What You Need to Know About Superior Consumer Loyalty

(Reading Time: 4 minutes)

There’s a curious tendency these days to bemoan the “disloyalty” of consumers. But is consumer loyalty really in decline?

Some like to point to studies like Deloitte’s annual “American Pantry” study, which this year reported that 73 per cent of consumer packaged goods categories have shown a decline in brand loyalty since 2011.

“Consumers aren’t loyal anymore!” is the knee-jerk conclusion. And subtle lines are drawn in an “us vs. them” battle.

But that’s like saying that if test scores in elementary schools are down, it’s because kids are getting dumber. Kids aren’t getting dumber; the system is failing. It’s not doing what it’s supposed to do.

What’s Really Happening

Consumers haven’t changed. But the world has, in case you’ve pulled a Rip Van Winkle. It’s easier than ever to gather information and to switch brands. And this is good news. Brands that truly perform will be rewarded.

And remember that people want to be loyal to brands. When a brand delivers a fantastic experience, it makes their next purchase decision easier. They’d rather stick with a good thing than switch all the time. It’s one less thing for them to worry about.

When the system works, consumer loyalty is a win-win.

The painful truth is that if you’re not the category leader, a competitive brand is probably enjoying better consumer loyalty than you are. They’re doing something you’re not.

Rather than pointing fingers at your consumers – the very people keeping you in business – it’s better to ask how loyal you are to them. Do you truly respect your consumers, and strive to improve their lives? Or do you treat them as “eyeballs,” chunks of data, or a means to reach your quarterly sales targets?

You’re a Consumer, So You Can Relate

Each of us is not only a businessperson, but a consumer. It’s not hard to find examples of brands that are loyal to us (or not). Some recent examples from my own consumer life:

  • When Apple sells me a $400 iPhone that repeatedly fails to sync properly, and then offers no help in resolving the issue, they are not being loyal to me.
  • When Delta, with whom I have 700,000 lifetime miles, makes it difficult to cash in my miles for flights, and charges three-figure “redeposit” fees if my plans change, they are not being loyal to me.
  • When BlueCross BlueShield tells me they’re moving me to a new health-care plan – with a 50% rate increase but no offsetting benefit – they are not being loyal to me.

In each of the above examples, if I move my business elsewhere, the data may say that I’m disloyal. But I’m not. In fact, I’m extremely rational. I’d be a fool not to explore my options. These brands have challenged my consumer loyalty.

There are examples in the plus column too, of course:

  • When Vanguard transfers my mutual funds to lower-cost options – without me having to do a thing – they are showing loyalty to me.
  • When the front desk staff at the Westin remembers my preferences from my last stay, they are showing loyalty to me.
  • When Dentek not only makes good on their promise to replace a product that didn’t perform as expected, but also sends me samples of their other products, they are showing loyalty to me.

In these last three examples, I’d be a little irrational to look elsewhere. Each brand has shown me that they’re worth doing business with – and that makes it riskier to take a chance with a competitor. So my consumer loyalty increases.

The Important Questions to Ask

If you want to change your business results – in this case, consumer loyalty – change your mindset and your behaviors. Here are some starter questions to consider:

  • How well do you know your consumers? If you don’t know them extremely well, you can neither empathize with them nor serve them. (And you can never know them too well.)
  • How do you stack up? Most companies think they’re better than they really are. Gather objective benchmarks vs. your competition to see what you’re doing well and where you’re falling short.
  • What is their experience really like? Track the consumer experience from start to finish, bearing in mind that different consumers want different things. Where are your systems and policies standing in the way of their happiness? How can you use data to serve them better?
  • How often do you say “thank you”? It’s as simple as it sounds, but it rarely happens.

Somewhere along the line, we business types sold ourselves the line that consumers really care about brands. They don’t. They really care about a very few brands. The rest they could easily do without.

So, the most important question is this: What exactly are you doing to be a brand that people really care about?

About Matthew Fenton: Matthew helps challenger brands to focus, grow and win.  Since founding his consultancy, Three Deuce Branding, in 1997, he’s helped hundreds of brands to achieve “brand clarity.”  His consulting services and speaking engagements help brands to focus on what matters through positioning, strategy and ideation.  Contact Matthew here.  He calls Chicago home.

Copyright 2015 – Matthew Fenton. All Rights Reserved. You may reprint this article with the original, unedited text intact, including the About Matthew Fenton section.