Is Brand Loyalty Dying a Slow and Painful Death?

Posted on January 8th 2013

Is Brand Loyalty Dying a Slow and Painful Death?

When I was a wee lad - OK maybe I wasn't so wee as I was in my mid-20s - I was a marketer working on the AARP Health Insurance account which, at that time, was underwritten by United HealthCare. In fact I think it still is, but that's not the point.

The point is as myself and my fellow marketers tried to get people to switch from their existing insurance coverage to coverage provided by AARP, underwritten by United HealthCare, we oftentimes heard a common lament which was Mr. and Mrs. Smith did not want to switch their plan because they were staying  loyal to their existing brand - which in many cases was Blue Cross/Blue Shield.

Oh we would lay out the fact that our plan was the exact same plan they already had only cheaper, but they were not buying it - literally and figuratively. They more often than not were steadfast in their desire to stay true and loyal to their beloved BC/BS.

That Was Then

Now keep in mind we're talking about people who were in their mid 60s and up, and one could argue brand loyalty among the older generation - especially going back 20 years - was a lot different than it is today. Times were a whole lot different. No social media, no real Internet - at least the way we know it to be today - and surely mobile phones were not what they are today, not by a long shot.

Consumers, regardless of age, were more likely to be brand loyal, in my humble opinion. You wanted an adhesive bandage, you bought Band-Aids. You wanted a tissue, you bought Kleenex. And so on and so on.

What About Now?

Earlier this year I wrote a piece entitled Only One Quarter Of American Consumers Are Brand Loyal which touched on the findings of an Ernst & Young survey of nearly 25,000 people across 34 different markets around the world.

"On the whole across all 34 markets brand loyalty checking in just under 40% as a determining factor in making a buying decision, but, that number dropped to just 25% in the US, a highly significant decrease in the number of American consumers who say brand loyalty is something that impacts their buying behavior."

As I wrote then and will write again here, I would’ve guessed that number would have been even lower among American consumers when it comes to brand loyalty.

And when you dive deeper and look into specific age demographics, the numbers re: brand loyalty are even more telling.

In her piece for Forbes earlier this year Why Big Retail Is Running Scared Of The Millennial GenerationJ. Maureen Henderson, made reference to "a report by WSL Strategic Retail that documents how the fortunes of retailers such as Gap, Urban Outfitters and Aeropostale have been suffering in light of decreased consumer spending by twentysomethings and cautions these retailers and others in their shoes about aiming their marketing campaigns at a cohort that currently lacks spending power."

The aforementioned WSL Strategic Retail How America Shops MegaTrends report entitled "Moving On 2012," revealed that that 80% of millennials looked for the lowest price possible when shopping and that 60% are more inclined to bypass their favorite brand if a cheaper alternative is available.

While the percentages decrease the higher/older you move on the demographic scale, it is worth noting, as Henderson noted in her piece, "The (WSL Strategic Retail) report’s authors also warn that a generation of potential consumers who are unwilling or unable to spend will eventually hurt higher-end retailers (brands)."

In other words if they can't afford the higher end brands now, they may not be able to afford to or even want to spend more as they get older.

The Role Of Mobile When It Comes To Brand Loyalty

I will surely not spew out the latest statistics re: the number of consumers using their smartphones and tablets to make a purchase. Surely by now you know ours is a mobile world where our smartphones have become an extension of our lives and rarely do we ever - with all due respect to American Express - leave home without it.

When consumers are out and about they check their smartphones for real time savings but surely that won't impact brand loyalty, right?

Sponsored by AisleBuyer, a survey conducted earlier this year revealed that nearly 75% of consumers would switch brands if offered real-time discounts and promotions that were delivered to their smartphones in real time while they were shopping in a store.

Honestly I would have predicted that number to be even higher for the simple reason that, no matter who you are, or how much money you make, every single one of us likes a deal. We all enjoy saving money, don't we? Well unless you work for the government.

But I digress.

So, the question remains.

Is Brand Loyalty Dying A Slow And Painful Death?

Or to take it a step further, has brand loyalty already died but no one told it yet?

Think about it.

Sources: consumergoods.edgl.comretailingtoday.comGoogle Images


steve olenski

Steve Olenski

A regular contributor to Forbes, among other publications, Steve was named one of the Top 100 Influencers In Social Media (#41) by Social Technology Review and a Top 50 Social Media Blogger by Kred. He is a also a member of the Editorial Board for the Journal of Digital & Social Media Marketing and co-author of the book StumbleUpon For Dummies. Follow him on Twitter@steveolenski or at the nearest coffee shop.The views expressed here are his own and do not necessarily reflect the views of Oracle Marketing Cloud.

See Full Profile >

Comments

kmskala
Posted on January 9th 2013 at 12:46PM

You raise some valid questions. I don't think brand loyalty is dying at all. Smart brands are finding ways, such as mobile (like you mentioned) to provide value. Value isn't always in terms of dollars. Digital and social have allowed us to form a tighter relationship with customers and potential customers, find out what their triggers are and reward them accordingly.

Retailers like Urban Outfitters and Aeropostale, which both are doing quite well and both continue to post increase in sales numbers, offer value. Sometimes it's price-based, other times it different forms of rewards. But both of these brands have a high sense of loyalty from their consumers. And now, they're both doing a great job leveraging technology to increase that loyalty.


Price is an easy excuse for people. People are, and always have been, willing to pay a premium for quality products and services. Think about it...if price was the absolute #1 driver, why do we still see SUVs driving on the road?


So no, brand loyalty is not dying. It's stronger, and more important to grasp, than ever before.

Kasey S.

learle
Posted on January 10th 2013 at 7:59PM

Are brands dying? In a word… Apple. How many kids have iPods and how many have Microsoft zone (or whatever the hell it was called)?

As a professor at an urban university, I have ask students questions about their brand preferences every semester for the past 1 years; amazingly number one detergent is Tide, toothpaste - Crest.

Why? Brands live in communities called families - passed down from one generation to the next.   Are these kids price conscious of course, but trust and ease of purchase still stand strong.

Your example of retail yes is a good one. I can remember shopping at Sears for virtually everything when I was a kid, but what millennial today would be caught dead in that place for clothes (that’s why Sears as well as JC Penny’s are bringing in outside branded clothing).  

But look at just one haul video on YouTube and you'll see brand names a plenty. Wills some of these brands come or go? Sure, it's called fast fashion, but there is still is some loyalty to brands such as Discovery (here in the Midwest) which have stood the test of time for over 20 years.

Finally, what is amazing, kids are even remembering brand names amid all the culture they endure each day.

Lee E

Associate Professor

(Former agency creative for 20 years)

 

Dave WB
Posted on January 11th 2013 at 9:40AM

In a word - no.  Now, can we stop with the "brands are dying" articles and posts, please??

wamaulljr
Posted on January 13th 2013 at 11:55AM

This is a great post.  

Could the lack of brand loyalty be attributable to being able to get high qualiy on demand?  As consumers, we have so much available 24/7 that we can virtually bid every transaction and find exactly what we want or a close comparable almost instantaneously.  

If survivor bias has created excellent choices across the spectrum, then price becomes the only discriminator for many products (service is another issue).  

With "sharing" growing in popularity - are we all now trading in an electronic souq?

 

 

Darren Youlds
Posted on January 28th 2013 at 8:51PM

Interesting article, Thanks for the write-up. I would just like to add that in my opinion, I feel that people only shift those brands that aren't responsive to their needs. Brands that listen to them and interact on a 1 on 1 basis will usually not be replaced by promotions. 

It comes down to the value offered by a brand - is it only the product (replacable) or is it also the service and feeling of mattering to that brand which is irreplacable
 
Recently my business started implementing a tool for communication called Geteco that essentially allows the customer to leave a comment (Speak into a phone or use in room phones) and for management to directly respond to that. It all goes into a database and brand managers can analyze feedback given on site. This is an example of clear 1 on 1 interaction between brands and customers which can make the diffrence between on going brand loyalty or a slow painful death for brand loyalty. Just thought i would share my thoughts. Cheers :)
Ethan Krane
Posted on February 4th 2013 at 8:48PM

Hey Darren, Thanks for the interesting comment. I agree with you that products are considered replaceable as there as so many substitute products in the market these days. So at times what makes the diffrence is the service and feeling towards the brand that make customers make a decision. A brand will not have to die a slow painful death if service quality is up to standard.

Regarding the Geteco tool you mentioned, i just happen to visit thier website and i must say it is something that really peaked my interest and can come in handy for business as well. Thanks for the tip. Cheers :)