Is Brand Loyalty Really Dead?
When was the last time you looked on the laundry detergent aisle for your favorite brand? Most people are searching for the best bargain to stretch the family dollar. Stagnant wages and an increased cost of living are driving the focus on cost over brand.
Brand loyalty was originally about quality. Later, it switched to marketing and advertising. Now, it’s back to quality. However, there’s a catch.
The Origins Of Brand Loyalty
Before the 1950s, your best bet at recruiting loyal customers was to create a superior quality product. Quality was so lacking that setting yourself apart in the marketplace was pretty simple to do. Around the 1950s, quality had improved across the board. Therefore, companies had to rely on other means to generate brand loyalty. This was the dawn of the golden age of marketing and advertising.
According to the Houston Chronicle, “Advertising boomed in the 1950s because of America’s culture at the time and TV’s massive reach. . . The end of World War II signaled the end of a thrift-based consciousness that Americans had held since the Great Depression. Goods, no longer as scarce as they were during the war, flowed into the marketplace. . . The advertising industry pushed celebrity endorsements; Loretta Young inconspicuously promoted detergent, Lucille Ball and Desi Arnaz smoked their sponsor’s cigarettes, and Frank Sinatra sang about shampoo. Popular TV cowboys stepped out of character to pitch breakfast cereals and other youth-oriented products. Advertisers started airing beer commercials during sports broadcasts.”
Into the 1960s, people had money to spend. Plus, it was no longer seen as wasteful to spend it. Quality products were readily available. Customers became loyal to the brands their favorite celebrities endorsed. There was also loyalty to brands with the best advertisements or those that played on their sense of quality.
The Age Of Loyalty Programs
In the 1980s, loyalty programs emerged. For example, when you bought a plane ticket, you received airline miles. Hotels, car rental companies, and other brands also offered rewards for loyalty.
According to airline loyalty program expert Tim Winship, “What distinguished the airline programs, and made them the most successful marketing programs ever, was a winning combination of the psychological and the financial — the lure of travel (quintessentially aspirational) and the return-on-investment value of the awards (because they awarded unsold seats, the real cost to the airlines was miniscule).”
As time went on the airline rewards programs got more and more complicated, adding in hotel rewards, diner’s club rewards, and more. It also became more expensive as customers learned to game the system. In 1999 a man named David Phillips purchased 12,000 Healthy Choice pudding cups, which he in turn traded in for 1.2 million airline miles.
But it was just those loyalty programs that gave rise to the current marketplace of loyalty programs cluttering up our wallets today.
Loyalty Programs Gone Wild
These days 90% of companies offer loyalty programs. These include apps, text messages with coupons, and dozens of key fobs. In the U.S., there are 3.3 billion loyalty program members. This equates to 29 members per household. Their popularity continues. Between 2012 and 2014, the number of loyalty programs increased by almost 30%.
However, there are some problems with these loyalty programs. According to Forbes, “Loyalty programs are, of course, a significant cost to any business, one for which the customer eventually pays. But very few businesses appear to be trying hard to think about what the customer wants, and then follow in that direction, in a bid to create long-term value. . . There is also an entire generation — the millennials — coming up for whom the very premise of airline loyalty schemes differentiated by who pays more is unlikely to be compelling.”
There are too many loyalty programs and they are starting to get lost in the noise.
Millennials Are Leading The Way To A New Form Of Brand Loyalty
Most Millennials — 78% — will tell you that brands are going to have a harder time earning and keeping their loyalty than they did that of their parents. Still, a significant number of Millennials report that they are just as brand loyal as their parents, and 63% report using most of the same brands their parents do. Mobile phone providers are the highest category for Millennial brand loyalty. Clothing and then health and beauty products follow close behind.
But Millennials are more likely to change brands, and they do so for a wide variety of reasons:
- 56% of Millennials will change brands if there is a change in their financial situation
- 41% of Millennials will change brands if the brand raises its prices
- 38% of Millennials will change brands if a friend or family member makes a recommendation
- 37% of Millennials will change brands if a newer better product comes out
- 32% of Millennials will change brands if bad business practices are exposed
Millennials are still brand loyal, but it takes different things to earn and keep their loyalty than it has in previous generations. Millennials want good quality products from companies with ethical business practices at a reasonable price. They expect companies to keep up with quality and stay on the cutting edge.
How Can Businesses Adapt To Millennial Loyalty Demands
If you are making a quality product at a reasonable price with good distribution and ethical or environmentally sound business practices, chances are you will do just fine with Millennials. But the even better news is that this new form of brand loyalty has the ability to level the playing field so startups and new products can compete with established and tried and true products. All you have to do to win customer loyalty is to make a better product — the distribution channels are already there, cutting down the work it takes to build the route to customers. All you need is better quality or a new idea.
This new brand loyalty encourages healthy competition, levels the playing field, and motivates brands to listen to consumer feedback. Consumers have more power than ever before.
Details Of Brand Loyalty’s Death Have Been Greatly Exaggerated
Brands lose customers because of dips in quality, scandals involving their business practices, and the ease of access to literally hundreds of other options at the push of a button. Brands do not lose loyalty because this generation isn’t as loyal as its predecessors. Brand loyalty is definitely still around, but it has changed shape according to the times. Even brands are taking advantage of the technology available by migrating their loyalty programs to apps and utilizing big data to really get to know their customers. This new era of loyalty is based on mutual trust and respect.
Learn more about the evolution of brand loyalty from this infographic from Rave Reviews.