Loyalty is so Yesterday

1. Brand Loyalty is so Yesterday Is brand loyalty a thing of the past? A number of large-scale studies indicate that brand loyalty has been eroding for much of the past decade. The current economic downturn hasn't helped, but the decline began well before the recession. Brand loyalty deterioration runs broad and deep. While a handful of mega-brands like Google, Apple, and Nike continue to increase in brand value, the vast majority of brands are seeing loyalty stagnating or falling. Significant Drops John Gerzema and Ed Lebar of Young & Rubicam have tracked 40,000 brands since 1993. Beginning in mid-2004, they saw significant drops in the key brand loyalty measures, such as "top-of-mind" awareness, trust, regard, and admiration. This was true not just for a few brands, but for thousands, covering a broad range of consumer goods and services, from airlines and automobiles and beverages to insurance companies and travel and retailers. Another study published last year from Catalina Marketing's Pointer Media Network found a high level of churn across most brands. Only 48% of highly loyal consumers in 2007 remained highly loyal in 2008. Only 4 out of 10 brands retained 50% of their highly loyal customers from year to year (see sidebar story). Battling Brand Loyalty Erosion While the studies show brand loyalty erosion has been a long-term trend, the current economic malaise hasn't helped matters. Last May ICOM reported 59 percent of U.S. consumers switched to store brand food and household products over the past six months. Marketing organizations are battling the forces behind brand disloyalty head on. One direct approach is the increased use of loyalty programs that offer tangible rewards to frequent users. More than 1.8 billion memberships exist in US loyalty programs, averaging 14 memberships per household, according to 2009 research conducted by COLLOQUY, a leading provider of loyalty marketing research. Kelly Hlavinka, partner of COLLOQUY, says, "for the consumer, participating in a loyalty program can help them stretch their limited budget a little bit further. For the company, retaining your best customers that have enrolled in your loyalty program is more important than ever." Connect In New Ways Others brands are attempting to connect with their consumers in dramatically new ways. Both the content of the brands' messaging and the media used are highly unconventional. For the last two months Domino's Pizza has been running documentary style ads saying how bad their pizza tasted before they changed their pizza recipe. In addition to the TV ads, Domino's is streaming unedited tweets and messages from Facebook about the new products at www.pizzaturnaround.com, where it also has posted an extended version of the ad. Domino's President Patrick Doyle said ''great brands going forward are going to have a level of honesty and transparency that hasn't been seen before.'' PromoAid Whether new non-traditional messaging and new communication channels can reverse the brand loyalty decline remains to be seen. What is clear is: navigating new media, social networks, and non-traditional marketing methods is more challenging than ever. That's where PromoAid can help. Its ever-growing database of marketing services companies is finding favor with an ever-growing roster of marketing organizations that are seeking to stanch brand loyalty erosion.