Loyalty Proceeds Profitability. Always!

Loyalty is a leading-indicator of profitability.

Let me put that another way: if you have loyal customers, you can virtually bet the farm that your company will be profitable!

Here’s a shorthand version: Loyalty = $$$.

The reason I repeated all that is last Tuesday the automotive tracking firm, R. L. Polk, presented their 10th Annual 2006 Automotive Loyalty Awards. They announced that General Motors “outpaced the rest of the industry in manufacturer loyalty,” winning for the 6th consecutive year in the “Overall Manufacturer” category.

Last Friday, however, The New York Times reported: “G.M. Posts Worst Loss Since 1992: Deficit for 2005 is $8.6 Billion.” Eight billion! That’s an 8 with nine zeros following it! One of the reasons for this loss, noted the Times was “G.M. sold 150,000 fewer large SUVs in 2005 than in 2004.” I guess they didn’t see the Polk press release.

Anyway, Brand Keys measures loyalty too. We invented the metrics and we have an award too. It’s called (take a deep breath) “The Brandweek Customer Loyalty Awards. . .powered by Brand Keys” and it’s given out in April. Timing notwithstanding, our measures are predictive. An independent corporate valuation firm found Brand Keys assessments correlated as high as .901 with company profitability. So it makes me wonder just how G.M. was able to “outpace the rest of the industry” and lose more money than the Gross National Products of some countries!?

If you’re wondering too, the press release said that they got the award because 63% of GM owners returning to market in 2005 opted for another new GM vehicle. Maybe that was 63% of only 100 drivers. Or 1,000. However you do the math, it clearly wasn’t enough to make G.M. profitable. That kind of math gives economics rigor, but alas, in this case, also mortis.

By our measures, the automotive brand engendering the highest loyalty is Toyota. They earned $11 billion in 2005, and expect to exceed that this year. Relying on research that tells you what people were thinking about yesterday and not what they’re going to do tomorrow, is like driving a car using only a rearview mirror to steer. Not, you’ll admit, the smartest way to manage your automotive brand, or any other brand for that matter! We prefer to be looking ahead through the windshield.

Anyway, loyalty = $$$. If you measure it right.

2 Networks Down, 5 To Go.

Back in 1964, Marshall McLuhan, wrote, “The medium is the message.” But 41 years later the U.S. TV market has become increasingly fragmented, and today, it’s more like “the medium can have great influence over the message, if you select the right combination of media and content.”

Because of that, Brand Keys developed Brand-to-Media Consonance assessments (B2MC) that measure how well media reinforces an advertised brand’s values. Do that and you can truly engage viewers. Do that and you get increased levels of attention and awareness and positive imagery. Heck, even sales! Before you spend your money.

I bring this up – not just because we’re so proud of our predictive assessments, though we are – but because it was announced this week that advertisers (and viewers) will have one less commercial broadcast network to choose from. In September, WB and UPN networks are merging to form a single new entity called the “CW” network.

WB practically invented the 12-to-34-year-old demographic of teens/young adults. UPN has focused on a female-oriented 18-34 segment and minorities. So those seeking to buy the 12-34 and minority demos will see inventory plummet. Shows will be shuffled and cancelled, and it’s been estimated that the merger will reduce primetime options, cutting the number of programming between the two networks from 23 to 13 hours. Industry pundits also suggest that cable networks may be the beneficiaries of the merger.

What’s a media planner to do? Well, to quote Lorelai Gilmore (of the soon-to-be defunct WB), “It's a long complicated story. I don't really wanna go into all the whats and whys and gory details right now... and to figure out exactly what happened,” but acknowledging “the medium can have great influence over the message and the marketplace if you select the right combination of media and content” is important. Doing something about it even more so.

Tune in next week. We’ll still be here!

¿Habla Hispanic Advertising?

We have been pointing out the growing importance of the Latino consumer for quite a few years now. The reality is, of course, that if you are not working in or with that particular consumer segment, or if you yourself are not part of that ethnic group, it’s not likely that you get exposed to much of the marketing and advertising that’s created for that group.

Marketers have learned that it’s not just a matter of taking “regular” advertising and translating it into Spanish and running it on a Spanish/Latino cable show or radio station that will engage these consumers. You need to understand the audiences’ values and create messages that will meet – even exceed – their expectations.

Well check out a new, and extraordinarily funny Got Milk? campaign brought to a Latino marketplace by Long Beach-based agency Grupo Gallegos:

http://www.youtube.com/watch?v=ErqZmR-BmVw


To be filed under “You’re the smartest person in the room when you have the customer data in front of you”: NBC has pulled “Book of Daniel,” starring Aidan Quinn as an Episcopal priest, from its schedule after broadcasting 4 episodes.

Welcome to the Super Bowl of Engagement Research

Traditional reach and frequency media buys, let companies pay for time or space to run their ads. But when all is said and done, what did the companies really get?

Advertisers can prove they got the time or space they paid for directed at a particular audience, but in terms of real-world accountability and engagement, they get no proof that it did anything for them.

Oh yes, they’ll know it ran but there’s no guarantee that the audience will remember it, or think well of the advertised brand - let alone buy the product! They won’t know if their efforts engaged the target audience. To remedy that we’re fielding the 2006 Super Bowl Media Survey.

Like our Customer Loyalty Index, it’s created to tease out respondents’ true behaviors. The process quantifies the brand equity increase (or decrease) that results from any advertising effort and reports the “return” or “loss” gained from the advertising effort. The survey delivers results that correlate highly with respondents’ true attitudinal and behavioral patterns – and are reliable predictors of future behavior toward the advertised brand.

Basically it answers the question: Is my marketing exercise going to engage consumers or will I just be burning money?!

Televised events like the Super Bowl – aka “Branded Entertainment” – have long been used to showcase “creative” advertising. But ultimately all TV spots - no matter how terrific – are judged by how well they engage customers, drive sales, and build the advertiser's brand.

By the way, advertisers can do this before they write a check, and at a time when brand managers and CEO’s are being pressed for greater accountability, we think that’s what’s really super!

Can U Read This?

Olny srmat poelpe can.

I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a word are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae.

The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh?

And I awlyas tghuhot taht slpeling was so ipmorantt!

Harmonious Handles

A study from the University of Chicago found that consumers tend to choose brands that begin with the first letter of their own names. The phenomenon is, apparently, most evident when consumers are making a large investment in the purchase, when they are not 100% confident and/or comfortable in terms of the category, or when their need-state – being really thirsty or hungry, for example – is high!

We are not surprised by these findings. Consumers always have an “Ideal” against which they compare offerings. The “Ideal” is made up of both expressed and unarticulated values, and the product that best meets or exceeds their ideal is always the one they choose. Maybe we should include more items like “has a really great name” in our assessments from now on.

Ralph Waldo Emerson said it best: “We do what we must, and call it by the best names.” Whose better than our own?

Tune In Next Week (Maybe)

The conservative American Family Association has charged that NBC’s new show, ‘The Book of Daniel’ "demeans the Christian faith,” and has urged people to call their local affiliates to ask them not to air the show – which some did. Not air the show, I mean.

The show is about Rev. Daniel Webster, an Episcopal minister in Westchester County, N.Y., who is addicted to Vicodin, has an alcoholic wife, and a gay son, and in moments of stress chats with Jesus, rather than – as the Reverand’s namesake is portrayed in Steven Vincent Benet’s famous tale – debate with the Devil.

Normally one might suspect that viewership would increase from the notoriety such a condemnation would bring. But ratings for the show dropped 23 percent last Friday among adults 18-49 years of age versus its January 6th premiere, and lost 36 percent of its "Dateline" lead-in.

The New York Times, reviewing the show said “the real mark against "The Book of Daniel" is not any antipathy it might show toward the family or sympathy for the devil. The real objection is that it's just not very good.”

So tune in Friday and see if the show actually runs, because these days, shows that can’t engage a large enough audience to justify advertiser fees, don’t have a prayer!

Watching The Boob Tube

Marketers and advertisers have been lamenting the fact that with increased competition from the Internet, DVD’s, VOD’s and the like, it’s gotten harder to “engage” viewers via Network and Cable TV.

Which seems counterintuitive to the announcement that average television viewing has increased 4 minutes a day over the same time period last season. Now it’s official! The magic number for ad planners is 4 hours and 39 minutes. That’s the average time people spend watching television each day.

Can you just imagine what the numbers would look like if TV advertising were strategically spot on? Maybe commercials would be more engaging and effective if there was a knob on the set to turn up the intelligence of the messages. I know that there’s one marked “Brightness,” but it doesn’t seem to be working!

An Embarrassment Of Entertaining Advertising

The weekend’s here and many folks are planning to see a movie, at the theatre or renting to watch at home. For those of you planning to rent (or even buy), have you noticed the plethora of TV advertising for “unrated” DVD films?

That means, I have come to discover, that the DVD now contains additional scenes that – had they been included in the original theatrical release – would have moved the film’s Motion Picture Association of America rating up one (or even 2) levels.

So a brief peep of a topless actress added to the film would have moved the film’s rating from a G to a PG. Or from a PG to a PG-13, a PG-13 to an R, or an R rating to the dreaded NC-17, thus eliminating segments of the theatre-going public allowed to see the film, thereby killing the opening weekend grosses. But now these scenes can be viewed in the privacy of your own home.

We in the marketing community have always known that ‘sex sells,’ and have absolutely nothing against tasteful nudity. But it now seems as if touting the added (unrated) scenes has become the single, key marketing strategy for getting consumers to rent or buy films.

Engaging consumers on that basis seems an extraordinarily short-term strategy, that has a high consumer wear-out factor built into it, but perhaps that’s the only way marketers find that they can sell DVDs in the near term.

The thing is that every time I see one of these ads on TV I can’t help thinking that somewhere Orson Wells and David Oglivy are turning over in their respective graves!

What's In A Name? No, Really!

About a year ago SBC bought a portion of AT&T for $16 billion dollars! Yes, billion. Which seems like an awful lot of money for a brand that had sold their birthright years ago for the proverbial “mess of pottage,” trading away their heritage of trust and Bell Lab-innovation to become a commodity!

Most of the time the company acquiring another keeps its name, and jettisons the other (á la Cingular). But SBC – largely unknown outside of its Texas base – has given up their name to become “AT&T.” And OK, it’s true that awareness levels for AT&T are higher than SBC, but today “awareness” is the absolute longest route to customer loyalty and profitability you can take! But when nothing else differentiates you, awareness numbers fills in an awful lot of awkward silences around the boardroom table, but it doesn’t fill corporate coffers.

Now the new campaign has broken. “Your world. Delivered.” For an interpretation of this largely meaningless tag line I turned to their web site, which indicated that the new company is now positioned to “deliver what matters most.” My 11-year-old son suggested “pizza,” which shows where his values lie, but what SBC (aka AT&T) ought to be trying to deliver is some meaning and relevance for the brand. Seems to me that “what matter most” these days is the network, and some other telecommunication giant already owns that!

The Holiday Sales Gap

Well, the holiday season is over. Now it’s just time to sit back and wait to see the 1Q’06 effects all those gift cards that got given out are going to make. On-line sales were up (again). Brick-and-mortar retailers reported less than stellar increases in holiday sales. None of that comes as a surprise to anyone. Gas prices, a general level of consumer ennui, and brand and product commoditization made it easier to stay at home and ‘let your fingers do the walking,’ as the old tagline used to go.

Based on recent financial reports, the GAP was one of the biggest holiday losers. Profits down. Same-store sales down 9%. Shares down 16.5%. Fashion industry analysts suggested that the GAP’s design offerings were “boring.” But retailers’ responsibilities go beyond those of a designer and include shaping both a brand identity and a collection of clothing that resonate with the consumer.

In 3Q’05 we conducted a study that showed that the GAP brand had lost enough meaning to actually become a ‘category place holder.’ There in the category, but not standing for anything. Based on their lack of meaning we predicted that they were not going to do well. And that’s what happened. Today consumers want meaning (along with their polar fleece). If it’s not there, they go someplace else.

Maybe Paul Pressler (GAP CEO) should ask Santa for a real brand identity and meaning for Christmas 2006!