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The Death of Brand Loyalty
Wikipedia divides brand type into four categories:
• Being’ brands: emotionally confirms you are somebody
• ‘Becoming’ brands: aspirationally defines what you want to be
• 'Doing’ brands: functionally enables you to do something
• ‘Belonging’ brands: connects you with other people like you.
For companies like Sony, Coach, Target, and Starbucks, these categories are textbook. These merchants have spent the last decade building attitude brands in which their customers have come to live their lives by. However, that may be changing.
These brands have reported slow growth this year. Starbucks has even reported a drop in customer traffic of 1 percent. The overall slow-down seems as though customers are hesitant to spend money on their favorite brands.
I think an unlimited choice of merchants, both online and in-store, may be bringing a slow death to brand loyalty. Such companies may no longer automatically count on their customers to return to buy from them again and again. Instead, they’ll need to win them back each time customers are looking to buy. To some extent, that has always been true, but it has never been more true than today.
Hmm interesting debate, if we were to say that brand loyalty is dying, could it simply be just part of the growth cycle and that the consumer has become say 'bored' of their choice of brands or is the consumer just exercising their option to be little 'experimental' or 'demanding' and try something different.
It does put forward a good case for a business not to become compliant, and be ready to adapt and throw a bit of 'honest wow' back to ensure their brand does not wonder to far to quickly.
A nice example is how IHG provide loyal customers of the Priority Club Rewards Program the opportunity to to stay at other hotels using the Hotel Anywhere Card provided by AMEX.
James Hayward
BigPond Media
I don't necessarily think that brand loyalty is dying. I'm just pointing out that that because of the proliferation of choice, even companies that have had success with customers year after year can no longer take customers for granted if they want to keep their loyal customers.
Look at Apple and Amazon--brand loyalty definitely isn't dead at these companies. Apple had strong sales last year and Amazon reported the highest-grossing holiday season to date. But that's no accident--they work hard to keep their customers coming back.
I can't believe you're concluding that brand loyalty is dying based on the results of one company from one year.
Personally, I'm not a big Starbucks fan -- I think their product is overpriced, and the so-called "experience" over-hyped. Maybe -- just maybe -- more and more people are agreeing with me.
Maybe -- just maybe -- it's the economy. Maybe customer traffic is down for ALL coffee retailers.
And one could argue that there was even more choices of retailers back in the height of the dot-com boom. Yet, Starbucks, et al. -- and brand loyalty -- has survived just fine the past 7-8 years.
Analyses from firms like Forrester say that the younger consumers (Gen Y) are more brand loyal than Boomers and Seniors.
So why is brand loyalty "dying a slow death" now? Why is the need to win customers back "never been more true than today"?
Sorry, but I'm not buying your analysis.
Mila
Happy New Year.
I think you make a good point. No brand, no matter how popular can afford to take customers and their custom for granted. Just look at the roster of AAA brands who were knocked off their pedestal by superior value-propositions from upstarts. And it is customers who decide whose proposition is the best. In that same way that it is customers who create real brands in their hearts & minds.
Graham Hill
Independent CRM Consultant
Interim CRM Manager