Sales & Marketing

Complacency could cause catastrophe as brand loyalty comes in four different forms

4 min read

16 August 2016

Former deputy editor

It’s fair to say that brand loyalty is the holy grail that businesses strive for, with the hope they will be able to woo customers and live happily ever after. However, it’s not as simple as that – it turns out there are four types of brand loyalty, which means there is no room for complacency.

The findings come from marketing trade body DMA, which started off by highlighting that engaged customers are better customers. The reasons for that are quite simple:

(1) They buy more from you

(2) They are more receptive to your marketing

(3) They talk about your brand to friends, which backs up point two and generates free marketing

As delightful as that may sound, however, there is no straightforward meaning of brand loyalty. In fact, there are four types of loyalty that consumers have towards businesses, which means that companies need to take this on board when pushing forward with marketing strategies.

The four types of brand loyalty, according to DMA, are:

(1) They love you: 40 per cent are “actively loyal” to brands across special and routine purchase.

(2) They’ll cheat on you: 27 per cent are “actively disloyal” and have no allegiance to specific brands.

(3) They want you to spice things up: 23 per cent are “habitually loyal”. That means routine items may be bought from you on a regular basis, but they’ll still scout about when searching for special goods.

(4) They feel like it’s all fun and no commitment: Nine per cent are the opposite of group three. You’ve won their loyalty when it comes to special purchases, but routine purchases aren’t something you can offer.

While data is a concern for some consumers. DMA found that customers are happy to share data – but only if they can benefit from it, receiving access to deals such as lower prices, loyalty rewards and special offers.

Rachel Aldighieri, MD at the DMA, said: “Current engagement methods often seem clumsy, like ‘brand stalking’, where items follow a consumer around on web banners.

“Instead, consumer data could be used in virtual or artificial intelligence systems. One example could be chatbots, giving brands a better way to use their data and consumers a more meaningful interaction.”

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The report added that the customer engagement and data sharing will develop a strong relationship between brand and consumer, which will allow both parties to win.

“An overarching theme emerges: customers crave dialogue. Fail to engage, and run the risk of seeing them flock elsewhere,” commented Tomas Salfischberger, CEO at Relay42, on the research.

DMA also found that disloyalty is likely to rise alongside the price of items bought. Some 46 per cent of consumers admitted shopping around for items like furniture, though that falls to 24 per cent and 21 per cent for goods such as clothes and beauty products.

Elsewhere, 40 per cent of customers want firms to remember upcoming birthdays, as well as provide gift suggestions.

Jed Mole, European marketing director at Acxiom, added: “Tantalising is the revelation that consumers really do want to be ‘surprised’ by brands, with great offers and gifts; but how can we do that without being able to recognise the individual and connect their data to understand just how we should surprise them, with what and when?”

“The report that follows proves that understanding people, not technology, is vital to the future success of brands who want to achieve better customer engagement,” concluded James Moffat, CEO at Organic.

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