Posted on April 25, 2016, at 4:20 p.m.
by Elizabeth Broussard.
This past February, Starbucks announced a small, yet meaningful, change to its customer rewards program. Instead of receiving one star for every visit to the coffee chain and a free drink or food for every 12 visits, customers now receive two stars for every dollar spent and a reward after 125 stars. Are you confused yet? You wouldn’t be the only one. Simply put, rewards now cost you a little bit more money.
As soon as this announcement was made public, the company’s “buzz” score — a measurement of public sentiment — dropped from 60 to 29. Why? Because when considering company rewards programs, one of the most important things a customer looks at is the length of time it will take them to make their money back. And in a business move that made sense for the company, Starbucks decided to lengthen that amount of time. Thrifty customers were not happy.
Fortunately, this mega-chain isn’t a company that will go under simply by changing a rewards program, but it does raise some interesting questions about a key factor in marketing: brand loyalty. Is a change in your rewards program really worth losing customers? Will you be able to gain enough new customers to make up for the lost ones? What will a drop in “buzz score” mean for the company even if you are making more money?
Positive public perception is imperative for companies and cannot simply be disregarded when making business plans. As consumers become less likely to remain loyal to brands and as companies keep trying to move consumer interaction to digital — and even simulated — spaces, certain requirements for maintaining brand loyalty will not quickly disappear.
Hold on, what is brand loyalty?
As defined by KeySplash Creative, Inc. President and CEO Susan Gunelius, “Brand loyalty is when a consumer is so emotionally connected to a brand that they will choose it over any other [brand] even if another might better meet their needs.”
Not only does brand loyalty involve consistent and even predictable purchase behavior, but it also requires an emotional connection from the consumer.
How is brand loyalty cultivated over time?
According to Gunelius, brand loyalty is a byproduct of delivering on your brand promise.
“You have to identify what that brand promise is and consistently communicate it to consumers, not just in your messaging, but also in your brand experiences and every interaction with the brand,” Gunelius said. “Brand confusion is the number one brand killer. If people are confused by a brand, they’ll turn away from it and look for one that will consistently meet their expectations.”
As Gunelius also explained, you can’t extend your brand into areas that would confuse the consumer. Brands must always tell the same story, make the same promises and deliver the same kinds of products and services. One prime example of this consistency: Apple. Need I say more?
How is the widespread access of information affecting brand loyalty?
This dilemma is one that many companies are having to consider in today’s sharing economy, which relies so heavily on word-of-mouth communication.
“We have the ability to get information, not just from messages delivered by brands or news organizations, but also from friends, from online influencers, from all of these different people around that world that we learn to trust,” Gunelius said. “People can instantly do a quick Google search and find out whether or not [a company’s claims] are accurate.”
Brand advocates are also becoming more and more important as word-of-mouth marketing continues to shape brand perception. These individuals serve two crucial roles: “Brand advocates are not only being loyal; they’re also pulling other people in. They’re doing the work for you,” said Dr. Sharon Beatty, Reese Phifer Fellow and professor of marketing in The University of Alabama’s Culverhouse College of Commerce.
Why is brand loyalty important?
Although this question may seem self-explanatory, it is an important one to dissect. Brand loyalty is mutually beneficial, both for companies and consumers. If consumers trust a brand and are loyal to it, they don’t have to think about repurchasing. It’s second nature.
“For the company, the benefit of higher brand loyalty is that it’s less work for them if they can keep their customers — new customers are much more expensive than old customers,” Beatty said. “Old customers want to do business with you regularly; they want to spend more money with you; they’ll be less concerned if you raise a price. They’re kind of locked in to doing business with you.”
However, as Beatty stated, companies can’t use high brand loyalty as an excuse to ignore current, or potential, customers. Complacency is a dangerous place to be, especially if you find yourself losing customers for unknown reasons. The company should always know its consumers.
Will consumer/company interaction ever fully move to a digital space?
This question is one that consumers are wary of and companies are hopeful for. Digital and simulated interaction is far less expensive for companies, but face-to-face is still crucial for customers.
Many companies are putting all of their marketing efforts into online experiences, when physical interactions with products actually matter more. Research continues to emerge about the importance of face-to-face interaction as even the youngest, social-media-obsessed consumers are still looking for a personal touch. As technology evolves, it’s only going to become easier and easier to simulate human/physical interaction online, but companies need to remember that computers will never be able to replace the trust and reassurance that come from interacting with another human.
“At the end of the day, social media is just one channel within the digital marketing space,” Gunelius said. “Are old forms of marketing dead? No. It’s a great way to stand out from the crowd and, depending on who your target audience is … Is face-to-face interaction dead? Absolutely not. There’s no better way to build a relationship than face to face. So, it’s all a matter of who your target audience is and how best to communicate with them; you need to be where your customers spend time – that’s the key to building a brand.”
Although “brand loyalty” is usually thrown around as a marketing term, it’s an important one for public relations practitioners to understand, as well. Too often, advertising, public relations and marketing professionals spend more time defending their industry as its own entity, when really they should be learning from one another. After all, building “brand/consumer/product/company loyalty” and maintaining long-term relationships is as much a key function in PR as it is in the broader field of communications.