November 18, 2013
Why Don’t Consumers Always Buy Their Preferred Brand?
Through a special arrangement, presented here for discussion is an excerpt of a current article from the Joel Rubinson on Marketing Research Consulting blog.
Even when consumers prefer your brand — that is, buy your brand more often than they buy any of your competitors — your share of wallet (sometimes called share of requirements) might not be much more than 50 percent.
Are consumers switching for a hot deal? Are purchases and preferences need-state dependent? Are people essentially indifferent towards a few brands on a short list?
From a marketing point of view, is there an easy way to raise your share of purchases among those who already prefer your brand?
One clue comes from R&D I spearheaded into customer retention while at the NPD Group in the ’90s. Interviewing the same respondents over two years, we found that brands only retained, on average, about half of their loyal consumers from one year to the next. However, a subset for whom the brand had a strong attitudinal advantage were retained at a much higher rate.
So how does a marketer enhance beliefs that its brand, and only its brand, stands out on benefits that are important to a given loyal consumer?
I believe a new and important answer in a digital, social, and mobile age is to build the largest possible "brand audience," defined as consumers who have joined your brand in some way — liking it on Facebook, following it on Twitter, signing up for e-mails on the brand website, downloading a branded app, etc. This creates a two-way communication channel from kitchen to store and all points in between. It allows the marketer to flip the loyalty equation and demonstrate their loyalty to the consumer with offers, personalization, and listening to their wants and needs.
Listening involves seeing what followers of your brand on Twitter are tweeting about. Every Facebook update is a conversation. A question asked on your brands’ Facebook newsfeed can show what’s interesting to your fans by analyzing the rates of "people talking about" (likes, sharing, comments).
Research communities of your consumers offer another way you can gain insight into what would delight them and what they think of your brand as its offers and messaging evolve. And finally, show some love. Give those in your brand audience gifts such as promotional offers, inside information about upcoming events, and the gift of being heard.
A constant eye must be kept on three important brand metrics: retention (keeping a customer loyal over time); purchase conversion (the percent of purchases you win from loyal consumers); and the size of the brand audience.
In this day and age, brands are not just products and services, they are media too. And that might very well be the key to improving your share of purchases from those consumers who already prefer your brand.
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Discussion Questions
How do you think a brand can best shift a customer from a preferred buyer of their product to a dedicated buyer? Do social tools hold the promise to foster an ever-loyal shopper base for brands?
Poll
There is no doubt that social-networking tools can reach consumers who are unplugged from conventional media. Perhaps they don’t read the printed newspaper, or perhaps they watch TV on demand while skipping through the commercials. In any case, any brand needs to figure out how to reach this growing customer base in new ways.
Beyond the marketing question looms the question of distribution. Have you chosen the right stores to carry your brand? Is it a mass-market product that demands the widest possible distribution, or a brand with more high-end appeal and limited availability? Once you have answered these questions, it’s time to partner with retailers who have also figured out how to move their customers from satisfaction to loyalty.
Consumers don’t always buy their preferred brand, particularly in situations where the category itself consists of choices that have little or no differentiation, which means price, promotion, and advertising, drives choice.
To move a customer from a preferred buyer to a dedicated buyer, we must begin by changing the loyalty paradigm. Customers can be loyal to their family, country, church, alma mater, etc. However, there is no need to be loyal to any product or service. Instead marketers of goods and services need to be loyal to their customers? How? Simple, deliver on your promises.
In order to deliver on your promises you need to know your customers attitudes, perceptions, needs and behaviors. Social media provides a terrific tool to listen to customers to better understand them, particularly as it relates to the purchase of your brands or visits to your store.
Listening, customizing and communicating with your customers will go a long way in making your brand their brand.
First, I think we need to recognize that in some categories, brand loyalty is really comparison set loyalty. I buy four different cereal brands because I want some variety in my diet. So Kellogg’s goal may be to make sure I buy their version of Raisin Bran rather than Post’s version.
Second, Joel’s ideas (as usual) have a lot of merit. But we might make a stronger case for having more a more differentiated product, with benefits you can hang your hat on – benefits that make a message, whether it is broadcast, direct mail, social media-based, etc. ring true.
Moving a preferred buyer to a dedicated buyer takes work. Using all of the research tools available to ‘listen’ and identify who your preferred buyers are and what they are talking about is just the first step. This is not listening. Listening from your customer’s point of view means that you’re reacting to what is being said. Tangible evidence that you are, in fact, listening.
In order to maintain a meaningful dialog and establish that ‘customer=for-life’, brands need to become publishers of a portfolio of content that continually tells stories of relevance and interest to your audience. Find your brand zealots and get to know them! Every one has a valued and meaningful story about your brand. Find those stories, capture those stories and share those stories with your audience across all available consumer touch points! Brands need to become publishers!
Curating, configuring and delivering that library of content becomes the next critical piece of this process.
When we talk about this topic, I think of products outside the food industry. I then try to think of aspects that drive loyalty and see what can transfer to the food biz.
People may stick with an automobile brand their entire life. If they don’t, they most likely still have a favorite brand. Perhaps that brand didn’t have what the shopper needed at that particular time (e.g., a minivan). However, when the brand again has the right product, the shopper returns to the brand. Hotels and airlines are other examples of this deep loyalty.
Closer to the food biz may be the footwear industry. People definitely stay with brands of athletics shoes fairly consistently. Why? Because the shoes fit their lifestyle and provide the cache and functionality required.
How can we translate that to food? First, determine your brand message to the market. Is there a message, actually? If not, that’s your first place to start. If there is, explore the social sentiment of that message to determine where the value lies with your brand. Then identify differentiators to drive exclusivity to your brand. There are great tools available from several providers these days to help you get started down this path.
Thankfully for most brands, consumers are willing to test other brands. Without that behavior, very few if any new brands would be introduced.
So how do you gain more than the average 50%? Yes, social is a huge opportunity to help drive loyalty. Consumers are hungry for content and if you can consistently provide them with valuable content, they are more likely to support your brand.
Two great examples:
1) King Arthur Flour – They have done a wonderful job of sharing inspiring images and recipes of baked goods using flour (hopefully their flour) on their Facebook page. As a “carboholic,” I can’t help myself. I have to share the photo and download the recipe. In return for their content, I buy their brand 80%+ of the time.
2) Whole Foods – A disclaimer, I do not shop at Whole Foods, but I am extremely impressed with their Facebook content. How to videos, recipes, holiday ideas and stories about eating healthy. I have spoken to several Whole Food fans and they love the store. Not just because of the shopping experience, but also because of the content they share.
Consumers still love coupons, but what they really want is content they can use.
In studying actual transaction data at the household level, it is apparent that different brands (with different quality perceptions) have different degrees of loyalty within different segments of customers.
In many instances, there are distinct price-gap thresholds that lead to switching to and from preferred brands. For example, one segment of customer might be continually loyal to a premium brand of a product, but switch to a less-preferred brand if the price differential is greater than some fairly well-defined threshold point. The transaction level data tells very interesting, actionable stories that characterize customer behavior with respect to product and brand loyalty.
There’s no foolproof way to win unwavering brand loyalty from consumers when you competitor is only 6 inches away. In the extreme, they can always induce trial by giving a free unit to consumers who prefer your brand.
That said, it’s very expensive (and not particularly effective) to buy a new customer away from a competitor, and Joel touches on some tactics you can use to keep your consumers engaged. We’ve found it to be very cost effective to deliver up-sell and reward offers to loyal consumers. The result is usually a lasting increase in consumption and a positive perception that the brand knows and values them as customers.
But, will I buy more brand X peanut butter because they follow me on Twitter? I’d need to see the data on that one to be convinced.
Good comments already.
Gaining granular insights and linking them to individual consumers and shoppers will help brands make the right investments to earn greater loyalty.
Although helpful, social media don’t provide access to individual level insights that can be harvested by brands, nor do they provide closed-loop personalized solutions.
Modern social media allows connection and to a great extent encourages experimentation so you are not perceived to be “boring.” Hence the challenge for today’s brand that dedicated buyers are bombarded by social media to “try something new, be different” and therefore divert the wallet elsewhere. Marketers today need to continuously “resell” the customer value of the brand as they are bombarded by alternatives and distractions.
Recognition that a brand notices that I like and use their product is an important motivator. I recently bought four packages of my preferred yellow bag chocolate chips in anticipation of holiday baking. At checkout I received a coupon from that company for a quite substantial amount off five more bags of their chips good until Dec. 24. It is such a good deal that I will certainly use it, will have the chips on hand (they keep for a long time) and feel very good about the company beyond the quality of their chips. The company is literally guaranteeing that I’ll not succumb to any other chocolate chip brand’s end-cap, BOGO, or discounts for a long time.
Because there is practically no such thing as true brand differentiation in CPG marketing any more. Particularly not in food. Marketers still haven’t learned that lime-lemon is not markedly and meaningfully different from lemon-lime. And calling it “scintillating citrus” doesn’t help either.
Ninety-plus percent of all CPG marketers are doomed to a share steal battle, albeit some are fortunate enough to be fighting in expanding categories, so they might not realize it yet.
To me, there is only one thing that can get customers to shift brands: Product Quality.
You can argue all you want about price, but if all you’ve got is the lowest price, it’s only a matter of time before someone undercuts you. Quality for a market right price is what value used to mean before the fast food guys changed the perception of “value” to mean “cheap.” Therefore, quality will win every time. Just ask Starbucks.
Warren Buffett is fond of saying, “price is what you pay, value is what you get.” Right on.
In today’s market, it is extremely difficult task to gain 100% of a customer’s share of wallet. Between constant promos, discounts, increased access to new channels and retail start-ups heavily funded allowing for attractive reasons to try another brand, the truly “loyal” customer is hard to find.
Certain companies are able to create loyal customers through thoughtful loyalty programs that adapt to customer needs. When there is minimal differentiation across products, the loyalty program will allow brands to capture the long-term attention of customers and reward them appropriately.
Social tools can drive engagement across channels that will keep brands top of mind, but this will still be an uphill battle for retailers in this crowded market.
A dedicated buyer is a loyal buyer. You get loyalty from confidence. Confidence comes from a predictable experience, both with the service and the quality of the product. That’s the table stakes to step up to playing in the loyalty game. However, it may not be enough in today’s digital world.
Start with the base and add social proof. That’s testimonials and other word of mouth marketing comments that validate the customer’s choice to do business with you.
Take a great product, deliver with great service, and prove to the customer he/she made the right choice, you have a shot at an “ever loyal” customer.
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There is no doubt that social-networking tools can reach consumers who are unplugged from conventional media. Perhaps they don’t read the printed newspaper, or perhaps they watch TV on demand while skipping through the commercials. In any case, any brand needs to figure out how to reach this growing customer base in new ways.
Beyond the marketing question looms the question of distribution. Have you chosen the right stores to carry your brand? Is it a mass-market product that demands the widest possible distribution, or a brand with more high-end appeal and limited availability? Once you have answered these questions, it’s time to partner with retailers who have also figured out how to move their customers from satisfaction to loyalty.
Consumers don’t always buy their preferred brand, particularly in situations where the category itself consists of choices that have little or no differentiation, which means price, promotion, and advertising, drives choice.
To move a customer from a preferred buyer to a dedicated buyer, we must begin by changing the loyalty paradigm. Customers can be loyal to their family, country, church, alma mater, etc. However, there is no need to be loyal to any product or service. Instead marketers of goods and services need to be loyal to their customers? How? Simple, deliver on your promises.
In order to deliver on your promises you need to know your customers attitudes, perceptions, needs and behaviors. Social media provides a terrific tool to listen to customers to better understand them, particularly as it relates to the purchase of your brands or visits to your store.
Listening, customizing and communicating with your customers will go a long way in making your brand their brand.
First, I think we need to recognize that in some categories, brand loyalty is really comparison set loyalty. I buy four different cereal brands because I want some variety in my diet. So Kellogg’s goal may be to make sure I buy their version of Raisin Bran rather than Post’s version.
Second, Joel’s ideas (as usual) have a lot of merit. But we might make a stronger case for having more a more differentiated product, with benefits you can hang your hat on – benefits that make a message, whether it is broadcast, direct mail, social media-based, etc. ring true.
Moving a preferred buyer to a dedicated buyer takes work. Using all of the research tools available to ‘listen’ and identify who your preferred buyers are and what they are talking about is just the first step. This is not listening. Listening from your customer’s point of view means that you’re reacting to what is being said. Tangible evidence that you are, in fact, listening.
In order to maintain a meaningful dialog and establish that ‘customer=for-life’, brands need to become publishers of a portfolio of content that continually tells stories of relevance and interest to your audience. Find your brand zealots and get to know them! Every one has a valued and meaningful story about your brand. Find those stories, capture those stories and share those stories with your audience across all available consumer touch points! Brands need to become publishers!
Curating, configuring and delivering that library of content becomes the next critical piece of this process.
When we talk about this topic, I think of products outside the food industry. I then try to think of aspects that drive loyalty and see what can transfer to the food biz.
People may stick with an automobile brand their entire life. If they don’t, they most likely still have a favorite brand. Perhaps that brand didn’t have what the shopper needed at that particular time (e.g., a minivan). However, when the brand again has the right product, the shopper returns to the brand. Hotels and airlines are other examples of this deep loyalty.
Closer to the food biz may be the footwear industry. People definitely stay with brands of athletics shoes fairly consistently. Why? Because the shoes fit their lifestyle and provide the cache and functionality required.
How can we translate that to food? First, determine your brand message to the market. Is there a message, actually? If not, that’s your first place to start. If there is, explore the social sentiment of that message to determine where the value lies with your brand. Then identify differentiators to drive exclusivity to your brand. There are great tools available from several providers these days to help you get started down this path.
Thankfully for most brands, consumers are willing to test other brands. Without that behavior, very few if any new brands would be introduced.
So how do you gain more than the average 50%? Yes, social is a huge opportunity to help drive loyalty. Consumers are hungry for content and if you can consistently provide them with valuable content, they are more likely to support your brand.
Two great examples:
1) King Arthur Flour – They have done a wonderful job of sharing inspiring images and recipes of baked goods using flour (hopefully their flour) on their Facebook page. As a “carboholic,” I can’t help myself. I have to share the photo and download the recipe. In return for their content, I buy their brand 80%+ of the time.
2) Whole Foods – A disclaimer, I do not shop at Whole Foods, but I am extremely impressed with their Facebook content. How to videos, recipes, holiday ideas and stories about eating healthy. I have spoken to several Whole Food fans and they love the store. Not just because of the shopping experience, but also because of the content they share.
Consumers still love coupons, but what they really want is content they can use.
In studying actual transaction data at the household level, it is apparent that different brands (with different quality perceptions) have different degrees of loyalty within different segments of customers.
In many instances, there are distinct price-gap thresholds that lead to switching to and from preferred brands. For example, one segment of customer might be continually loyal to a premium brand of a product, but switch to a less-preferred brand if the price differential is greater than some fairly well-defined threshold point. The transaction level data tells very interesting, actionable stories that characterize customer behavior with respect to product and brand loyalty.
There’s no foolproof way to win unwavering brand loyalty from consumers when you competitor is only 6 inches away. In the extreme, they can always induce trial by giving a free unit to consumers who prefer your brand.
That said, it’s very expensive (and not particularly effective) to buy a new customer away from a competitor, and Joel touches on some tactics you can use to keep your consumers engaged. We’ve found it to be very cost effective to deliver up-sell and reward offers to loyal consumers. The result is usually a lasting increase in consumption and a positive perception that the brand knows and values them as customers.
But, will I buy more brand X peanut butter because they follow me on Twitter? I’d need to see the data on that one to be convinced.
Good comments already.
Gaining granular insights and linking them to individual consumers and shoppers will help brands make the right investments to earn greater loyalty.
Although helpful, social media don’t provide access to individual level insights that can be harvested by brands, nor do they provide closed-loop personalized solutions.
Modern social media allows connection and to a great extent encourages experimentation so you are not perceived to be “boring.” Hence the challenge for today’s brand that dedicated buyers are bombarded by social media to “try something new, be different” and therefore divert the wallet elsewhere. Marketers today need to continuously “resell” the customer value of the brand as they are bombarded by alternatives and distractions.
Recognition that a brand notices that I like and use their product is an important motivator. I recently bought four packages of my preferred yellow bag chocolate chips in anticipation of holiday baking. At checkout I received a coupon from that company for a quite substantial amount off five more bags of their chips good until Dec. 24. It is such a good deal that I will certainly use it, will have the chips on hand (they keep for a long time) and feel very good about the company beyond the quality of their chips. The company is literally guaranteeing that I’ll not succumb to any other chocolate chip brand’s end-cap, BOGO, or discounts for a long time.
Because there is practically no such thing as true brand differentiation in CPG marketing any more. Particularly not in food. Marketers still haven’t learned that lime-lemon is not markedly and meaningfully different from lemon-lime. And calling it “scintillating citrus” doesn’t help either.
Ninety-plus percent of all CPG marketers are doomed to a share steal battle, albeit some are fortunate enough to be fighting in expanding categories, so they might not realize it yet.
To me, there is only one thing that can get customers to shift brands: Product Quality.
You can argue all you want about price, but if all you’ve got is the lowest price, it’s only a matter of time before someone undercuts you. Quality for a market right price is what value used to mean before the fast food guys changed the perception of “value” to mean “cheap.” Therefore, quality will win every time. Just ask Starbucks.
Warren Buffett is fond of saying, “price is what you pay, value is what you get.” Right on.
In today’s market, it is extremely difficult task to gain 100% of a customer’s share of wallet. Between constant promos, discounts, increased access to new channels and retail start-ups heavily funded allowing for attractive reasons to try another brand, the truly “loyal” customer is hard to find.
Certain companies are able to create loyal customers through thoughtful loyalty programs that adapt to customer needs. When there is minimal differentiation across products, the loyalty program will allow brands to capture the long-term attention of customers and reward them appropriately.
Social tools can drive engagement across channels that will keep brands top of mind, but this will still be an uphill battle for retailers in this crowded market.
A dedicated buyer is a loyal buyer. You get loyalty from confidence. Confidence comes from a predictable experience, both with the service and the quality of the product. That’s the table stakes to step up to playing in the loyalty game. However, it may not be enough in today’s digital world.
Start with the base and add social proof. That’s testimonials and other word of mouth marketing comments that validate the customer’s choice to do business with you.
Take a great product, deliver with great service, and prove to the customer he/she made the right choice, you have a shot at an “ever loyal” customer.