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Page 1: Brand Loyalty Blue Paper

4imprint.com

Brand Loya l ty

Page 2: Brand Loyalty Blue Paper

© 2015 4imprint, Inc. All rights reserved

Maintaining loyal customers in today’s d ig i ta l wor ld

Today’s customers have more choices than ever before—both online and in-stores.

And if brand promises are not fulfilled with every interaction, trust between the

customer and a brand can fluctuate.1 The business marketplace is changing, too.

Customers are now shopping online more and in stores less. The Internet now

tops the list of shopping destinations—last year alone, shoppers made 15 percent

fewer trips to the store.2,3

Changes in the way consumers shop has led to decreased brand loyalty. Why?

Because it is easier to cultivate loyalty and trust in-person. Couple this potential

for shaky trust with a somewhat unstable economy, the rise of couponing and

other economic factors, and we see a marketplace that has everyone looking for

more … whether that’s in the form of a deal or an optimized experience. In other

words, higher customer expectations and fewer opportunities for face-to-face

interactions mean that marketers may need to shift their brand loyalty strategy or

risk losing loyal customers.4

New customer behavior research from multiple

sources has shed light on this topic and these

customer behavior changes. For instance,

one third of customers are now less loyal

than before.5 And, their loyalty is impacted

by customer experience.6 The research finds

that better customer service and experience

equates to a greater chance of generating sustained loyalty. Furthermore, loyal

customers are only loyal to a limited number of brands at any one time. How

many brands, you ask? Three.7 Additionally, BizReport shared Emarsys research

finding that 79 percent of customers said they were more likely to be loyal to

1 Lee, Jonathan, Marissa Gluck, and Ken Allard. “How Brands Build Trust in a Digital World.” Huge Inc. N.p., 27 Aug. 2014. Web. 14 Dec. 2014. <http://www.hugeinc.com/ideas/report/how-brands-build-trust-digitally>.

2 Kenney Paul, Alison, Rod Sides, and Susan K. Hogan. “Deloitte’s 2014 Annual Holiday Survey: Making a List, Clicking It Twice.” Deloitte University Press. N.p., 28 Oct. 2014. Web. 08 Dec. 2014. <http://dupress.com/articles/holiday-retail-sales-2014/>.

3 Russo, James. “Stay Ahead of Consumers to Win in Today’s Fragmented Markets.”Nielsen. N.p., 14 Feb. 2014. Web. 8 Dec. 2014. <http://www.nielsen.com/us/en/insights/news/2014/connecting-through-the-clutter-stay-ahead-of-consumers-to-win-in-todays-fragmented-markets.html>.

4 Roesler, Peter. “5 Ways to Build Customer Trust and Loyalty in the Digital Age.”Inc.com. N.p., 13 Oct. 2014. Web. 17 Dec. 2014. <http://www.inc.com/peter-roesler/5-ways-to-build-customer-trust-and-loyalty-in-the-digital-age.html>.

5 Legatt, Helen. “Poor Retail Customer Service Decreasing Loyalty.” Loyalty Marketing. BizReport, 25 Aug. 2014. Web. 24 Nov. 2014. <http://www.bizreport.com/2014/08/poor-retail-customer-service-decreasing-loyalty.html>.

6 Ibid.7 Ibid.

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© 2015 4imprint, Inc. All rights reserved

brands with a physical presence.8 That data might seem a little doom and gloom,

but have no fear there is good news for marketers. The research also revealed

brand advocates’ real motivations. Somewhat surprisingly, brand advocates were

not motivated by incentives or discounts. Instead, the Needle® in partnership

with Y2 found that two thirds of brand advocates are motivated to positively

impact your marketing efforts by sharing their passion for your products and

services.9 Bottom-line: Despite a shifting loyalty landscape, research shows

that opportunities exist for marketers to build loyalty through swift service,

personalization and captivating experience. In other words, brand loyalty is

ready for a much needed and customer-mandated makeover for the converged

digital marketplace.

This Blue Paper® will utilize psychology and new research to provide a research-

driven approach to brand loyalty in an Internet-driven world. First, we’ll provide

brand loyalty background using psychological foundations to develop a shared

definition of brand loyalty. Using this shared definition we’ll then analyze the

new research to gain insight on how marketers might need to shift their brand

loyalty strategy. These research insights will then help us shape the finalized

makeover through a three-part approach to brand loyalty today.

Firm foundations: The psychology of brand loyalty

The marketplace is changing, but the core customer psychological principles

behind brand loyalty remain the same. These principles form the foundation of

all brand loyalty behavior, and we will use them throughout the Blue Paper as

we look to build a brand loyalty strategy that is relevant for today’s customers.

Let’s start by defining two key psychological principals involved in brand loyalty:

motivation and reciprocity.

Motivation is the fundamental urge that pushes a

customer to purchase a product or service in the

first place. Motivation begins by identifying that

you have an unfulfilled need, want or desire. As

the unfulfilled need/want/desire creates tension,

drive is formed to satisfy the need or want.10

This drive, coupled with previous learning and

biological, emotional, social and cognitive factors,

leads the individual to form a behavior that they believe can meet the need at

8 Legatt, Helen. “Consumers More Likely to Be Loyal to Brands with a Physical Presence.” Loyalty Marketing. BizReport, 22 Sept. 2014. Web. 24 Nov. 2014. <http://www.bizreport.com/2014/09/consumers-more-likely-to-be-loyal-to-brands-with-a-physical.html>.

9 Heidersbach, Amy. “First Ever Advocate Study Dispels Myths About Untapped Resource.” Needle. N.p., 29 Sept. 2014. Web. 14 Dec. 2014. <https://www.needle.com/blog/thought-leadership/first-ever-advocate-study/>.

10 Cherry, Kendra. “What Is Motivation?” About Education. About.com, 2013. Web. 08 Dec. 2014. <http://psychology.about.com/od/mindex/g/motivation-definition.htm>.

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© 2015 4imprint, Inc. All rights reserved

hand. The motivation process is illustrated in figure 1 below11.

Figure 1. The motivation process12

Without motivation, individuals would not be compelled to re-purchase items or

to develop a strong positive attitude toward a specific brand. An understanding

of customer motivation to buy is essential as we work to understand customer

needs and goals.

Reciprocity is the second psychological principal at play in discussions of brand

loyalty. Mutual benefit that fosters goodwill between two parties is the definition

of reciprocity. Whether it is exchanging tweets, providing a free sample with

purchase or one of many other exchanges of ideas and/or goods, reciprocity

between a brand and a potential or current customer can help foster a brand

relationship by building an attitudinal preference toward your product or

service. When paired together, motivation and reciprocity can help foster a brand

relationship that evolves into brand loyalty. Using these definitions of motivation

and reciprocity, let’s move on to discuss models of brand loyalty.

Brand loyalty models build on the psychological principles of motivation and

reciprocity by illustrating how brand loyalty is cultivated. While the research we’ll

cover in the next section is new, these models are not. There are many brand

loyalty models, but we will use two models that when joined together provide

the most comprehensive reflection of loyalty cultivation. We’ll overlay Kolsky’s

“emotion vs. intellect” model with Peppers’ “attitude vs. behavior model” as a

means to viewing the full spectrum of factors contributing to brand loyalty. Other

models want to define loyalty as only emotional, where the customer’s feelings

are the only factor that determines loyalty. Some models see loyalty as only based

on behavior where simple repurchasing rules loyalty. However, it is easy to see

that multiple factors impact customer loyalty in today’s complex market. For

11 Trivedi, Mithilesh. “Motivation in Consumer Behaviour.” Motivation in Consumer Behaviour. N.p., 19 Sept. 2013. Web. 10 Dec. 2014. <http://www.slideshare.net/mithileshtrivedi581/motivation-in-consume>.

12 Ibid

Page 5: Brand Loyalty Blue Paper

© 2015 4imprint, Inc. All rights reserved

this reason, we’ll define loyalty as the combination of the Kolsky and Peppers’

models—meaning that the customers’ emotional or logical preference for a brand

combined with their repeated behavior in favor of that same brand is loyalty.

Let’s first dive into Kolsky’s “emotion vs. intellect” model for greater

understanding. Customer strategy expert and customer relationship management

(CRM) thought leader, Esteban Kolsky, proposes in his model that loyalty can be

either emotional or intellectual. Emotional loyalty is focused on how the customer

feels about your product, your services and doing business with you.13 The feelings

your brand produces feed your relationships with your customers. On the other

hand, intellectual loyalty is based more on logic and transactions.14 Customers

might wonder why they have not switched to another company, but they always

find a reason to continue doing business with you.15 This form of loyalty is much

shallower than emotional loyalty because it is always based on the current

transaction. The customer is reasoning through the current experience of price

and service, and then making comparisons to other providers.

Both emotion and logic play into purchasing decisions. And circumstances manage

the extent to which both factors impact the decision at hand. Some purchases

carry more emotional weight than others.16 A study by the Max Planck Institute

for Human Cognitive and Brain Science demonstrates this by revealing that our

unconscious brain makes decisions at least seven seconds before our conscious

brain becomes aware of the decision-making process.17 Therefore, proving that

we act only after our subconscious brain has felt.18 Consumer behavior expert,

Michael Fishman, takes this finding further by saying, “Most people can’t answer

the simple question of why they want the things they want. That’s because our

brain drives our decision-making process in ways we aren’t really

aware of.”19 For example, most of us can say whether or not we want

a specific product, but we may not be able to clearly and justifiably

explain why.20 The reason is because there are subconscious drivers

motivating our actual decision-making.21

Don Peppers’ “attitudinal vs. behavioral” model builds upon the

Kolsky’s model by focusing on the attitude and behavior connected to loyalty.

13 Hayes, Bob. “What Is Customer Loyalty?” InsideCXM. N.p., 28 Aug. 2013. Web. 02 Dec. 2014. <http://www.insidecxm.com/customer-loyalty/>.

14 Ibid.15 Ibid.16 “Loyalty, Emotion and Habit: The Psychology of Branding.” Ashgrove Marketing. N.p., n.d. Web. 25 Nov. 2014.

<http://www.ashgrovemarketing.im/loyalty-emotion-and-habit-the-psychology-of-branding/>.17 Ibid.18 Ibid.19 Clark, Dorie, and John Corcoran. “Cracking The Code Of Consumer Psychology.” Forbes. Forbes Magazine, 20

Aug. 2013. Web. 02 Dec. 2014. <http://www.forbes.com/sites/dorieclark/2013/08/20/cracking-the-code-of-consumer-psychology/>.

20 Ibid.21 Ibid.

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© 2015 4imprint, Inc. All rights reserved

Peppers asserts that action is missing from the Kolsky model because as noted

before, loyalty cannot be solely based on an attitude.22 Just knowing that

customers felt positively toward your company doesn’t mean they will buy.

Loyalty has to be attitude and action combined. In this perspective, attitudinal

loyalty is meaningless without behavior.23 Peppers regards attitudinal loyalty as

no more than customer preference.24 Behavioral loyalty, as you might guess, deals

with the customers’ actions.25 When we put the emotional, intellectual, attitudinal

and behavioral factors together, we gain a more complete picture

of brand loyalty. The following case study about Camay® soap

illustrates the power of emotional and attitudinal loyalty when

combined with behavior … even in a changing marketplace.

Camay soap, sold by Proctor & Gamble®, was originally introduced to the market

in 1926. Its history illustrates the importance of both attitude and behavior when

building brand loyalty.26 Camay was marketed as, “Camay: the soap for beautiful

women.” As the primary audience aged, the messaging changed to, “For your

most beautiful complexion at every age.”27 Today, Camay only sells well to women

in their 60’s.28 Only sold online in the U.S., the pink soap is still in demand despite

not being readily accessible in stores for that age population.

This case study shows the impact that loyalty can have in a changing business

landscape. When buyers could not purchase the soap in-stores, they didn’t simply

choose another soap. They went online to find Camay. A New York Times article

shares customer reactions to Camay no longer being available on store shelves:

“I’ve been looking all over for Camay soap, and I was afraid I would never wash

again,” one customer wrote online.29 Another wrote, “I call them memory bars.”30

The brand commitment demonstrated in these customer testimonies shows

the power of psychology on customer behavior. These women felt so strongly

about the product and the emotions and attitudes attached to their experiences

with the soap that they sought out the product despite having to change their

shopping habits. This is an example of what can be accomplished through careful

understanding of customer loyalty.

22 Peppers, Don. “Customer Loyalty: Is It an Attitude? Or a Behavior? - Strategy Speaks: A Peppers and Rogers Blog.” Customer Loyalty: Is It an Attitude? Or a Behavior? - Strategy Speaks: A Peppers and Rogers Blog. Peppers and Rogers Group, 1 Oct. 2009. Web. 16 Feb. 2015. <http://www.peppersandrogersgroup.com/blog/2009/10/customer-loyalty-is-it-an-atti.html>.

23 Ibid.24 Ibid.25 Ibid.26 “Camay.” Wikipedia. Wikimedia Foundation, 24 Nov. 2014. Web. 25 Nov. 2014.

<http://en.wikipedia.org/wiki/Camay>.27 Ibid.28 Beckwith, Harry. “Are People Actually Brand Loyal?” Psychology Today: Health, Help, Happiness + Find a

Therapist. N.p., 5 Jan. 2011. Web. 25 Nov. 2014. <http://www.psychologytoday.com/blog/unthinking/201101/are-people-actually-brand-loyal>.

29 Morell, Ricki. “When a Trusted Brand Disappears.” The New York Times. The New York Times, 01 Dec. 2010. Web. 25 Nov. 2014. <http://www.nytimes.com/2010/12/02/fashion/02SKINDEEP.html?_r=0>.

30 Ibid.

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© 2015 4imprint, Inc. All rights reserved

Understanding the psychology behind customer loyalty is vital because technology

will continue to evolve and change customer behavior. We might get new brand

loyalty research in 10 years that indicates totally different customer behavior, but

the psychological principles behind customer behavior will remain constant. These

principals will continue to provide insight on what customers want no matter the

latest tech trend.

A next level look: Research analysis for increased loyalty

With the foundation primed, it’s time for a cut, color and wash as part of our

brand loyalty makeover. We’ll take the new look to the next level by analyzing

six primary findings from the latest brand loyalty research. Overall these findings

demonstrate the importance of strong customer service in keeping today’s

customers loyal. We’ll use the psychological principals covered in the foundation

section to analyze each of these six findings and uncover insights into the

changing look of brand loyalty.

Findings one and two discovered that: One third of UK

consumers have become less loyal to retail brands in

the last five years.31 And that 78 percent of consumers

feel they are not loyal to a particular brand.32 As more

and more product and service offerings are available,

customers have more choices. Additional choices can impact buyer motivation.

For example, if a customer sees similar toothpaste with the same flavor but at a

better price point, they may be positively motivated toward that new product. Or

perhaps a customer is very loyal to a specific grocery store; the product offerings

meet their needs but the service has become increasingly poor. The customer may

be negatively motivated to change grocers in search of better service. 64 percent

of Consumer Reports® survey respondents said they had left a store in the last 12

months due to poor customer service.33 Talk about a loyalty killer.

Finding number three says that loyal customers are only loyal to three brands

at once, and that 79 percent of customers feel they are more likely to be loyal

to a brand with a physical presence.34 While finding number three found that

customers are more likely to experience brand loyalty with businesses that have a

31 Legatt, Helen. “Poor Retail Customer Service Decreasing Loyalty.” Loyalty Marketing. BizReport, 25 Aug. 2014. Web. 24 Nov. 2014. <http://www.bizreport.com/2014/08/poor-retail-customer-service-decreasing-loyalty.html>.

32 Russo, James. “Stay Ahead of Consumers to Win in Today’s Fragmented Markets.”Nielsen. N.p., 14 Feb. 2014. Web. 8 Dec. 2014. <http://www.nielsen.com/us/en/insights/news/2014/connecting-through-the-clutter-stay-ahead-of-consumers-to-win-in-todays-fragmented-markets.html>.

33 “Consumer Reports Survey: Two In Three Consumers Have Walked Out Of a Store Because Of Poor Customer Service : Consumer Reports Http://pressroom.consumerreports.org/pressroom/.” Consumer Reports Pressroom. Consumer Reports, 7 June 2011. Web. 15 Dec. 2014. <http://pressroom.consumerreports.org/pressroom/2011/06/consumer-reports-survey-two-in-three-consumers-have-walked-out-of-a-store-because-of-poor-customer-service.html>.

34 Legatt, Helen. “Consumers More Likely to Be Loyal to Brands with a Physical Presence.” Loyalty Marketing. BizReport, 22 Sept. 2014. Web. 24 Nov. 2014. <http://www.bizreport.com/2014/09/consumers-more-likely-to-be-loyal-to-brands-with-a-physical.html>.

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physical presence, this research does not mean that online businesses will not be

able to cultivate loyal customers. This finding simply means that online businesses

may have to be extra diligent with their messaging, strong customer service and

excellent customer experience when looking to build loyal customers. Why do

brick and mortar businesses experience a greater likelihood for loyal followers?

The psychological underpinning may be that in-person brand connection presents

more opportunities for customers to connect emotionally with a branded

experience and to build a relationship with the staff. What’s your key takeaway?

All businesses—both brick and mortar and online-based—should consider

finding innovative methods of building trust and presenting an engaging and

personalized experience for customers.

Forty-two percent of consumers feel that personalization and special

treatment build trust and loyalty for online-only brands—or so

concludes finding number four.35 This reveals that online businesses

should employ reciprocity to foster positive attitudinal association

with their brand by personalizing the shopping experience and

email messages and offering discounts and other incentives to help the customer

feel valued. Not only do these efforts help the customer develop a positive

association with a brand, they help differentiate an online business from the

myriads of others. When customers feel good about shopping with you, they

remember you and are more likely to engage with you on social media and to

come back and shop again.

Finding five says that 37.5 million people in the U.S. fit the characteristics of a

potential brand advocate, and research shows that two-thirds of brand advocates

are primarily motivated to advocate on behalf of a specific brand because they

enjoy sharing their passion and being able to help others solve a problem.36

This finding contradicts the common misconception that brand advocates are

motivated by incentives or payments.37 What is it that really defines a brand

advocate? Brand advocates are customers who are super passionate about your

brand or product, and they talk about why they love a specific product/service

in the physical and digital realms. True advocacy is a combination of expertise,

knowledge, influence, loyalty and promotion—this is the most advanced form of

brand loyalty.38 The sheer number of qualified brand advocates and their intrinsic

motivation to help others presents great opportunities for brands able to cultivate

passionate customers who will then go out and share the brand with others.

It is easy to assume that all customers want brand relationships … especially

35 Ibid. 36 Heidersbach, Amy. “First Ever Advocate Study Dispels Myths About Untapped Resource.” Needle. N.p., 29 Sept. 2014. Web. 14 Dec. 2014. <https://www.needle.com/blog/thought-leadership/first-ever-advocate-study/>.37Ibid.38 Brand Advocacy in the U.S. Rep. Needle, Inc., 2014. Web. 19 Dec. 2014. <https://www.needle.com/whitepapers/power-of-advocates/>.

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after reading about the enthusiasm and zeal of brand advocates. However,

not all customers want brand relationships. In fact, a Harvard Business Review

study reveals that only 23 percent of people want brand relationships—that’s

finding number six.39 These customers most likely seek a more emotional and

attitudinal connection with brands. And 64 percent of customers who have

brand relationships do so because of shared values with the brand. The other 77

percent of customers may be more likely to be loyal to brands on a transactional

level.40 These transaction-focused loyals may have an attitudinal and behavioral

preference for specific brands, but they don’t want to connect with brands at the

more involved relationship level. This finding shouts loud and clear that we all

might want to consider the positive impact investments in transactional loyalty

can have.

Do these research findings have your commitment to brand loyalty wavering?

Are you thinking that it might just be easier to go after new customers if loyalty

is more difficult to build and sustain in today’s marketplace? Think again—new

customers are costly—much more costly than loyal customers. Acquiring a new

customer costs 5 to 10 times more than selling to a customer you already have.41

There is also an added incentive to sell to existing customers because current

customer spend is 67 percent more per purchase than that of new customers.42

If we just look at online sales for both B2B and B2C companies, 8 percent of U.S.

customers make repeat purchases with a company.43 While we know that repeat

customers are not necessarily loyal customers, we know that businesses whose

client base is 40 percent repeat customers generate nearly 50 percent more

revenue than similar businesses with only 10 percent repeat customers.44 The

profits prove that brand loyalty is a worthwhile investment.

In addition to the valuable findings about how brand loyalty

has changed, four categories of loyal customers also emerged

from this new research. This combined research presents

the “relationship-focused loyal,” the “transaction-focused loyal,” the “brand

advocate” and the “non-loyal” customer. The insights gained from the new brand

loyalty research and these loyalty categories will help complete our makeover as

we provide new considerations for building brand loyalty in the next section.

39 Freeman, Karen, Patrick Spenner, and Anna Bird. “Three Myths about What Customers Want.” Harvard Business Review. N.p., 23 May 2012. Web. 16 Feb. 2015. <https://hbr.org/2012/05/three-myths-about-customer-eng>.

40 Ibid.41 Fenn, Donna. “10 Ways to Get More Sales From Existing Customers.” Inc.com. N.p., n.d. Web. 08 Dec. 2014.

<http://www.inc.com/guides/2010/08/get-more-sales-from-existing-customers.html>.42 Ibid.43 Vides, Tracy. “What You Never Knew About Repeat Customers and What to Do Now.” Online Marketing

Institute Blog. Online Marketing Institute, 18 May 2014. Web. 25 Nov. 2014. <http://www.onlinemarketinginstitute.org/blog/2014/05/what-you-never-knew-about-repeat-customers-and-what-to-do-now/>.

44 Uzunian, Mark. “The Importance of Repeat Customers.” SumAll. N.p., 5 Apr. 2013. Web. 10 Dec. 2014. <http://blog.sumall.com/journal/the-importance-of-repeat-customers-2.html>.

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New style for a changing marketplace:

Your get-started guide to brand loyalty in 2015

It’s time for the real transformation to take place … we’re now going to apply the

learning gleaned from our research analysis to your existing loyalty strategy. The

goal is to use the four categories of loyal customers and the following research

highlights to improve loyalty cultivation and sustainability in our ever-changing

business landscape. But before we do, here’s a re-cap of the key research findings:

• Overall loyalty has decreased.

• Engaging customer service and experience are indicators of higher

levels of loyalty.

•Customers are generally only loyal to three brands at any one time.

•Customers are more likely to be loyal to brick and mortar businesses.

• Personalization and incentives can positively impact customer loyalty for

online businesses.

• There are 37.5 million U.S. customers who meet the criteria of brand

advocates and 2/3 of existing brand advocates are motivated by sharing their

passion for your brand with others.

• The majority of customers are more likely to be brand loyal on a

transactional level.

Are you ready to get started? This three-part brand loyalty plan will first analyze

your audience and plan for loyalty strategy enhancements. In the second part,

we’ll provide tips on application and implementation of the new loyalty research

findings. And we’ll put the final touches on brand loyalty’s new look with a

loyalty measurement and refinement discussion in step three.

Step one: Audience analysis and loyalty planning

No matter what type of loyalty building initiative you are considering—start

with what your customers want. What are your customers looking for in your

products? Why are they motivated to buy from you and what are their pain

points? Every approach to building loyalty will be different based on who your

company is, what your current customers are saying about you and how they feel

about you. Get answers to the questions above by starting your quest toward

greater brand loyalty by doing your homework. As with any new marketing

initiative, you will want to start with your research. Use social media and other

listening platforms carefully to see what customers are saying about you. Use the

data available to paint a picture of:

• What do customers like and dislike about your product or service and how

do they feel about your brand?

•What makes current customers think about your company?

•What motivates customers to come back? What drives them away?

• Does your brand have advocates or are your customers loyal on a different

level?

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•What does your perfect customer really want?45

•How can your product or service solve their problem(s)?46

•What factors motivate customers’ buying decisions?47

• Why do your existing customers choose your business over

the competition?48

Make sure to record this data as a baseline for your loyalty

initiatives. You will want to be able to measure loyalty-based

initiatives against these baseline numbers, and then refine to continuously build a

stronger following of loyal customers.

This data, coupled with what you already know about your existing customers,

will help you determine what types of loyals your customers tend to be. For

example, if a brand is historically very emotionally-driven in its messaging, it

would make sense that the loyal customer would generally be more

relationship-focused. If you are using audience segmentation and/or personas,

overlay your current segments with your new loyalty-driven data to see where

your customer segments align. This alignment can provide additional insight

about your customers and their loyalties. Use this information to create greater

personalization in your messaging and loyalty initiatives. Marketing automation

may help—for more information on how to make marketing automation really

work for you, read our marketing automation Blue Paper.

Remember, as discussed in our loyalty background section, brand loyalty is a

powerful attitudinal and behavioral attachment that can be easily damaged.

This makes understanding your customers and their relationship with your

brand—whether relationship-focused or transaction-focused—essential to

moving forward. Recognize that competition for brand advocates is fierce and

that fierceness is only going to grow. Simply implementing a loyalty program

won’t necessarily give you an edge on competition, but building relationships,

personalizing loyalty initiatives to meet customer preferences and maximizing

your brand differentiators can.

Step two: Application and implementation

The next step in building greater loyalty is to put your segmented customer/

loyalty-aligned data to work. But before we jump to implementing loyalty

programs, let’s remember that the average consumer is only loyal to three

brands at any one time. Let’s also take into consideration that there are 2.65

billion loyalty program memberships in the U.S. alone, which is equal to 21.9 per

45 “How to Create a Ferocious Unique Selling Proposition.” (n.d.): n. pag. Wordstream. Wordstream, Inc., 2014. Web. 10 Dec. 2014. <http://www.wordstream.com/download/docs/unique-selling-proposition-guide.pdf>.

46 Ibid.47 Ibid.48 Ibid.

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household.49 However, the average customer is only active in 9.5 of those loyalty

programs … meaning that there are a lot of loyalty programs going unused.50 This

tells us that instead of focusing on loyalty programs alone, we may want to shift

our attention towards building initiatives that meet the needs of your different

types of customers.

The goal: Build trust over time. If you build trust effectively while differentiating

your brand, you can cultivate brand advocates. The trick is understanding

that building trust for relationship-focused customers looks different than for

transaction-focused customers. And, it also looks different in-stores versus online.

The following table shows what these differences might look like.

Figure 2. Trust building

The key difference in treatment is the way personalization is handled.

Personalization for transaction-focused customers will be more centered on

products or services; whereas with relationship-focused customers, you’ll want to

incorporate lifestyle information in addition to product/service messaging. With

these differences in mind, let’s review some specific ideas on how to put trust-

building into practice.

Relationship-focused loyals. For your relationship-focused loyals, focus on being

helpful and earning your relationship. In your content, social media, email

programs and surveys, always provide information that helps customers while

offering a consistent experience.51 This doesn’t have to necessarily be product- or

service-specific information, but it does have to be relevant to your customers’

49 Pearson, Brryan. “2.65 Billion Reasons to Attend This Year’s COLLOQUY Loyalty Summit.” Quartz. LoyaltyOne, n.d. Web. 15 Dec. 2014. <http://qz.com/104930/2-65-billion-reasons-to-attend-this-years-colloquy-loyalty-summit-2/>.

50 Ibid.51 Ciotti, Gregory. “The Business Case for Building Real Relationships with Customers.” The Business Case for

Building Real Relationships with Customers. Help Scout, 10 July 2013. Web. 27 Jan. 2015. <http://www.helpscout.net/blog/relationship-marketing/>.

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interests. For example, health food brands might consider offering up information

about active living, eliminating chemicals and healthy sleeping habits.

Also, remember the research indicated that experience was a major predictor of

loyalty. So make loyalty an experience—for example, card holders of Cabela’s®

Silver card are invited to a VIP night where they can take advantage of employee

pricing. These customers are invited to shop after-hours, they are treated to

dinner and are privy to special deals before the holiday rush—in other words,

they’re given a special experience. This invite-only event

creates feelings of reciprocity among attendees who feel

valued by Cabela’s upon receiving the invitation.

As brand relationships grow, customers will be increasingly motivated to

connect and engage with your brand. Foster this motivation through reciprocity.

When a customer tweets you, tweet them back. Post user photos. U-Haul’s®

“U-Haul Famous” campaign is a great example of building reciprocity and true

engagement using social media. U-Haul told followers that posting their moving

photos to social media with #uhaulfamous could earn their photo a spot on the

side of a U-Haul moving truck. People were so excited to be featured on the truck

that 2,749 photos were tagged #uhaulfamous from November 15 thru December

20, 2014.52 Not only does this reciprocity differentiate your brand and make

relationship-focused loyals feel warm and fuzzy, but small acts of reciprocity are

huge when it comes to personalization.

Don’t forget the importance of value branding with your relationship-focused

loyals. As the research found, sharing values with a brand attracts customers. A

few examples of brands to focus on connecting with customers through shared

values include: Pedigree® Dog Food’s belief that “every dog deserves a caring

home”.53 And Jeep®’s commitment to fun, freedom and adventure.54 As brands

live their values, sometimes customers mirror the brand’s values in their lifestyle.

Think about brands like Jeep, Harley Davidson® and Patagonia®.55 Jeep enthusiasts

attend Jeep Jamborees and last year Patagonia customers followed their brand in

repairing old outdoor gear instead of purchasing new apparel on Black Friday.

Transaction-focused loyals. When looking to build loyalty among the more

transaction-focused customers, always think about how these customers are

motivated. Generally speaking, transaction-focused loyals are motivated by a

great deal or an optimized experience. Incorporate personalization by delivering

52 “Do You Want to Be U-Haul Famous?” U-Haul: My Photos. U-Haul, 2014. Web. 20 Dec. 2014. <http://www.uhaul.com/MyPhotos/>.

53 Freeman, Karen, Patrick Spenner, and Anna Bird. “Three Myths about What Customers Want.” Harvard Business Review. N.p., 23 May 2012. Web. 16 Feb. 2015. <https://hbr.org/2012/05/three-myths-about-customer-eng>.

54 Ibid.55 Ibid.

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deals or special purchasing options to customers based on their past purchases

with your brand. Messaging to these customers should be product- and service-

focused. And this may be a given, but be sure to deliver on your company’s

promise every time. This is especially significant as 45 percent of U.S. shoppers will

abandon their online shopping cart if their questions and concerns aren’t taken

care of in a prompt fashion.56

Ease of use is also a must for transaction-focused loyals. Are there ways you

can make the purchase easier and faster? Can you offer a great deal? Do you

have the capability to optimize transactions and provide incentives to keep

these transaction-focused loyals coming back? When optimizing your shopping

process to save customers’ time, start with the checkout process. Test, test, test

to eliminate glitches.57 The Marketing Profs also recommend offering multiple

payment options and provide a secure way to maintain customer payment and

shipping data in an effort to make future purchases quick and convenient.58

After all, 94 percent of customers who have a low-effort service experience will

buy from that same company again.59 And with the research demonstrating that

customer service is becoming more important than ever, focus on eliminating

customer pain points and always work to create a better experience for your

customers while differentiating your brand from others.

You can also turn your transaction-focused loyals into advocates through

customer reviews. For online businesses, customer reviews can help build loyalty.

When customers cannot touch and hold products or meet your staff in person,

customer reviews are critical. They help customers gain insight

into your company, and feel more confident that they chose

the right product/service.60 Matt Moog, CEO of PowerReviews

says: “When customers engage, such as through leaving an

online review or some other form of feedback, they feel more

committed to that brand than they did just from purchasing the

product or using the service.”61

56 Thorton, Kendall. “18 Interesting Stats to Get You Rethinking Your Customer Service Process.” Salesforce Blog. N.p., 14 Aug. 2013. Web. 19 Dec. 2014. <http://blogs.salesforce.com/company/2013/08/customer-service-stats.html>.

57 Caporaso, Tom. “Five Ways to Turn New Holiday Customers Into Loyal, Year-Round Patrons.” MarketingProfs. N.p., 25 Nov. 2014. Web. 20 Dec. 2014. <http://www.marketingprofs.com/articles/2014/26559/five-ways-to-turn-new-holiday-customers-into-loyal-year-round-patrons#ixzz3KfWCMhFc>.

58 Ibid.59 Chuang, Hsin-Ju. “The Business Case for Effortless Customer ExperienceMindTouch – Driving Customer Success

with Self-service.” MindTouch Driving Customer Success with Self-Service. MindTouch, 13 June 2014. Web. 11 Dec. 2014. <http://mindtouch.com/blog/2014/06/13/the-business-case-for-effortless-customer-experience>.

60 Roesler, Peter. “5 Ways to Build Customer Trust and Loyalty in the Digital Age.”Inc. Inc. Magazine, 13 Oct. 2014. Web. 25 Nov. 2014. <http%3A%2F%2Fwww.inc.com%2Fpeter-roesler%2F5-ways-to-build-customer-trust-and-loyalty-in-the-digital-age.html>.

61 Knight, Kristina. “Top 3 Tips to Implement an Engagement-based Loyalty Strategy.” Loyalty Marketing. BizReport, 14 Nov. 2014. Web. 20 Dec. 2014. <http://www.bizreport.com/2014/11/top-3-tips-to-implement-an-engagement-based-loyalty-strategy.html>.

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Bottom-line: Use research to understand what motivates your customers’

behaviors, personalize loyalty building initiatives and use messaging that aligns

with customer motivations.

Step three: Final touches: Measurement and refinement

As you adjust your brand strategy for the current market, make sure to adjust

your expectations, too. Loyalty is harder to come by, but its value can be well

worth the extra work. As you look to measure your loyalty impact, make sure

to consider the research statistics and your proprietary data to help in setting

yearly goals. No matter what loyalty strategy you are employing, make sure that

measurement is baked in. You need to have metrics embedded in your loyalty

plan so that you can track, measure and refine your brand loyalty building

initiatives. Remember, no initiative is ever the end-all-be-all of marketing right

out of the gate—success requires refinement.

Speaking of built in metrics, it is important to include metrics in every step of

the loyalty generation process. One example of this process is shown below. This

example does better align with brands using some kind of loyalty program, but

the concept of using registration/engagement, frequency, conversions, advocacy

and rewards can be changed to fit your organization’s loyalty building process. No

matter what process you use to build loyalty, embed metrics in every phase.

Figure 3. Sample loyalty measurement framework62

One widely accepted brand loyalty measurement that may be helpful is the Net

Promoter Score (NPS®). The NPS measures how brand loyalty translates to word-

of-mouth among your promoters.63 The NPS asks customers how likely they are

to recommend your company to a friend or co-worker? NPS scores these answers

on a 0-10 scale, and then based on the scores customers are divided into three

groups: promoters, passives and detractors.

Or, consider measuring how much a customer is worth to your company with

the customer lifetime value metric. This helps you determine how much more

62 Lord, Joanna. “How to Measure and Increase Customer Loyalty - The ExactTarget Blog.” The ExactTarget Blog. Sales Force, 24 Jan. 2014. Web. 21 Dec. 2014. <http://www.exacttarget.com/blog/how-to-measure-and-increase-customer-loyalty/>.

63 “The Net Promoter Score and System.” Net Promoter Community. Net Promoter Score, n.d. Web. 21 Dec. 2014. <http://www.netpromoter.com/why-net-promoter/know/>.

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© 2014 4imprint, Inc. All rights reserved

4imprint serves more than 100,000 businesses with innovative promotional items throughout the United States,

Canada, United Kingdom and Ireland. Its product offerings include giveaways, business gifts, personalized gifts,

embroidered apparel, promotional pens, travel mugs, tote bags, water bottles, Post-it Notes, custom calendars,

and many other promotional items. For additional information, log on to www.4imprint.com.

loyal customers are worth than non-loyal customers. You may also want to

consider measuring this customer lifetime value against how much your business

is spending to generate loyal customers. While this is only one metric, it can

be helpful because this metric is a big picture view of loyalty and its impact on

the organization. As loyalty increases, your average

customer lifetime value should increase as well.

Want to learn more about NPS and customer lifetime

value? We like the NPS website and this KISSMetrics

infographic on how to calculate customer lifetime value.

As brand loyalty improves, keep an eye on other KPIs, like lead value contribution

and online conversion rate and sales. In theory, brand loyalty should positively

influence these larger business metrics. Remember no one metric is the magic

bullet for brand loyalty measurement, but when multiple metrics are embedded

throughout your brand loyalty process, you can gain valuable insight into your

brand’s loyalty growth. Also, make sure to use your metrics to refine your loyalty

initiatives. You can’t measure growth without periodic testing.

Brand loyalty’s big reveal

Its time to reveal the total transformation—despite research that customers have

become less loyal, building loyalty with both relationship and transaction-focused

customers is not out of reach. In this Blue Paper we applied a customer psychology

lens to new brand loyalty research with the goal of understanding what really

motivates customers … and we did it all in style. To help your brand don its best

look, we provided background information on the customer psychology of brand

loyalty before exploring the latest in brand loyalty research. We then helped your

brand complete its makeover for a changing loyalty landscape by building out a

get-started guide to generating increased brand loyalty. Congrats—your brand

loyalty look is ready for today’s market.