Saturday, October 29, 2016

2016 Loyalty Leaders: Digital Delights

More than a third (35%) of the 2016 Brand Keys Loyalty Leaders are represented by digital technology, social networking brands, or brands that facilitate digital tech or social networking. That was one of the key findings in the 20th annual Loyalty Leaders survey. And while digital brands not only represent the lion’s share of this year’s list, they also command 80% of the top 20 loyalty leaders spots as well.

Loyalty Is a Gift and a Curse
Consumers haven’t entirely deserted traditional brands. The largest loyalty shifts this year have been in more traditional areas like apparel retail and athletic footwear, which for brands turns out to be both a gift and a curse.

Gift-wise loyalty is a leading-indicator of positive consumer behavior toward brands. Oh, and loyal consumers are six times more likely to behave better toward that brand.

The “Curse” aspect means it’s getting more difficult for non-digital brands to create the kind of emotional engagement consumers desire – for connection and distinction, tailored to ever-increasing consumer expectations regarding customization of products, services, and experiences. This environment forces brands to work harder to create emotional engagement. Want to know what consumers are going to do? Measure loyalty and emotional engagement.

2016 Top 20 Brand Keys Loyalty Leaders:
(Numbers in parentheses indicate last year’s brand ranking)
  1. Google: search engines (#6)
  2. Amazon: online retail (#8)
  3. Apple: tablets (#4)
  4. Netflix: video streaming (#1)
  5. Facebook: social networking (#5)
  6. Apple: Smartphones (#3)
  7. Amazon: tablets (#2)
  8. YouTube: social networking (#7)
  9. Amazon: video streaming (#10)
  10. WhatsApp: instant messaging (#9)
  11. iTunes: video streaming (#13)
  12. PayPal: online payments (#18)
  13. Dunkin’ Donuts: coffee (#17)
  14. Samsung: smartphones (#11)
  15. Nike: athletic footwear (#31)
  16. Ford: automotive (#22)
  17. Uber: app-based rideshare (#21)
  18. Starbucks: coffee (#40)
  19. LinkedIn: social networking (#16)
  20. Zappos: online retail (#12)
Loyalty’s Rule of Six
The kind of loyalty generated by leader brands means consumers are six times more likely to use the brand’s products and services in other categories too, which makes it harder for others to break into the top 100, let alone the top 20. This year Brand Keys examined 635 brands in 72 categories. To compound the challenge of rising to, say, the top 20, a number of brands ended up bein represented in multiple categories, like Amazon (which appears in the top 20 in three categories: Online Retail, Tablets, and Video Streaming). Google, which moved up five spots to rank #1 this year and was represented in both Search and Online Payments and Apple, which was rated highly in the Tablets, Smartphones, and Video Streaming categories.

Category Loyalty Leaders. Digital and. . .
Digital technology and social networking brands had the most Loyalty Leader brands, and represented 35% of the 2016 list. Other categories represented by Loyalty Leader brands included:

Retail: 17%
Beverages: 9%
Automotive: 8%
Cosmetics: 8%
Financial: 6%
Restaurants: 6%
Travel: 4%

Nine New Brands Replace Nine Old Brands
Nine of the top 100 Brand Keys Loyalty Leaders are new:  4 digital: Airbnb (#52), Line (#72), theSkimm (#76) and BuzzFeed (#95), with the remaining 5 including: Häagen-Dazs (#85), Jack Daniels (#92), Burt’s Bees (#96), Lowe’s (#99), and Vanguard (#100).

Brands that slipped from the top 100 included all hotel brands that had made last year’s list: Ritz-Carlton, W Hotels, Hyatt, and Hilton, a partial explanation of Airbnb’s spectacular first showing. Other brands that fell from this year’s top 100 include Neutrogena, Revlon, Macy’s, FIFA, and HTC Smartphones.

2016’s Biggest Loyalty Winners
Loyalty and emotional engagement are leading-indicators of consumer behavior toward a brand. That equation looks like this:

Loyalty + Emotional Engagement = Positive Consumer Behavior = $$$$

Axiomatically, the better consumers behave toward a brand, the better the brand does in the marketplace, which ultimately shows up on brands’ bottom lines. The 7 brands (including ties) that showed the greatest loyalty leadership gains were:

Starbuck’s (+22 to #18)
Ralph Lauren (+19 to #24)
Nike (+16 to #15)
LG (+15 to #31)
Domino’s (+15 to #43)
HBO GO (+15 to #63)
Under Armour (+13 to #28)

The Biggest Loyalty Losers
The 5 brands with the greatest loyalty erosion included:

Chipotle (-45 to #68)
Estee Lauder (-34 to #87)
eBay (-26 to #64)
Clinique (-21 to #97)
GAP (-20 to #93)

The bottom line? No matter the category, brands that understand that emotional connections serve as surrogates for added value, have succeeded.  And brands that have made loyalty and emotional engagement a strategic priority always appear high on the Loyalty Leaders List, and always appear at the top of consumers’ shopping lists.

Brand Keys Loyalty Leaders analysis was conducted in September 2016 and includes assessments from 42,792 consumers, 18 to 65 years of age, from the nine US Census Regions, who self-selected the categories in which they are consumers and the brands for which they are customers. Seventy-five percent (75%) were interviewed by phone, 20% via face-to-face interviews (to account for cell phone-only consumers), and remaining consumers assessed categories and brands online. The 2016 Loyalty Leader assessments examined 72 categories and 635 brands.

Unlike economic use models, which rely heavily on historical data and profitability conjecture, the Brand Keys Loyalty and Engagement Model and rankings are 100% consumer-driven, and are predictive, leading-indicators of brand and corporate profitability. The good news is that brand loyalty is understandable. The better news is, it can be quantified and predicted. And, today, knowing what’s coming down the road from a category and competitive perspective is an extraordinarily powerful advantage that brands shouldn’t really pass up.”

The complete top-100 2016 Loyalty Leaders List, is available here.

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

Sunday, October 02, 2016

The Brand Authenticity Cycle

You know how it goes, Brand Authenticity = Product Authenticity = Brand Authenticity = Experiential Authenticity = Brand Authenticity. . . and the beat goes on!

You hear a lot about how brands are supposed to be “authentic,” although you’re likely to hear different definitions from different brands, some related to category, some related to experience, and some actually even related to brand, with some designations more plausible than others. Brand Keys views “brand authenticity” as a set of values – the most leveragable of which are emotional – that a brand can believably own.

The critical words in that last phrase was “believably own” because it turns out that there’s an enormous difference between a brand saying something, a brand doing something, and a brand doing something believably. If it helps, think of it as a brand’s emotional version of “a promise made, should be a promise kept.” In a world where consumers talk to themselves before they talk to brands, you definitely want consumers to feel that your brand is keeping its promises – or the promises you make about your products or services – and, thus, protect your brand’s authenticity.

In the Retail sector, “authenticity” has a lot to do with “trusting what the brand says or sells,” which has a lot to do with “brand reputation,” which has a lot to do with “customer loyalty,” which has a lot to do with “sales,” which has a lot to do with.  .  . well, you get the point. This is true in all Retail sectors, but more particularly in the sub-category “Discount Retailers.”

In a category where low-lower-lowest prices correlate so very highly with the perception of value and product primacy, consumers ask the question, does the product deliver on what was promised and do I feel I received real value?  Authenticity is why responsibility for things like illegal child labor practices ultimately came back to haunt discount retailers. They weren’t running the sweatshops, but who else was the customer to blame? Sure, cheap is cheap, after all. But do consumers really care where a product is manufactured? Or how? Or if it’s exactly up to specs? Or whether political prisoners are sewing soccer balls with their teeth? The easy, intuitively obvious and rational answer is, of course “yes,” but brand loyalty research in the Discount Retail category proves it’s so. And to a much larger extent that has previously been assumed.

A recent Brand Keys study examined Target, Walmart, and Kmart shoppers and measured the connection of authenticity to actual behavior in the marketplace. It turns out that people who felt the brand more “authentic,” shopped the brand six times more frequently, bought more products from that retailer, and were also more likely to rebuff competitive offers, especially one that were price-based. They don’t call it “Discount Retail” for nothing!

So an authentic brand yielded more loyal customers. But it also turns out that “authenticity” is strongly related to expectations consumers hold for primacy-of-product, the head-nodding response to the question, “Did I get what I paid for?”

These findings were most-recently face-validated when Target pulled Welspun India Ltd.’s products from their shelves after the brand’s investigation found they couldn’t guarantee that the products were actually 100% Egyptian cotton as advertised.

The following week Walmart announced that it would stop selling the “Egyptian” cotton sheets made by Welspun because they couldn’t attest to the products legitimacy. They removed all products from their shelves and have offered customers a full refund. They donated the sheets to some good cause.

But it turns out that Welspun has not used actual Egyptian cotton in their products for two years. Oops! And if that’s not enough to have you question the authenticity of products you buy, the Cotton Egypt Association, which certifies suppliers, estimates that 90% of products labeled “Egyptian cotton” are inauthentic, or the precise opposite of “authentic.”

Good brand marketers need to understand that not only must their brands be authentic, but their products must be authentic too. And while our studies have confirmed that precept, perhaps Shakespeare said it best:

This above all: To thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.

Particularly it you want loyal consumers.

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