2007 Brand Keys Customer Loyalty Engagement Index

Next Monday the results of the 2007 Brand Keys Customer Loyalty Engagement Index will be available. Brandweek will be covering it in their annual “Loyalty” issue, and Forbes.com will be discussing various categories on-line and via their web TV network. Various specialty publications will be covering individual categories and how brands ranked.

Participants in the survey included a nationally-representative sample of 24,000 men and women, 18 – 60 years of age drawn from the 9 US Census regions. Screening is tailored by category and engineered to identify “heavy users” or “top-20% users” for each brand.

In our 10th year, we assessed 55 categories and 362 brands. All the research is done by means telephone interviews, augmented by 10% central location intercept interviews of “cell phone-only” respondents.

The results reveal the extent to which your brand is positioned to meet or exceed customers’ expectations - the key to earning a customer's next purchase and the only true measure of loyalty and engagement.

This year we’re making access to the loyalty and engagement knowledge easier via the Brand Keys Customer Loyalty Engagement Insights Package. A subscription to it includes a customized report for your brand, (providing access to the results for your brand and competitors – including updates over the year), and a Quarterly E-Newsletter, The Customer Loyalty Engagement Monitor, which will report leading-edge thought-strategies, insights, and perspectives regarding loyalty and engagement. Specific information regarding this program can be accessed via our website (www.brandkeys.com) or calling 212-532-6028 X15.

In a more complex marketplace with more savvy consumers and more complex and creative engagement possibilities, we remind you that these days, an ounce of loyalty is worth a pound of cleverness.

Character and the NFL Draft

According to FootballOutsiders.com writer, Russell Levine, “‘Character’ has always been one of the buzzwords in frequent use at NFL draft time, but most teams paid little more than lip service to the idea of drafting high-character individuals.”

Two recent suspensions from the new NFL Commissioner have signaled that the teams need to take a harder look at exactly whom they put into uniform. And, of course, NFL teams would love to have fans believe character matters to them. But the economics of the business – at least how the teams define it – seem to be that the bottom line is only about wins and losses.

Perhaps if the teams had a better understanding of what actually drives fan loyalty, they’d pay more attention to character issues. See, there are (just like any other category) four drivers that define “loyalty” and “engagement” in professional spectator sports. It turns out that only 20% of loyalty and engagement (defined as fans watching the game, going to the game, persuading others to watch/go to the game, buying licensed team merchandise, eschewing the temptations of other spectator sports, and discretionary time activities) is driven by win-loss ratios.

And the rest? More than half of the decision to become/remain a fan (and all the money that comes with that) is driven by character-based drivers like “Authenticity” and “Fan Bonding.” Which suggests that there needs to be some bolder thinking about how the NFL places values on “character.” Teams need to readjust the definition of success to account for character, because whether they like it or not, it has tremendous effects to the dollars-and-cents bottom line.

Perhaps the words of Grantland Rice should be hung in every NFL locker room:

For when the One Great Scorer comes
To write against your name,
He marks-not that you won or lost
But how you played the game.

Field Of Dreams Marketing

Traffic at Anheuser-Busch's online Bud.TV network plunged last month following an already underwhelming debut. The ever- declining audience numbers provide proof positive that on-line age-verification measures are an obstacle to reaching a mass audience and that just because you “build it,” consumers will not necessarily “come.”

Anheuser-Busch seems hopeful that new content via this generally “new” media will draw more viewers. Bud.TV videos dropped into YouTube have so far generally been met with complete apathy.
One supposes they think a breakout hit will draw notice on YouTube and other viral video channels, and produce viewers for their network. But that clearly hasn't happened.

Bud.TV has been the subject of widespread interest among media and marketing professionals because it is the first attempt by a marketer to launch a full-scale TV network online. But consumers don't seem nearly as engaged with this concept, and perhaps that’s because Anheuser-Busch is mistaking an unlimited budget and corporate ego with co-creation and community.

The Schlog

It seems as if every brand on the face of the earth has a blog. This is mine and I update it on Tuesdays and Thursdays. I hope that what I write opens dialogues and suggests solutions. (The critical word in this paragraph is “write” and I’ll get back to it in a bit.)

I can’t put my finger on the precise date that everybody – especially brands – felt that they had to have a blog. Some of it has to do with the fact that brands have become desperate to engage customers. That desperation has driven some marketers so far as to create "flogs,” a word now used to describe a fake blog.

Wal-Mart promoted its brand with a fake travel blog. Sony created a flog to promote the Sony PSP. Both got caught. Users posted angry comments, and accused the perpetrators of trying to deceive them (which, of course, they were). Big brands who would never consider running false advertising on TV learned that flogs are just as bad. Maybe worse, given the context of the medium. But here’s a new one.

Recently CBS News fired a producer of Katie Couric’s video blog for plagiarism. Apparently the producer who wrote it appropriated significant portions from a Wall Street Journal article. CBS disclosed the plagiarism with a correction that said, “we should have acknowledged that at the top of our piece,” which would have made for compelling, “Must See TV,” watching Couric, the fifteen-million-dollar-a-year newscaster, explain that she not only required a producer to figure out which feelings she wanted to share with the world, but to write them for her as well.

Which brings me to the title of this column, “The Shlog.” Officially Ms. Couric’s “Couric & Co.” is a blog since it gets regularly updated. It’s not a flog, since the agent of the message isn’t misrepresenting herself. But – and here’s where I bring this back to my remark in the opening paragraph – Ms. Couric doesn’t actually write the blog herself. It’s a sham, hence the term “shlog.” (More creative appellations, more than welcome, by the way.)

The lesson here for anyone who wishes to share their intimate or professional thoughts is that the blogosphere is a very open, self-policing, and pretty unforgiving world – especially when you try to trick people. CBS News and Ms. Couric are just like brands in this instance. They too need to protect their “brand’s” equity and image. Perhaps more so since the greater part of a news organization’s brand equity is based more on the value “credibility” and less on the image “perky.”

And way less than on adjectives like “poseur,” or “sham.”

Smoothing Out A Brand's Rough Edges

I think that it’s fair to say that innovation is the specific instrument of entrepreneurship that endows resources with a new capacity to create wealth.

Either that, or it’s what happens when you can’t figure out what to do with a product that has been virtually unchanged since, say, June 12, 1924 when Kimberly-Clark trademarked the name “Kleenex” for their version of facial tissue, which has been around in its current form since 1615. So if you can’t substantively improve the product, what does one do?

Change the package, of course. And that’s exactly what Kleenex has done. Introduced an oval-shaped box. Unimpressed? Yes, so were we. What’s so new about a package change?

Well, it’s not so much the package change as it is the leveraging of the extraordinarily powerful consumer value, “customization.” Kleenex created a website that allows consumers to design their own tissue box online. The site provides backgrounds, or allows you to add your own photos or art to the design. You can add any text you want, and they offer a lot of preset themes. And all this creativity and personalization costs is just $4.99. Plus shipping and handling, of course.

So the lesson of today’s blog is that you need to accurately track the direction and velocity of customer values, identify what fits with your brand, and leverage the hell out of them. Do that and you’ll engage customers, engender loyalty, and make money.

And that’s nothing to sneeze at!

A Brand Is Bought By The Association It Evokes

A brand is bought by the association it evokes, and here’s how that works. We’ll mention a brand and you come up a single word that you feel captures the brand’s central association and imagery. We’ve provided our reactions as well.

Mercedes (LUXURY)

BMW (ENGINEERING)

Toyota (RELIABILITY)

Volvo ( ? )

If your brand association for Volvo was “safety,” we wholeheartedly agree with you. And while consumers do want safe cars, Volvo recently issued the statement that, “Safety on it’s own is not enough.” We agree with that too. And given a general lack of real automotive differentiation and ubiquitous car brand awareness, decisions today are more emotionally driven than rationally driven, no pun intended.

It’s easy to proffer one-word brand images for most cars (well, maybe not GM or Ford which are, after all, associated with nothing in particular), but in the real marketplace a brand’s “equity” is defined as “the degree to which the brand meets or exceeds the expectations consumers hold for the values that drive a category.” The thing is that there is always more than just one driver that explains how consumers will view a category, how they will compare offerings in a category, and, ultimately, which brand they will buy!

“Safety” is, in fact, one of the drivers in the automotive category. And Volvo’s “safety” association turns out to be a left-brained, rational stance. And while consumers do have the highest expectations for “Safety,” it’s the 4th most-important (of four) purchase drivers for the automotive category.

That means that there are three, more-important drivers that consumers use to bond to – then buy – an automotive brand. So Volvo is missing out someplace. Not only that, but rival auto brands have been leveraging safety for some time now and even though Volvo is still known for “safety,” it doesn’t differentiate or resonate the way it used to. They’re just known for it! Rational positioning and production processes only go so far these days before they run out of the proverbial “gas.”

Studies of 15 automotive brands included in the Brand Keys Customer Loyalty Engagement Index, indicate that the engagement/loyalty/purchase process for automobiles is 61% emotional and right-brained and only 39% rational and left-brained. Two of the remaining three drivers are entirely emotionally based, which could provide an opportunity for Volvo to merge the brand into the right-brain lane, if people are willing to believe it about the brand. But these days, given entrenched imagery, having to market to the bionic consumers of the 21st century, and more and more fragmented media consumption, that’s an awfully big “if.” Currently, Volvo ranks #12, ahead of Kia, and tied with Hyundai, and is not, it’s fair to say, facing an easy road ahead.

Happily, engagement and loyalty metrics not only identify the most leveragable emotional values, but also the one’s consumers are actually willing to believe about the brand. And that’s an important detail to get right because most things in life – rational or emotional – are always somewhere else. But if you get the details right you can get there in a car.

No Safety In Numbers

Clearly, demographics play a part in brand and market planning. If you look hard enough and think hard enough, there are always some implications to be found in shifting numbers.

For example, the Census Bureau released figures recently indicating that the average household is currently comprised of 2.57 people. That’s down from 3.14 back in 1970, which might, for example, provide an explanation why consumption of certain product categories are down as well. But the figures themselves can’t provide insights into which brands the 2.57 people will engage with.

Today 1 in 3 children under the age of 18 live with only their dad or mom, which is almost double the numbers seen in 1970, so there are 111 million homes, double the number in 1970. But the number of homes that contain just a single person has risen to 26% (up from 17% thirty-five years ago). So there are inferences that can be drawn regarding production figures – more households = need for more toasters, for example – but the numbers alone won’t tell you anything about loyalty to a particular brand.

So what do these numbers tell us? Well, two absolute truths at least: The family is changing not disappearing and apparently, three out of every four people still make up 75% of the population.

Fall Into The (Sales) Gap

What’s harder than getting customers into Gap stores?

On the basis of seven years of customer loyalty and engagement tracking on our part, the only correct answer would be “immediate peace in the Middle East.” If you think that’s a joke, it’s not.

In 2000 Gap had a loyalty index of 111 (benchmark is 100), which meant that the chain was profitable. Not highly profitable, mind you, but not actually losing money. Between then and now the chain has been in a “Death Spiral” of decreasing same-store sales.

According to the 2007 Brand Keys Customer Loyalty Engagement Index, they’ve lost nearly 20% of their brand’s equity. That means that they are seen to meet customer expectations for the category 20% less than they were six years ago. You don’t see many declines like that! What’s worse is that these predictive metrics correlate extraordinarily highly with the levels of Gap’s decreased sales.

Not content to learn from their mistakes of the past, Gap (who apparently was totally unapprised of a retail chain called “Banana Republic”) has wanted to move upscale and away from their brand heritage for a while now, and have, in fact returned to their roots of the past – khaki. Yes, it’s where they started and is a “classic” look, but given the competitive retailers Gap now faces, it seems to be too little, too late.

And, as there was apparently too much money left in the marketing budget, they went the “celebrity” ad route yet again. Not content to have wasted millions of dollars on the ill-fated Sarah Jessica Parker celebrity campaign, or the return from the grave of Audrey Hepburn, this time they went with Claire Danes and Patrick Wilson.

Reminiscent of past campaigns where dancers danced against a white background to classic tunes, this time Danes and Wilson dance against a white background while Ethel Merman sings the classic show tune “Anything You Can Do, I Can Do Better.” They are attractive and talented (just as all the dancers have been in the past) and totally useless in terms of engaging prospective customers and engendering loyalty.

The issue of the levels of engagement attained when this approach – and the clothing – was fresh, notwithstanding, the current brand strategy raises two peripheral questions.

First, the commercials are highly entertaining and are exceptionally well-produced (with or without celebrities), but from an engagement perspective, that’s just the price-of-entry into the ad world today. So you can be as creative as you want, but it doesn’t guarantee engagement or sales!

Second, are they insane!? Given the availability of attractive and highly-trained non-celebrity dancers (working as waiters in many of New York’s and Los Angeles’ finest restaurants), what was the brand and the agency actually thinking they were going to achieve by hiring yet more, very expensive celebrities to shill for the brand? Even in marketing the long-established, definition of “insanity” applies: doing the same thing over and over again expecting a different result.

A new campaign is forthcoming from their agency, Laird + Partners, next month, but a Gap spokesperson declined to provide details. If history proves itself out, no level of creative, no matter how enjoyable and well-produced is going to reverse the downward sales trend of the past few years. Their reticence to unveil details, however, reminds us of another marketing-applicable quote, which goes something like, “Nothing is more like a wise man than a fool who holds his tongue.”