Thursday, 9 February 2012

Is there really such a thing as customer loyalty?

Dunkin’ Donuts, that staple of the American mall, has just been named by Brands Keys Customer Loyalty Engagement Index as number one in customer loyalty for the highly competitive US coffee sector for the sixth year in a row. It doesn’t take a marketing guru to see that they’re obviously doing something right, but is customer loyalty a genuine phenomenon and, if so, what can brands do to influence it?
On one level, of course, loyalty schemes have as much to do with loyalty as reality television is about reality. Loyalty cards are simply promotional devices that work in both directions; as a customer I get money off my next bill and the retailer in turn collects a lot of data about me they wouldn’t otherwise have got. But is this really inspiring my loyalty?
There will always be individuals or groups of consumers who align themselves with brands with which they think they have something in common or which they feel say something about them and their status. This is particularly the case with high end fashion or jewellery brands or consumer electronics, of which Apple is the prime example.
But this aside, when it comes to brands are we really talking about loyalty or are we talking about convenience and opportunism on the part of the consumer. Loyalty as a concept speaks of our unwavering need to stick by something even in the face fierce opposition – the way football supporters, for instance, stand by their team through thick and thin.
Convenience, though, is something different. I may have a Tesco loyalty card because I shop there three times a week. I may not be doing that out of loyalty, but out of convenience. If I move house and Sainsbury’s becomes my nearest supermarket, the likelihood is that because of convenience my “loyalty” would transfer to them. It is too easy to confuse loyalty with frequency. Loyalty is much more about emotion and an instinctive reaction to a brand and this has to be considered differently.
Good customer service is certainly an important factor in brand loyalty but there has to be a good product too. Brands also have to stand for something; if you know what the brand is about and why it is right for you, you will almost always pick that brand over a competitor at price parity and most likely even at a premium price position. Sometimes, though, what we believe is loyalty may just be inertia. We may be inherently dissatisfied with our bank, utility company or broadband provider, but we simply can't be bothered to switch because it seems like such a hassle.
The flip side to this loyalty question is the lack of rewards for being loyal versus the bonuses you might get for switching brands. This is more likely to occur in the services sector but there don't seem to be many advantages in staying with say a bank or a savings provider. Often introductory offers are better than the ones available to current customers. The 'savvy' consumers are thought to be those who are the most promiscuous in terms of brand behaviour.

Whether it is loyalty or not, what is clear is that people warm to brands that show a degree of humanisation. Consumers like it when they can see a brand that displays the characteristics of its community, no matter how large a corporate it is, and avoids adopting a rather soulless "one size fits all" approach. McDonalds and Dunkin’ Donuts are particularly good at this. Although the consistency of the brand experience is paramount it is the little things that make the difference that makes customers want come back and repeat purchase.

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