Brand Loyalty is Not Dead (It Merely Shifted)
If you ask people this question, you are likely to get a lot of heated responses. Never mind that people generally pick a cell phone manufacturer and stick with it for years out of the need for seamless transitions.
But most people will tell you unequivocally that brand loyalty is dead. They may not be entirely wrong -- brand loyalty as your parents and grandparents were used to it might actually be dead.
Historically, there were some specific reasons for brand loyalty and certainly many of those reasons don't apply today, but brand loyalty may have just shifted to adapt to the times.
Why does brand loyalty matter?
In today's consumer landscape, it doesn't even really make sense to be brand-loyal. We have a lot of choices and most of those choices are pretty good, so people more often choose convenience or cost preferences over brand loyalty. But back in the early days of America, having the best product was what sold products.
Many people were producing things that were sub-par, and consumer concerns about quality became a sort of de facto brand loyalty.
This is when brands like General Electric, Winchester, RCA, and GoodYear came on the scene.
After the industrial revolution really had a chance to take hold and everyone was basically manufacturing things that were higher in quality, though still to varying degrees, brand loyalty was won oftentimes through advertising and marketing.
Tide is a perfect example of this.
Proctor & Gamble was the first one to discover the perfect recipe for laundry detergent, but knowing the competitors could get ahold of the product and make a reasonable facsimile of it, P&G spent time and money on marketing to set Tide apart. According to the American Chemical Society: "the company would conduct shipping tests that involved manufacturing some of the product, shipping it to select markets, trying out advertising strategies in those markets, polling consumers about the product, and then refining the detergent based on the results of testing."
A great deal of effort was put into packaging, marketing, and advertising, which led to Tide becoming an instant success with consumers once it fully rolled out.
Loyalty programs saved and then maybe finally killed brand loyalty
Way back in the 1980s, some of the first consumer loyalty programs emerged in the form of airline points. There was even a man in the 1990s who hacked the brand loyalty sphere by buying 12,000 pudding cups, which earned him 1.2 million airline miles. But today there are so many customer loyalty programs and cards that it now adds up to an average of 29 memberships per household. People are getting burned out on brand loyalty:
- 77% of people retract their brand loyalty faster than they did three years ago.
- 71% of people don't believe these programs even work.
- 61% of people have switched brands within the last year.
- 23% will have a negative reaction at the mere suggestion of another brand loyalty program.
Brand loyalty is changing
There are still some brands that have a loyal following, though the reasons may be quite different today than they were for your grandparents' generation. Google, Amazon, and Apple are the three top companies right now for brand loyalty. Everything else is pretty well negotiable:
- 78% of Millennials say that brands have to work harder to secure their loyalty.
- 64% of Millennials say they are still pretty brand loyal.
- 63% of Millennials use many of the same brands they grew up with.
Financial reasons, personal recommendations, and the wow factor are some of the reasons that Millennials will still switch brands, but one of the most noticeable reasons has to do with public image problems. We've all seen calls for boycotts of certain products because of business practices, and in fact this accounts for 32% of the reasons why Millennials will switch brands.
Mobile phones, clothing, and health and beauty brands are the three top categories for Millennials' brand loyalty, and all other products are going to have to work much harder to keep customers coming back.
Is brand loyalty really dead?
Brand loyalty as your grandparents experienced it is certainly dead. Quirky advertising alone is no longer enough to capture and retain a consumer base, and getting existing customers to stick around is harder than it has ever been. But if you have a quality product, good customer service, and the will to do whatever it takes, you can capture the next generation of loyal customers.
Learn more about brand loyalty from this infographic from Rave Reviews.