After years of disruptive change that has lead to better informed, more empowered consumers, it has become more difficult than ever for brands to control customer perception with traditional marketing. There is a shift from trying to get new customers to ensuring that your brand experience is a good one.
Customer-first marketing uses the customers’ goals as the compass to make decisions about marketing approach. They put the long-term interest of the customer above the short-term company conversion goals. Marketers put themselves in the customers’ shoes to serve them better, thus building a long-term, sustainable competitive advantage.
In this approach, customer needs come before the immediate gain of a business, and customer knowledge guides product development, business and marketing decisions.
But is there such as thing as brand loyalty?
According to a study by Havas Media, “in Europe and the US, people would not care if 92% of brands disappeared.” Of all the factors relating to consumer behavior, perhaps none is more mischaracterized than brand loyalty. Most of what we call “brand loyalty” is simply habit, convenience, mild satisfaction or easy availability.
However, this is not true for all brands. Consumers will go out of their way, for example, to get Starbucks coffee or Haagen Dazs ice cream, but if tomorrow Coke disappears would people stop drinking soda? Doubtful.
Marketers are spending way too much time and effort on the acquisition of new customers without ensuring that their brand experience is a good one. To understand this marketers need to get out into the field as well as meet regularly with customer service people. Any barrier or disruption in the “brand experience” means a lost customer at a time when brands can ill afford to lose any customers.
Consider these stats from Accenture:
57 percent of consumers spend more on brands or providers to which they are loyal. That means 43 percent spend the same or less. And more than a third (36 percent) consider loyalty irrelevant to their spending.
71 percent of consumers claim loyalty programs do not engender loyalty.
61 percent switched some or all of their business from one brand or provider to another in the last year. Not surprisingly, the propensity to switch is 6 percentage points higher among customers for whom loyalty programs have a negative or negligible effect. But even consumers who spend more on brands to which they are loyal switched 17 percent more often than those who spend less. And the clincher?
77 percent of all consumers admitted they now retract their loyalty more quickly than they did three years ago.
23 percent of consumers demonstrate a negative or non-existent reaction to companies’ loyalty efforts. And that number is rising, particularly among younger consumers who will be critical to driving revenue growth in the years ahead. The sobering truth is that for nearly a quarter of consumers, all that spend is actually hurting the relationship.
Loyalty still matters. It always will. But today, as the correlation between customers’ loyalty sentiments and purchasing behaviors continues to weaken , it’s becoming clear that the old loyalty rules no longer apply.