A newly released study by Georgetown Institute of Consumer Research (GICR) sponsored by KPMG in the US offers fresh insight into the many shades of customer loyalty and the difference between frequent buyers and fiercely loyal customers, highlighting the importance of nurturing the latter segment.
The January 2014 study, Finding the Fiercely Loyal Among the Frequent Buyers, delves into a murky area of market research to better understand the varying degrees of consumer brand loyalty and their impact.
“Past research on brand loyalty generally equated it with frequent purchase, but we found that the customer behaviors of frequent purchasing and fierce loyalty are very separate phenomena,” observes Kurt Carlson, Associate Professor of Marketing and Director of the GICR.
For example, frequent buyer participants in the study were almost twice as likely to be willing to switch to a cheaper brand or a more convenient brand than fiercely loyal participants. Similarly, the study found that fiercely loyal customers were much more prone than frequent buyers to recommend a brand to others, as well as much less prone to recommend the brand's competition than frequent buyers. Moreover, they stick with a brand or defend it even following a public relations crisis or a price increase. For these reasons, it’s desirable for companies to identify and engage such customers, since they will be loyal shoppers in good times and bad."
The study also separated the idea of fierce loyalty from the concept of ‘brand love,’ which arose recently to describe the ‘warm fuzzy feelings’ that some consumers lavish on brands like Apple and Starbucks.
“The difference between these two perspectives is that fiercely loyal customers don’t just love their brand but they also have strong negative feelings towards its competitors,” explains Carlson. “It’s more like being a sports fan. You love your team and you hate their rivals. You wear the logo, rush to defend it and you are very resistant to change.”
How to build fierce loyalty?
But how can marketers build the same kind of die-hard customer loyalty as sports fans feel for their beloved teams? The study suggests that first a company must build positive feelings about its brand by being the kind of company that consumers feel good about. To do so, you must truly understand customer needs, meet them better than anyone else, and create a brand personality that reflects this.
The second - and perhaps trickier - step involves positioning your company against the competition and drawing direct or indirect comparisons to make consumers dislike the rival brand. This is risky since consumers, like voters, can be turned off by mudslinging.
The key according to Carlson is for companies to paint a picture of their competition that is negative but believable. He points to the long running “I’m a Mac/I’m a PC” TV ads in which a hip young Apple user conversed with a rumpled, middle-aged PC user, effectively positioning Apple as cool while Windows-based competitors were not.
Finally, even with the advent of social media, it’s not easy to identify and engage your fiercely loyal customers, notes Alton Adams, Principal and US Customer Strategy & Growth Practice Leader with KPMG in the US: “Identifying your firm’s most valuable customer is the holy grail of customer analytics. Indeed, the amount of human and financial investment in identifying the truly loyal customer, who frequently has the highest lifetime value, is both art and science given the changing habits of the post-recession consumer.”
Despite the intense effort needed to build a strong customer brand and position it strategically against rivals, marketers might wish to pay closer attention to the ‘fiercely loyal’ client segment, in hopes of drumming up fanatical loyalty like you see at your hometown soccer, baseball, or basketball stadium.
- Do your current data analytic abilities enable you to identify, target and engage your most loyal clients?
- What percentage of your clients would you estimate to be ‘fiercely loyal’ vs. ‘frequent buyers’?
- What types of products, services, programs and campaigns have you developed to foster fierce brand loyalty?
- How can bank marketers realistically draw direct comparisons/criticisms of competitors without tarnishing their own brand?