It’s a Fight For Brand Loyalty!

Source: Forrester NSCTAS 2006 Benchmark Survey, North Amercian Technographics Benchmark Survey, Q2 2010

Source: Forrester NSCTAS 2006 Benchmark Survey, North Amercian Technographics Benchmark Survey, Q2 2010

We’re in a new age of competition for brand loyalty (the propensity to repurchase a brand). The battle for market share is fierce and according to Forrester over the past 4-5 years American’s brand loyalty has been declining. People no longer feel that owning the “best” brand is important. This is due in part to economic conditions but there is an even bigger culprit. Technology. Technology is one of the forces eroding loyalty.

According to JP Gownder, Rapid innovations in consumer technologies has caused this shift by provided consumers with new tools for comparing, evaluating, choosing and experiencing brands. Anyone selling products today have to deal with the likes of Google Products, ShopSavvy, Expedia or BizRate, who offer both product and channel comparisons, increasing the likelihood shoppers will find a new brand or a better deal to entice them away. There are lots of ways to find a deal. Deal of the day sites such as Groupon that make consumers feel like they are entitled to things at a huge discount. They like to haggle on price and share their stories and tips for how to win (sharing the secrets of inventory cycles at Target or ways to handle “hostile” cashiers who won’t give you a discount). They even share their coupons on swapping sites like Hot Coupons. Online coupons are 1% of the coupons issued but represent 10% of redemptions.

Studies have shown that armed with these technologies, customers are becoming increasingly brand agnostic. Statistical analysis shows the more technology-optimistic a consumer is, the less loyal she becomes.

Passion for a brand (think Nike, Apple) comes from wanting to be a part of what they represent, a sense of valuing the same things as others who buy the brand and the people running it. Successful companies like these use their goods and services as props for engaging people in their brand story, they focus on creating a meaningful connection.

I believe the key to winning the loyalty battle is to use technology to work for you rather than against you. Empower your customer with digital technologies that reinforce the value of your brand, rather than erode it. Design your experiences and services to deliver real value in a practical and meaningful way. For most organizations this will mean rethinking the customer and product experience to find ways to make this connection.

With a toolbox of technology capabilities like location-based services, sensors that monitor people or an environment, and smarter IP-enabled products there are even more ways to connect and serve customers. Organizations have a few exciting possibilities they can explore:

Think differently about the role of marketing and add conversion as a metric We tend to focus on marketing to attract. But with all the digital touch points available Marketing shouldn’t just be focused on using digital to generating leads. Explore beyond looking to get the attention of a customer when they are thinking about what to buy (Google, Facebook and Twitter are great at doing that).

  • Look for ways to make them feel a part of your brand. Right now most emotional engagement is still happening in traditional media (especially during the Superbowl). Create content that will pull people in or can be shared. Gucci does an interesting job in store of creating an emotional experience.
  • Connecting with customer’s and helping them with their goals will enable you to know when to take action. There are some existing examples like The Home Depot’s Kitchen Design tool that lets customers to pick potential designs for a kitchen renovation. They can save them to a project folder that can be accessed by a Designer.
  • Bringing together data from various sources to be able enable you to pick up signals that help anticipate customer needs over time. Banks have been paying attention to life events that will cause customers to refinance their home. Imagine what you will be able to do as the internet of things increases the amount of touch points.

Create an ecosystem by combining digital experiences with the physical products. Manufacturer’s are increasingly looking for how they can offer digital services. Digital Services are compelling because they usually involve the customer contributing data over time so the barrier to switching is greater, they generate new sources of revenue and enable your teams to learn more about what your customer’s want. There are great examples like Nike Fuel Band, iTunes I have covered before. It was about a year ago that I did this blog entry talking about the need to create VALUE. It’s becoming more and more important as core products become rapidly commoditized.

Think differently about customer service. Get your employees more connected across channels. Your people are the best at creating connections and driving loyalty. They need to be present online and offline and today they are “trapped” in a specific channel or location. Imagine a consumer electronics expert in a low-volume store being able to serve a customer in a different store through high-definition video, answering questions on Twitter or responding to a question on your website!

Find ways to turn this loyalty trend around to make technology a competitive advantage by deliver value to people.