VALS™ framework has a specific design to explain and predict consumers' psychological mind-sets. To demonstrate the VALS utility for branding efforts, consider the following brief profiles of two of the eight VALS™ consumer groups.
Thinkers research before making most purchases, large and small. Their buying style reflects their responsible, informed approach to consumer decision making. Thinkers are much less interested in being on the leading edge of innovation than are early adopters of most products. To pay more money for a green version of a product, for example, violates Thinkers' search for tangible, quality, or cost-related product benefits. Thinkers are inherently suspicious of fads; they prefer what has worked in the past over untested, new ideas. Thinkers view dynamic brands as inherently unstable and untrustworthy.
Thinkers are less likely than other consumers to be brand loyal on the basis of image or identity benefits because their identity is to be thoughtful and smart. That thoughtfulness includes regular vetting and (periodic) revetting of products and brands; the goal is to locate the highest-quality product for the most reasonable price. To illustrate their idiosyncratic approach, Thinkers may settle on a certain automobile at one time; they choose the selected vehicle following extensive research about the total cost of ownership of various makes and models of cars, such as five-year repair costs, gasoline costs, and the cost to insure the vehicle. At another time, Thinkers might purchase the same make and model of car again, but not on the basis of loyalty to the brand or even on the basis of previous research. Thinkers will revisit the total cost of ownership for the new set of vehicles under consideration. In fact, Thinkers are not loyal to products or brands. They would be willing to switch from a previously owned brand if another brand provided a superior offer. To the extent that research may suggest that Thinkers are brand loyal, their "loyalty" is the result of a product's ability to pass Thinkers' repeated tests and the absence of a viable competitor.
Thinkers' informational search strategies for products outside consumer-packaged goods frequently involve finding heirloom-quality products that never need replacement—products of such superior craftsmanship that they pass the test of time. For example, Thinkers might ultimately decide to spend extra money on a high-end enamel-coated cast-iron cooking pot. They conclude that the less expensive but materially inferior aluminum cooking pot (with its easily scratched nonstick coating) will require replacement in the relatively near future; by contrast, the cast-iron pot will not. By doing the math, Thinkers determine that although the initial cost of the cast-iron pot may be higher than for the aluminum one, the total cost over time of cooking-pot ownership will be less than if they were to have to buy two pots. (If Thinkers cannot afford the cast-iron cooking pot, they will save money to make the purchase and watch for the item to go on sale.) Thinkers' search for heirloom-quality products makes the notion of brand loyalty obsolete, because Thinkers are loyal to specific items they can keep for a long time. Thinkers' desire for heirloom quality suggests that brands need to execute communications around traditionalism, quality, durability, reliability, and functionality (over form) appeals.
A comparison between Thinkers and Experiencers shows the importance of matching brands to the specific identity of consumers. Experiencers show no interest in the types of images in brands that appeal to Thinkers: Tradition, stability, durability, minimalist style, and lack of excess features are all turnoffs for Experiencers.
Experiencers are impulsive spenders, frequent shoppers for entertainment purposes, and influenced by the latest trends and fashions—by what's "hot." As a result, Experiencers often show less than loyal behavior toward many brands. However, Experiencers do develop loyalty to brands that consistently deliver on the key benefits the group is looking for: experiential content involving heightened sensory experiences (touch, taste, smell, sight, sound), emotional connections (that evoke passion), and social benefits (sharing, networking, connecting). In short, Experiencers want to connect viscerally with brands. A visceral connection does not mean that all high-energy, loud, irreverent, or lightening-fast image communications resonate with Experiencers. In general, however, brands that deliver trendy and dynamic content and images are well positioned to become "Experiencers brands."
For brand managers to keep Experiencers interested in and loyal to a brand is no small feat. Once a dynamic, viscerally stimulating product hits the market, the company has to introduce line extensions frequently to keep Experiencers "hooked" and product loyal. For example, Phusion Projects successfully entered the Experiencers market with a line of caffeinated alcoholic beverages under the brand name Four-Loko. In addition to including caffeine and a number of other stimulants, Four-Loko drinks include several novel fruit flavors—such as watermelon—not typically associated with canned alcoholic beverages. The addition of stimulants, along with the overall brand execution of the alcoholic beverage as an "energy drink," is highly appealing to Experiencers, but to ensure repeat business over time, Four-Loko is under constant pressure to develop line extensions featuring additional fruit flavors.
Similar demands for novelty drive market-penetration strategies of any company targeting Experiencers. For example, manufacturers of trendy brands of cosmetics need to introduce new colors and features at regular intervals. MAC Cosmetics exemplifies a company that understands Experiencers' need for variety and novelty and the power of "buzz" that Experiencers can generate about their brand. MAC's ever-changing color palette is always trendsetting; MAC relies on viral marketing, not advertising, to build brand loyalty. Retailers that cater to Experiencers need to introduce new product lines frequently and change the layout of their stores to keep the experience fresh. However, the moment Experiencers' attention is captured by another product that appears to be more exciting, loyalty may go out the window.
According to a recent, international IBM survey of chief marketing officers, brand loyalty appears to be on the decline. One reason for this decline may be that companies, in light of the need to message increasingly through social-media outlets, have begun to target Experiencers with their offerings by making them more dynamic and trendy but without keeping the brand fresh or compelling enough to retain Experiencers as core customers over the long term.
To learn more about how to apply VALS to your customer-loyalty initiatives, contact us.