Monday, October 20, 2014

An Ounce of Loyalty Is Worth A Pound of Most Everything Else


Bottom line: mobile, digital, and social brands continue to exhibit loyalty supremacy. New brands and categories make up more than a third of this year’s Top-100 leaders list.

Apple, Amazon, What’s App, Google, YouTube, and Kindle head of our 2014 Brand Keys Loyalty Leaders List. This is the 18th year aggregating brand loyalty leaders, and the seismic shifts in loyalty leadership in terms of new categories and brands making appearances in the Top-100 continues.

As we’ve always said – and the marketplace has proven – brand loyalty has always been driven by emotional engagement, and the rankings on this year’s list make it abundantly clear that connection, meaning, and differentiation is still everything to consumers. With 721 brands in 65 categories for consumers to rate, there’s a lot of competition for the top-100 spots. This year certain categories rose to the top because of their high levels of consumer emotional engagement. Oh, and their abilities to deliver against consumers’ increased expectations – in virtually any category you care to name.

Thirty-six of the top-100 Loyalty Leaders are new brands or categories. Most new arrivals facilitate communication and social outreach: tablets, smartphones, and social networks, with What’s App (instant messaging), Netflix, and Amazon (video streaming), Instagram, and PayPal (online payments) now representing that trend.

Other, new, non-digital/social categories include Fast-Casual Restaurants (Chipotle, Panera, Chick-fil-A), Insurance (USAA), Credit Cards (Discover, American Express), and Beer (Sam Adams). Dunkin’ Donuts was the only non-digital/social brand in the top-10, up 7 spots since last year, but not surprising when you realize their customers have rated them #1 in the out-of-home coffee category for years.

This year, the top-10 on the Brand Keys Loyalty Leaders rank as follows:
  1. Amazon: tablets
  2. Apple: tablets
  3. Apple: smartphone
  4. YouTube: social networking
  5. What’s App: instant messaging
  6. Amazon: online retail
  7. Google; search engines
  8. Kindle: e-readers
  9. Samsung: smartphones
  10. Dunkin’ Donuts: coffee (out-of-home)


Forty-five percent (45%) of the top-100 brands account for consumer outreach and engagement via cellular and social networks, and the phones, smartphones, computers, and tablets needed to meet ever-increasing expectations related to outreach and personal connectivity the consumer uses as a yardstick to measure brands.

Last year beauty and personal care brands accounted for nearly a fifth of the top-100 but this year represent only 13%. The emotional engagement that women share with their beauty brands can be very powerful, but again, consumers are looking harder for a reason to believe and a reason to engage with – and buy – one brand versus myriad ‘me-too’ products. Check out who were among the brands to show the greatest positive loyalty increases.

Traditional retail brands were down 50%. The inability for many retailers to provide meaningful differentiation – beyond low-lower-lowest pricing strategies – has seriously eroded loyalty levels in the retail category. That, and a shift to buying online and via mobile devices. Retail brands that remain among this year’s Loyalty Leaders include J. Crew (#50), The Gap (#80), Macy’s (#88), Victoria’s Secret (#75) and T.J. Maxx (#92).

Six (6) automotive brands made the top-100, including: Hyundai (#23), Ford (#26), Toyota (#48), Jeep (#70), Nissan (#94), and KIA (#99). Ford and Toyota moved up the list +12 spots each, Jeep +11, and Nissan appears on the list for the first time

Biggest Winners

The brands that showed the greatest loyalty gains this year were:

Netflix (+79)
Estee Lauder (+31)
MAC Cosmetics (+28)
HTC smartphones (+26)
Cover Girl (+25)

The Biggest Losers

With minor exceptions, it turns out that the biggest Loyalty Leader losers were primarily categories. Certain categories just disappeared.

These included Breakfast Cereal, which shouldn’t surprise anyone. The category has seen dramatic shifts over the past few years in how and what is consumed for breakfast. And anyway, and how much loyalty can you expect when “differentiation” is defined as which flavor marshmallow is in this particular box?

Major brands – perennial Loyalty Leaders – but absent from this year’s list, included:

Pepsi and Coke. Sure, the category has shifted there too, but they’re both cold, refreshing, come in a bottle or a can, have ubiquitous brand awareness and distribution, and are each on sale alternate weeks. What is there to be loyal about? 

ABC News, CBS News, NBC News, and the Today Show didn’t report this year list, some accounted for by the ascendancy of mobile. Today a tablet screen and a TV screen are regarded as two entirely different platforms engendering different loyalty and engagement levels for different programming. Certainly broadcast news is watched, but not considered an important first-source to be loyal to.

And you can search all you want, but you won’t find Bing or Yahoo on this year’s list either. When it comes to search, Google (#7) is the only one in that category that that appears.

Not surprisingly General Motors didn’t make the list this year. Where loyalty exists, consumers are six times more likely to give a brand the benefit of the doubt in uncertain circumstances. But that well of forgiveness isn’t bottomless, especially in the face of seventy-five GM recalls (more than 30 million vehicles) this year alone. Loyalty is about the strongest bond you can create between customer and brand, but even loyalty has its limits!

McDonald’s, which up till this year had appeared since the List’s 1996 inception, dropped off the top-100 list too. In another study conducted earlier this year by Brand Keys, Millennials, a critical audience for fast food chains, reported a 20% decrease in visits to them, with 42% reporting increased visits to fast-casual restaurants, a category whose brands have shown up for the first time on this year’s list. When asked to characterize traditional fast food brands, including McDonalds, 53% of this group called it “dollar food,” the result of a habituated fast food brand reliance on the ‘Dollar Menu’ to boost sales. The thing is, you can’t build loyalty on the basis of price. In the absence of brand meaning, stuff for a dollar, a new wrap, or new app, and all the social networks in the digital universe isn’t going to change things for them.

Other brands not appearing on the Loyalty Leaders List this year included Ben & Jerry’s, Canon (point-and-shoot cameras), H&M, Haagen-Daz, Skechers, Skype, Southwest Airlines, Walgreens, and Walmart.

Which brands had the greatest loyalty and engagement erosion?

Max Factor (-20)
Clinique (-16)
Grey Goose (-13)
Revlon (-13)
Apple Computers (-11)
Costco (-11)
Sam’s Club (-11)

OK, it’s true that some of the shifts are certainly due to the creation and adoption of new categories and brands that better meet – even exceed – customer expectations. But brands that understand that real emotional connections can serve as a surrogate for added-value, and the brands that have made loyalty and emotional engagement one of their real strategic priorities and KPIs will always show up at the top of a consumer’s list.

For the complete top-100 2014 Brand Keys Loyalty Leaders List, please visit: http://info.brandkeys.com/acton/formfd/943/0011:d-0004

Or, for more information regarding this year’s Loyalty Leaders List, your brand’s position on the list, or general information about integrating predictive loyalty and engagement metrics into your marketing efforts, feel free to contact: Leigh Benatar at leighb@brandkeys.com or 212-532-6028.



Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Tuesday, October 14, 2014

Q: What do you do when your brand gets stale? A: Find a fresh recipe that offers more than just product.


McDonald’s is desperately looking to change the image of their food – from unhealthy (and, apparently, unnatural) to something closer to how people see fast-casual restaurants, that have apparently been eating McDonald’s proverbial lunch!

To that end, they’ve hired Grant Imahara, former host of Mythbusters, as part of their new social media campaign. Mr. Imahara is, ostensibly, far less frightening than their previous Facebook and Twitter Happy Meal mascot that ended up drawing massive mockery and scorn from audiences. And, four straight months of declining U.S. same-store sales. To be clear, we don’t believe that the mascot contributed much to that decline. McDonald’s has been suffering from more than just a bad case of social media malaise, although it is worth pointing out that social media is not a universal antidote for what ails them!

In a study conducted 3rd Quarter this year by Brand Keys, Millennials reported a 20% decrease in visits to fast food chains, 13% indicted fast food was “cheap” and “edible” but not much more than that. Fifty-three percent (53%) characterized it as “dollar food,” the result of a habituated reliance of fast food brands like McDonald’s (credited as the originator of the ‘Dollar Menu’) to boost sales. But apparently not working as well as in years past. Baby Boomers indicated an 18% drop in fast food restaurant visitation, citing that they were looking for “quality food,” and didn’t expect to get it at places like McDonalds. Gen Xers reported an 11% decrease in visitation. They wanted their food fast, but even that’s something McDonald’s has been reported struggling with.

To dispel all these beliefs – and hopefully shift consumer behavior – McDonald’s is turning to social media to take real questions from consumers and deliver real answers. Answers to questions like, “What is mechanically-separated meat, and how do you turn it into a nugget?” or “What’s with that pink slime?” or “Why are there 17 ingredients in your French fries?” “Is there horsemeat in your hamburgers?” and the very, very, best of all: “Does McDonald’s even sell real food?”  Don’t believe us? Check it out here: www.youtube.com/watch?v=UaJUq1ncCRo

The company – apparently unaware of Albert Einstein’s definition of “insanity,” i.e., doing the same thing again and again expecting different results, has been rolling out new menu items and price promotions, including a $5 20-pack McNuggets, $2 jalapeño burgers, and National free coffee events. Ben Stringfellow, a spokesman for McDonald's USA, said, "People are looking for faster, more straightforward responses to their questions about our food." Actually they’re not, Ben. That’s what late-20th century research techniques and the ad agency told you.

What they’re looking for is quality food (quality, which by the way, it turns out they’re willing to pay for at fast-casual restaurants), served in a reasonable timeframe. That’s not exactly the secret of the decade. But with consumer decision-making more emotional than rational, Q&A, no matter how many social media platforms are used, isn’t the answer to this problem. A new wrap, a “natural” frappe, or a social media app won’t fix what needs fixing. It’s the brand. And it needs reinvention.

That and what the brand stands for à la emotional engagement. Where emotional engagement with a brand is high (and BTW, you can’t buy that for a dollar), consumers are six times more likely to trust you. When they do, they don’t ask questions like “Are your ingredients pure?” or “Is it actually meat?” They walk into your restaurants already believing all that! And more. Which is precisely why Chipotle Mexican Grill reported same-store sales growth of 17.3%.

It seems as if the research McDonald’s is relying on is the kind of stale Q&A that stopped providing attitudinal and behavioral insights around 1995. Maybe earlier than that. There may not be such a thing as a free lunch, but here’s a free tip: It’s the brand, not the food. You’d think a company as big as McDonald’s, with all their marketing and insight resources, would have figured out that recipe by now!

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Thursday, October 09, 2014

Breaking Up Is Hard To Do.



Three years ago Meg Whitman, CEO of Hewlett Packard, instituted a new turn-around attempt in the form of a new line of printers. More precisely, multi-functional printers (MFP’s). At the time of that announcement, H-P ranked 5th of 5 major brands we tracked in the MFP category and HP stock was at a ten-year low. In the spirit of fairness we did mention at the time that H-P was the largest printer maker in the world, but only if you counted number of “units.” It had only a miniscule share of the then-burgeoning MFP market.

At the time Ms. Whitman noted, "We haven't had a new product lineup in seven years" and her plan to fix the brand so it was seen as innovative. Well, that and cost-controls and cutting nearly 30,000 jobs. Oh, and an announcement that they were going to come out with a smartphone. No, seriously, a smartphone. They had spent $1.2 billion dollars to acquire Palm, and debacle or not, consumers had apparently been crying for an H-P smartphone for a while [Editor: insert emoticon for sarcasm here], so why not? Currently the word on the street is that their “Slate” 6 & 7 will be introduced in India first this year.

In the meantime on this continent Meg “Together-we-are-stronger” (her quote in 10/11) Whitman, is suggesting a different strategy three years later, to wit: “Being nimble is the path to winning.” Well, being nimble is good, especially in a world where consumer expectations move at the speed of, well, the consumer, so having a company and brand that is deft and agile is an advantage.

So, to that end, H-P announced that the company is going to split into two smaller pieces. H-P will continue as the printing and computer part of the business, serving the consumer, and Hewlett-Packard Enterprises will sell services like data-storage and consulting and products like servers to large businesses. Now you may not agree with Ms. Whitman, but you have to admire her grit, because they really have to do something! Both revenue and earnings are down again, and how long will the U.S. market wait for a new tablet-like smartphone!?

According to the current Customer Loyalty Engagement Index (whose rankings, by the way, correlate very, very highly with positive consumer behavior toward brands and, axiomatically, with sales and profits, and whose 2014 Loyalty Leaders List will be released next week) H-P is now rated 3rd of 10 brands in the MFP printer category – where they’re up against leaders like Konica Minolta and Canon. It’s worth noting that they were tied for 1st place this past January. H-P is ranked 7th (of 12) in the computer category, against juggernauts like Apple and Samsung and price killers like Lenovo. We don’t currently measure hardware platforms and converged systems, but you have to expect that Cisco will have something to say about a new competitor. And as to smartphones. . .  

So you’d think that having smaller, more agile operating units would help to meet shifting consumer needs and expectations. It worked OK for eBay and PayPal. But to be frank, those brands were really seen as separate categories and brands by consumers to begin with. They were also rated #1 in their respective categories in the Customer Loyalty Engagement Index, so if splitting H-P doesn’t seem as graceful and seamless as that kind of brand disengagement you’re not alone in that.

One question raised by industry analysts about this decision is, “will a slimmed down H-P become a stronger, more profitable company?” But in what’s become a no-one-size-fits-all-world, the real question should be, “will consumers – B2C and B2B – decide to remain engaged with the brand in its new incarnation?” It’s worth remembering that for sure if they don’t, H-P’s engagement number won’t be the only thing that will continue to go down.

Time will tell, but it’s also worth remembering the old marketing maxim, “Bad decisions made with good intensions are still bad decisions.”


Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Wednesday, October 01, 2014

Truly Mobile Apps: Ridesharing, the 21st Century Version of Carpooling



As of September 2014, the San Francisco and app-based Uber ridesharing network of private car and peer-to-peer drivers was available in 45 countries and more than 200 cities worldwide. Lyft, which also parks their headquarters in San Francisco, is in 63 U.S. cities. True, Uber had a head start on Lyft, but still! Talk about accelerating brand growth!

There are others entering the race, like Sidecar, also based in San Francisco, (their slogan, “A Whole New Way to Get Around”, although there has been this thing called “carpooling” around since WWII. Just saying.) but currently is in only about a dozen cities or so. You can find other rideshare services locally via an app or (very likely) on an index card on your company break room, but right now Uber and Lyft are the two big app brands.

Uber (“Everyone’s Private Driver”) and Lyft (“Your Friend With A Car” – assuming your friend has a fuzzy, pink mustache on the front bumper of the car coming to pick you up) are currently the two most popular of the on-demand, app-based rideshare car services. Both are known for their very competitive, and sometimes controversial, approaches to acquiring customers and recruiting drivers.

In the face of accusations of extreme price surging (charging higher prices for rides when demand is high, like holidays or bad weather) and aggressive recruitment tactics, Uber’s CEO Travis Kalanick described his company as “scrappy.” PayPal co-founder, Peter Thiel, (and an investor in competitor Lyft) on the other hand was quoted as saying, “If the slogan for Google is ‘Don’t be evil,’ the slogan for Uber should be ‘Do a little evil and don’t get caught!’” Both companies have accused each other of booking the competition and then cancelling rides at the last minute.

When Uber started, they only offered full-sized luxury cars, under the name of “UberBlack,” but in 2012 they launched “uberX,” which made smaller vehicles available for rideshares. That program charges lower fees, and became competitive not only with other rideshare brands, but with traditional, local taxi services as well.

In fact, in a blog posting last week, Uber announced that the 20% price cut for its lower-end UberX fleet they introduced in New York City this summer would become permanent: “From Brooklyn to the Bronx, and everywhere in between, uberX is the most affordable ride in the city.” But while lower fees may be paying off for the company, not everyone agrees. Uber drivers say it comes right out of their pockets, and they’re not happy.
Just as Uber and Lyft are racing to prove themselves the most innovative and passenger-friendly rideshare app in a growing industry, they both received the green light for curbside pickups at Nashville International Airport (NIA), the very first airport to officially recognize rideshare services.

Both services currently pick up riders at airports, but taxi services and airport operators have consistently maintained that this is illegal, with the service banned at Los Angeles, Memphis, Raleigh-Durham, and (ironically enough) San Francisco airports. To operate legally at NIA, the companies will have to apply for permits, pay user fees, and be plainly identified. No comment was made whether a pink mustache would be adequate in that regard.

Not to be a drag on this race, but in New York another provider is going to give both Uber and Lyft a run for their money. A Tel Aviv-based company is introducing a rider-driver connection app named “Gett” (which, paradoxically, translates from Hebrew to “divorce document,” perhaps not the best name for a service that purports to be a rider-driver matchmaker. But as we say in New York, “Go know!”). They just announced an introductory deal that will run though the end of this year for a ride any time, under any traffic conditions, any place in Manhattan for $10. So some real price competition for Uber and Lyft. And NYC’s yellow medallion cabs. And, in light of the Lyft-Uber accusations of sabotage and price surging, perhaps an attempt at a more transparent and straightforward brand model, if not the best name in the world.

Anyway, we are unable to comment upon the veracity of the accusations flying back and forth between the two, current category leaders, but will include flag-to-flag rideshare app coverage in our upcoming January 2015 Customer Loyalty Engagement Index.

As a born-and-bred New Yorker, I can say this: The average speed of crosstown transport has not changed in nearly 100 years, and saving some time getting transport and some money on a trip from the Eastside to the Westside (or vice versa) would be greatly appreciated. As a former NYC taxi driver in my youth, I can knowledgably quote the old driver maxim, “Manhattan is 10 miles long and 3 hours wide!”

As professional branding consultants we can also say that consumers always appreciate – and benefit from – having more options. But especially when brands have to compete to see which can best meet your expectations.

The ones that can are always the brand that crosses the loyalty – and profitability – finish line first.



Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Thursday, September 18, 2014

2014 Sports Fan Loyalty Index Names NFL Fan Favorites And Finds Ray Rice Domestic Violence Hurts League More Than Team


Anyone up on the news can’t have missed the fact that the start of the National Football League’s season was overshadowed by the release of a video of Baltimore Ravens running back, Ray Rice, punching his fiancée in the face. Wow. Talk about unsportsmanlike conduct!

NFL commissioner Roger Goodell disciplined Rice with a two game suspension, but that penalty was criticized as being far from ideal. And not representing standards the fans expect. A review of the video led to the termination of Rice’s contract and his suspension from the NFL. Now former FBI director, Robert S. Mueller III, is conducting an independent investigation into the NFL's pursuit and handling of the evidence.

While the Brand Keys Sports Fan Loyalty Index doesn’t normally conduct diagnostic measures of individual players, we do measure overall League loyalty. In January 2014, self-classified football fans representing the NFL’s 32 teams rated the National Football League 1st in terms of league loyalty. But based on current Rice-related circumstances, their own fans now rate the NFL #3, just behind Major League Baseball and the National Basketball Association, and just ahead of the National Hockey League. The good news is that loyalty for the Baltimore Ravens team (#7 this year) has so far been unaffected by all this.

The fans’ “Ideal” is the foundation upon which the Brand Keys Sports Fan Loyalty Index, the 22nd annual fan survey, is based. The Sports Fan Loyalty Index was designed to help teams identify precise fan loyalty rankings in their home and national markets with insights that enable the league and teams to identify areas – particularly emotional values – that need strategic brand coaching. As we’ve said before, it really isn’t just about winning games. Not entirely, at least. In the case of fan loyalty, a team ends up being much more than a group of players and a good win: loss record, and the actions of individual players can have dramatic fan loyalty effects.

So here’s the 2014 NFL teams that scored well in re fan loyalty, and those that didn’t. For comparative purposes, #’s in parentheses give the team’s rankings for last season:

Top-5

1. New England Patriots               (#1)
2. San Francisco 49ers                 (#4)
3. Green Bay Packers                   (#2)
4. Denver Broncos                         (#7)
5. Indianapolis Colts                      (#5)

Bottom-5

32. Oakland Raiders                      (#32)
31. Jacksonville Jaguars                (#31)
30. Cleveland Browns                    (#30)
29. Tampa Bay Buccaneers           (#24)
28. Dallas Cowboys                       (#26)

The Brand Keys Sports Fan Loyalty Index provides an apples-to-apples comparison of the intensity with which fans within the team’s home market area support their team versus corresponding values for fans of other teams (or leagues) in that market. And yes, everybody loves a winner, but, again, win/loss ratios do not entirely govern fan loyalty. Neither does simply counting attendance. There are other powerful and emotionally-based factors that need be taken into account. The percentages next to each driver of loyalty indicates the contribution they currently make to fan loyalty and engagement:

History and Tradition (33%)
Is the game and the team part of fans’ and community rituals, institutions and beliefs? These include both moral and legal codes of behavior and principals.

Fan Bonding (29%)
Are players particularly respected and admired? An issue like domestic violence will not only have its effects primarily on this driver, but on an overall basis as well. And, to be frank, it depends on the transgression. No matter how rational a response fans seem have regarding offenses like domestic or alcohol or drug abuse, adultery, illegal possession of firearms, or adultery, a great record for touchdowns, field goals, pass completions or rushing, has a tremendous emotional modifying effect.

Pure Entertainment (21%)
How well a team does, wins, losses sure. But even more importantly than a win-loss ratio, how or entertaining is their play? And yes, on-the-field aggressive play is part of the acceptable DNA of this loyalty driver. Off the field, not so much (see Fan Bonding).

Authenticity (17%)
How well they play as a team. What’s the offense and defense like? New managers, as they’re seen to be responsible for the genuineness and credibility of the team, can also help lift this driver. How the team – and in this particular instance, the league – behaves in a situation like Rice’s. Do they ultimately meet the fans’ expectations?

As overall league and team rankings correlate very highly with game viewership and purchase of licensed merchandise, and since rankings can be influenced by how loyalty drivers are managed, it’s critical that team marketers manage them strategically to better meet fan expectations. But you have to know what the fans really expect – beyond a winning season.

The Sports Fan Loyalty Index measures all teams in the four Major Leagues each year, and as loyalty is a leading-indicator of behavior and profitability it tells us what people are going to do. And, because of their high correlation with sales of licensed merchandise, we weren’t surprised when retailers like Dick’s Sporting Goods and Modell’s pulled Ray Rice jerseys from the shelves. Or when the Ravens themselves tweeted that they “will offer an exchange for Ray Rice jerseys at stadium stores. Details to come.” Indeed.

And sure, aggression and ferocity are a thread that runs though the “Pure Entertainment” loyalty driver for Major League Sports (some leagues more than others, of course), and are undeniably characteristics that help teams win. But this kind of widespread negative publicity, fan outcry, the appearance of a player letting his fans down, and of league indecision and/or whitewash, unfortunately raises issues regarding not only player behavior but league standards as well. When that happens, bonds of loyalty are weakened for all teams.


And when that happens, nobody wins.


Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Wednesday, September 10, 2014

Unhappy Meal Options: Consumers Losing Taste For Fast Food



A new study conducted by New York-based brand and customer loyalty and engagement consultancy, Brand Keys (www.brandkeys.com) has shown that demographics and associated core values of generational cohorts explain critical factors initiating failure of fast food brands to increase same-store sales and profits and driving the success (and concomitant increase in visitation – and profits) of fast-casual brands.
The 3,000-consumer study examined attitudes and behaviors of 1,000 consumers in each of three generational cohorts – Baby Boomers, Gen X, and Millennials – as regards fast food and fast-casual restaurants. The sample was drawn and balanced from the 9 U.S. Census regions and examined major National brands.

If you have any doubts as regards the difficulties fast food brands have been having over the recent couple of years, you only have to look at recently reported same-store sales of the big guys, McDonald’s, Burger King, and Taco Bell to see the shift that’s taking place. The declines reported by the big-3 correlate very highly with the downward loyalty shifts we saw in our January 2014 Customer Loyalty Engagement Index, with fast food brands losing loyalty. And as loyalty is a leading-indicator of profitability, it isn’t surprising that fast food visitation and associated profitability is down too. QED.

The survey conducted in the 3rd Quarter of 2014 identified the following insights as regards visits to the traditional fast food chains and fast-casual restaurants. (BTW, the nomenclature “chains” for fast food and “restaurants” for fast-casuals came out of the study. “Storytelling” may be the flavor of the month, but nothing beats seeing what language a consumer uses to describe a brand. We mean, would you rather eat at a “chain” or a “restaurant”? Yeah, exactly!)

Baby Boomers Want Better Service and Believe They Deserve It. Oh, And They Can Pay For It!

Baby Boomers reported an 18% decrease in fast food restaurant visitation. Not surprisingly, this group placed extraordinarily high values on health, but also living well. They can afford, what nearly a third of the sample (32%) called, “quality food,” something that they attribute more to the fast-casual restaurants like Panera and Chipolte than they do to the traditional fast food brands.

The survey showed that Baby Boomers also expect better service, something the traditional fast food chains have fallen down on in recent years, not being as fast as they used to be. Expectations in, well, everything, just get higher and higher each year, and expectations as regards speed of service is up too. This group reported a 20% increase in visitation to fast-casual restaurants, with 65% indicating high expectations of “excellent service” and 58% indicating that their expectations were met by the fast-casual brands. Baby Boomers (along with Millennials) indicated that interior design was a critical difference between fast food and fast-casual too.

Among the National brands examined, Baby Boomers’ top-3 carte du jour were located at Panera, Au Bon Pain, and Applebee’s.

Gen X Looking for Value-For Dollar

Gen Xers reported an 11% decrease in visitation to fast food restaurants – the lowest decline in the three groups examined – but with an equal increase reported in visitation to fast-casuals, so pretty much a wash.

The Gen X group turns out to be more pragmatic about their decisions about eating out, so they seem to still be more vulnerable to value positioning. But they’re also skeptical about brands too, and are looking not for price-value, but value-for-dollar. They feel the fast-casuals offer that to them too, equal to and more often better than the fast food brands. Nearly 50% of this cohort reported that time was important to them so “fast” has it’s advantages for them. But years of experience and process-engineering pretty much guarantees you don’t have wait long at a Panera either.

Gen X’s top-3 selections included Subway, Chipolte, and Au Bon Pain.

Millennials Not Interested In “Dollar Food”

Millennials reported a 20% decrease in visits to fast food chains, with 13% indicting that they felt fast food was, indeed, “edible” but not much more than that. Forty-two percent (42%) reported increased visits to fast-casual restaurants in the past year. Millennials are, perhaps, our most sophisticated segment right now. They also mentioned interior design as an important element of choice, with nearly a quarter of the sample (23%) postulating that how the restaurant looked gave them a sense that the brand “knew what they were doing.”

True, they’re the toughest to reach via traditional marketing à la McDonald’s et. al., and they are the toughest group with whom to build loyalty. But when asked to characterize traditional fast food brands, more than half of this group (53%) called it “dollar food,” the result of a habituated reliance of traditional fast food brands on the ‘Dollar Menu’ to boost sales. The thing is, you can’t build brand meaning or loyalty on the basis of price. That only works for commodities.

Virtually all this group (89%) reported looking for fast, casual food that they deemed tastier, healthier (22% indicated the ingredients in fast–casual offerings were “of higher quality” and ingredients were more “trustworthy”), and more customized than fast food. “There’s an issue with this group regarding how they value what they eat too. For them, fast-casual restaurants offer better, more customizable options. Nearly half the sample (48%) indicated that fast-casual was “worth more” – and they were willing to pay more for it. And, according to the reported sales figures, apparently are. And while it’s true that digital and mobile behavior has changed – particularly for Millennials – more mobile apps and outreach aren’t going to change how they see the brands.

Millennials top-3 menus were located at Chipolte, Five Guys Burgers, and Panera.

Sure, consumers in all the cohorts have definite expectations about eating out, and some of them even overlap, but a new McWrap isn’t going to do it for them. Not in and of itself. The traditional fast food brands have tried to be all things to all customers for years now and the results should have informed them long ago how that was going to turn out. Longer menus have just resulted in longer waits, but more significantly, a real dilution of what the brand means.


Your brand may be all over, but you can’t be all things. You really do have to stand for something in the mind of the consumer. And it really ought to be something other than “dollar food.” Otherwise loyalty for fast food brands is only going to move in one direction. Down.


Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.