Mike Anthony @ engage consultants

Mike Anthony on Shopper Marketing

Consumer or shopper loyalty – Can we please be clear on what we mean?

with 10 comments

Fanaticism does not equal loyalty

Loyalty is one of those words that is thrown around in marketing circles with incredible regularity, and it appears that it has many meanings for many people. In the same way as the word “strategy” (don’t get me started on that!) loyalty is used all over the place; unfortunately it is rarely used to describe actual loyalty, or in a way that is useful to marketers to help them associate this potentially high value measure with the returns that true loyalty can create.

Loyalty

A loyal consumer is one that uses your brand to the exclusion of any other. A loyal shopper, likewise, one that buys your brand in the same exclusive manner. Further a loyal consumer or shopper would continue to use or buy your brand even if you increased your price; would be likely to try a different store if your brand wasn’t available. But loyalty is not, as a recent blog I read suggested, someone who “talks about your brand and recommends it to friends”. That is an advocate. Advocacy may well be valuable to a brand, and desirable too, but it is not loyalty.

Nor is using the brand in quirky or new ways, or wearing a T-Shirt with the brand on it, or hanging it on your Christmas tree, or knowing more about the brand than the brand manager. These are traits of fanaticism. Fans may well be valuable to a brand, and fanaticism may be desirable, but it is not loyalty. I’m loyal to many brands, but I don’t chat about my deodorant, wear a Colgate T-Shirt, or want to join a shampoo fan club.

Toby Desforges suggested in a recent blog that consumer marketing had got just a little “flaky”, and this obsession with fans and fanatics, currently displayed by the CPG industry and made easier to manage in the Facebook era, is a symptom of this flakiness.

Loyalty is valuable to you as consumer or shopper marketers  because it is about consumption behavior or shopper behavior.  It means that these people use your brand all of the time. These consumers or shoppers tend to be valuable because they tend to use more, and they should be profitable as there should be no need to promote a brand to someone who shuns your competition. Creating loyalists creates direct profitability.

Advocacy and fanaticism have their place in the marketing world. But what percentage of a brand’s users become advocates or fans? How valuable are these individuals compared to those who quietly but stoically continue to use the brand day in, day out. They can create value but the value they create is more likely to reside in their ability to change the behavior of others (rather than in their own consumption or purchasing) – their ability to create new consumption in other people.

If marketers are going to pursue advocates or fans, then the return on investment needs to be calculated in terms of the additional consumption that they can create. If we are making “likes”, or “engagement” our goal, then we are not measuring the true effectiveness of our marketing. These are potentially great KPIs – indicators of performance – but unless we are clear (and can measure) a causal correlation between these indicators and real, quantified, behavioral change, then marketing is well and truly on the path to “flaky”.

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Written by Mike Anthony

May 24, 2012 at 3:22 pm

10 Responses

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  1. Mike – you and Toby are absolutely right, but don’t we face the situation that the clients want to create devotion for their product – just like Apple (and it’s always Apple that is the example). If you are wearing a research or consultant hat you can be more objective, but if you are the advertising agency, the client does expect you at some level to sell him dreams first and deliver KPI’s later.

    kenci59

    May 24, 2012 at 3:52 pm

    • Hi Kenan,
      Thanks for your comment – of course brands may want to create devotion to their brands. My point was more about:
      – Let’s make sure we get the words right. All fanatics may be loyal, but not all loyalists are fans. Loyalty and devotion are not the same thing
      – Let’s make sure we understand the commercial value of devotion. One assumes that clients are aiming to achieve commercial results, which means that they want to change consumer and shopper behavior. Let’s makes sure we understand the relationship between devotion and sales, and then we are clear why that devotion is valuable (or not). Too many campaigns are judged as “effective” because they achieve levels of “like” or whatever – without any clear understanding of what value that might have created.

      To be clear – devotion may be desirable, but it isn’t loyalty, and until we understand what behavior it helps create, then we are not clear of its value. Loyalty however is related to behavior, therefore its value is far more transparent…

      All the best,

      Mike

      Mike Anthony

      May 24, 2012 at 4:06 pm

      • Absolutely Mike – perhaps an example; I’m devoted to Ferrari – I talk about it, support it at F1 races but that doesn’t mean I’m loyal, because I happen to drive a Kia. Devotion and a lot of the ‘likes’ on Facebook and the like is what creates the buzz about the brand but that doesn’t necessarily lead to a measurable action or purchase. You are right – the value of devotion is difficult to quantify, and I think part of the uncertainty about the Facebook flotation demonstrates that.

        kenci59

        May 24, 2012 at 8:56 pm

    • Hi Kenan,

      One additional thought – there is nothing wrong in selling dreams, but if agencies don’t challenge their clients as to the KPIs behind the brief, then I would argue that they are doing their clients a disservice. Marketers the world over a bemoaning their absence from the “top table” (see ) – isn’t this is where marketing as an industry (agency and client alike) needs to step up and be accountable.

      All the best,

      Mike

      Mike Anthony

      May 24, 2012 at 4:14 pm

  2. Mike –

    Your definition of loyalty is absolute. In reality there are levels, particularly in fast moving consumer goods. A more loyal buyer of a brand satisfies a higher “share of requirements” than a less loyal counterpart. If 90% of one’s cereal purchases are Kellogg products, they are considered highly loyal to Kellogg and more loyal than one at 80%, who is still very loyal.

    Pricing is another continuum. Loyalty is nearly always lost in the face of an increasing price gap to alternatives. The more loyal, the higher the gap before switching occurs.

    Dave Carlson

    May 25, 2012 at 8:21 pm

    • Hi Dave,
      Thanks for taking the time to comment – much appreciated.

      In response to your point, being complete loyalty. Is absolute. In the terms you describe that would be 100%. Clearly not everyone is 100% loyal – and getting someone who uses Kellogg’s 80% of the time is a desirable, measurable and quantifiable target. Further, it has a measurable value to the brand as they would consume 25% more product, the brand would grow significantly.

      Getting someone to love the brand more does not necessarily deliver the same growth. As I say in the post, until we can translate love or fanaticism into constpion or purchase it is always going to be difficult to value it and measure a return on investment
      Pursuing an improvement in loyalty however will always directly create growth.
      Gobe clear I agree – of course there are degrees of loyalty – but my loyalty to cereal is about how I shop or consume cereals, not about whether I wear a Kellogg’s shirt and join their fan club.

      Thanks for helping me clarify this.

      All the best,

      Mike

      Mike Anthony

      May 25, 2012 at 10:51 pm

  3. Mike,

    Even measuring loyalty is a tricky business. The most straightforward example of presumably loyal behavior — i.e. frequently shopping the same store — could be the simple result of convenience or a lack of interest in exploring alternatives or other reasons having nothing to do with “loyalty.”

    Loyalty and satisfaction is about much more than repeat purchases. A customer or shopper who buys again and again from the same company or the same brand may not necessarily be loyal to that company or brand, but may instead be trapped by inertia, indifference, convenience or exit barriers(in case of service contracts) erected by the company or circumstances.

    All the loyalty card and household data and most (if not all) online panels of the world at the most can give you is purchase behavior of an individual(shopper-demographic) at a store at a specific point in time. The shopper picks up the product put it in the basket; check it out at POS and takes home. Basically it can tell you about his/her “behavioral loyalty” and not about his “attitudinal commitment” to the brand. It is important to distinguish between “attitudinal commitment” and “behavioral loyalty”. Too often people fail to differentiate b/w the two.

    “Attitudinal commitment” driven “behavioral loyalty” is what brands should strive for, examples are numerous – Apple products, Starbucks, Nike etc. It is the deep understanding of this attitudinal commitment driven behavioral loyalty that makes the difference.

    Therefore, simply resorting to Panel data or loyalty card data and looking at the share of requirements all it can tell you is about behavioral commitment (even this behavioral commitment could be bought by trade promotions) and not about attitudinal commitment. It is that routine habitual shopping behavior that we are all very familiar with. However, if we can go to a brand’s high share of requirements “buyer group” and explore about their attitudinal commitment to the brand say by knowing their brand equity that can help qualify their behavioral commitment to the brand with their attitudinal commitment as well.

    Mostly agree with you “Loyalty is valuable to consumer or shopper marketers because it is about consumption behavior or shopper behavior and can be readily measurable in terms of ROI. Creating loyalists creates direct profitability. However, If marketers are going to pursue advocates or fans, then the return on investment needs to be calculated in terms of the additional consumption that they can create”.

    However, here I have slight disagreement; ability of brand advocates to create additional consumption is the final outcome. Creating and having brand advocates in this socially connected world is an investment in the brand that reap rewards starting at growth in “% of category shoppers who have brand in their consideration set” leading to likes, household penetration gains, attitudinal driven behavioral loyalty to the ultimate “exclusivity”. Advocacy’s ability to change the behavior of others can at the most generate trial. After that it is the consumption experience that can create sustained new consumption.

    Regards,
    Humayun

    Humayun Akhtar

    May 27, 2012 at 6:48 pm

    • Dear Humayan,

      Thanks for taking the time to write such a detailed response. Much appreciated.

      Your point on the difference between attitudinal loyalty and behavioral loyalty is well made. They are different and it is important to differentiate between the two. I recognize that behavioral loyalty may be caused by many factors, and does not necessarily indicate attitudinal loyalty. I guess for me the important thing is that we are clear on what we mean when we use this word, and therefore are careful in value we attibute to them.

      Store loyalty cards are behavioral loyalty tools. They are “traps” in and of themselves if I were to use your language. The nice thing about this is that the value they create is easy to measure. Attitudinal loyalty is much harder to test (and define) and therefore whilst unquestionably a useful concept, it is really difficult to value it. It is only valuable if it creates behavioral change. The guy who would only ever drink Starbucks, but doesn’t drink coffee as there is no store near him is no more valuable that anyone else. Marketing measures which cannot be translated into measurable behavioral change must unfortunately be treated with at least a degree of skeptisism. If I wore a watch it would only ever be Tag – but I don’t wear one.

      This is similar to the point I make on advocates. Until we can demonstrate the value that they create, marketers must not assume that there is value there. Just because it is conceivable that “likes” might lead to purchase does not mean that it actually does. Each year the number of products “liked” grows almost exponentially. Purchasing does not.

      If we assume, we fail. Behavior is valuable and measurable. It is behavioral change we must strive for, and therefore it is the ability to create behavioral change that we should look for in our marketing goals. The great thing about digital is that it creates the possibility to track interactions much better – so that it is p[ossible to understand the connections between advocates and the behavioral change of others.

      Don’t get me wrong. Loyalty (both types), advocates and fans can all be valuable. But often the words are mixed up, and often little effort is made to really understand the value that they create for the brand.

      All the best, and thanks again,

      Mike

      Mike Anthony

      May 30, 2012 at 8:31 am

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    Consumer Sales

    July 17, 2012 at 12:08 pm


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