5 Lies We’ve Been Fed About Brand Loyalty
Brand loyalty: It’s time to let it go.
More and more empirical research has been coming out showing that brand loyalty doesn’t drive business results, yet we still see articles about how to drive loyalty and we still see brands striving for it. Below are 5 myths about brand loyalty and why they’re not reflective of reality.
Lie 1: Consumers Fall in Love with Brands
Consumers don’t care about brands. For example, when people think of “brand love,” they often think of Apple as the company that’s mastered it. But do we love Apple? Would we never buy another electronics brand because we have an irrational affinity for Apple? Let’s look at the current US market. Apple is still first when it comes to smart phones, but Apple’s tablets marketshare is declining. Unbranded Andriods are stealing more and more market share. For a variety of reasons, people are buying other tablets over Apple’s, and the “love” that people allegedly had for Apple isn’t saving them. As Byron Sharp debunks in How Brands Grow, you won’t get people to make buying decisions based on “brand love”.
Lie 2: Repeat buying = loyalty
In one sense of the word, loyalty is everywhere. Sharp found that people are more likely to buy brands they’ve already bought. But we are tricking ourselves when we call repeat buyers loyalists. Loyalty implies devotion, the brand love mentioned above. According to Sharp’s research, repeat buyers are actually occasional buyers, not “loyalists”.
Lie 3: If consumers are loyal to you, they’re not loyal to your competitors.
Bigger brands do get repeat buyers, and more so than small brands. But does having repeat buyers mean you’re detrimentally hurting your competitors because your frequent consumers are “loyal”? In reality, no, it doesn’t. Let’s take the biggest brand rivalry of all: Pepsi vs Coke. People can only like one, right? The numbers say otherwise: 72% of Coke buyers also buy Pepsi.
Lie 4: Loyalty Programs Drive Loyalty
You may have heard that loyalty shoppers shop buy three times as much as other customers, and this might even be true for your store or product. However, the majority of people who join loyalty programs already frequently buy from you. They were the people who were already spent three times more than everyone else. So you’re not really driving more sales from buyers, you’re just giving frequent buyers cheaper prices for products they would buy anyways. So that’s great for them… not actually so great for you. This is probably why companies like Trader Joe’s are opting not to have loyalty programs.
To add to that, top spending loyalty costumers are most likely to be top spendors at your competitors’ and part of your competitors’ loyalty programs. So it turns out, the people you thought were the most loyal are actually the least loyal.
Lie 5: Loyalty Effectively Drives Brand Growth
Maybe you’ve been told that 20% of your consumers drives 80% of your sales. According to extensive research by Byron Sharp, it’s more like 40% and 60%. Sure, that still sounds like a lot, but we have to remember that those consumers are more similar to the occasional buyers mentioned above, not “brand loyalists”. They are buying from your competitors and leaving your brand all the time, even if they later back. So if your messaging is focused on “loyalists,” you’re probably not resonating with most of your consumers.
To further confirm Sharp’s initial research and to put the nail in loyalty’s coffin, a McKinsey study of 55 major corporations found the companies that focused most on cultivating loyalty had the lowest increase in revenue.
In conclusion…
Byron Sharp dropped his anti-loyalty knowledge on the rest of the world in 2010 and research continues to validate it. Let’s do ourselves and our clients a favor and stop using loyalty as a goal for work or measurement. And if you’re not sold that you should give up on loyalty and you want to learn more, How Brands Grow is a great place to start.
