Customer Loyalty Index shows brands struggling
BrandWeek has published an excerpt of the Brand Keys Customer Loyalty Index for 2006. The excerpt is a pdf with summary charts, and is well worth reading.
Based on the Brand Keys survey, brands are struggling to meet customer expectations. In fact, many brands are falling behind, creating a “loyalty gap.”
The average level of consumer expectation across 35 major brand categories rose by 4.5% from last year. Over the same period, the survey shows, the average ability of brands to keep up with those hopes decreased 9.2%. Put another way, while brands certainly try to meet the expectations of their loyal customers, those expectations are nonetheless growing two times faster than the brands’ ability to keep up with them.
What do these results mean?
Various experts cited in the BrandWeek article offer up a “usual suspects” range of explanations and remedies:
- Brands have to do a better job of managing customer expectations.
- There’s too much hype in ads. People believe it, and brands get caught trying to deliver on vapor.
- Better brand strategies are needed. Don’t over-promise (and under-deliver).
- Customers themselves are to blame. They demand too much. They’re unrealistic. Brands are caught in the middle.
- Lower the bar for brands. That way, whatever you do will be appreciated.
- Just sell commodities. That way all brand problems disappear. (Oops—my joke.)
My take
In general, I’d say these results (the survey calls them a trend) indicate a systemic breakdown weakness in traditional brand
practice. Attempts to “differentiate the brand” by “changing customer perceptions” invariably lead to campaign-driven brands, instead of customer-driven brands. The usual result is huge discontinuities between brand perception and reality. Customers and brands become “out of sync.”
The problem starts with top-down brands
The traditional top-down approach to brands is a main cause of the “loyalty gap.” That approach typically aims to create an unrealistic mind-meld of iconic brand worship, or, failing that, simply bribes customers with rewards and perks. The first sets customers up for a clash with reality; the second merely conditions customers to ask for “more.”
Top-down brands create low-performance customers. Customers conditioned by top-down brands are shocked (shocked!) when the brand veil is pulled from their eyes, or when they feel the least bit jilted in rewards. Typically, top-down brands are not designed to deliver value, and they’re not developed to create customers. That’s a big part of the problem.
Collaboration is key
If you use your brand to collaborate with customers, engaging them on mutual terms, you can create a platform of understanding and trust that avoids problems like the top-down “loyalty gap.” For instance, Southwest does not need to “lower expectations” to be a successful brand. It forges an agreement with customers on travel value: lots of reliable, cheap flights to key cities at attractive travel times. Their (high-performance) customers willingly pitch in to keep this brand proposition viable. Customers want to collaborate.
Needed: a new concept of “brand loyalty”
One problem with the “loyalty gap” meme is that it’s predicated on the traditional “loyalty to the brand” approach, and that approach itself is off base. In fact, trying to make customers “loyal to the brand” only makes matters worse.
As we note in our new definition of “brand loyalty,” brand loyalty is:
The loyalty of the brand to what it stands for. In practice, brand loyalty is a mutual loyalty of company and customer to a common cause. The customer is loyal through the brand, not to the brand.
There is no “loyalty gap” when you and your customers are on the same side.
