CMOs: Start Building (Real) Loyalty

As I’ve mentioned before, brands are dying. While there are some exceptions (Zappos, Apple, Southwest Airlines, etc.), firms just aren’t developing strong brands. Why does it matter? Because weak brands can’t build strong loyalty.

People often say that prices are being driven down by customers empowered with information. But I don’t really buy it. Price competition is being driven by the lack of strong brands. Here’s what I said about brands in an earlier post:

True brands are more than just marketing slogans, they’re the fabric that aligns all employees with customers in the pursuit of a common cause.

I just completed an analysis of what consumers want from different companies in 12 different industries. It turns out that good customer services was preferred more frequently than low prices across every industry.

But my research isn’t the only source of insight about the importance of strong brands. Here are a few recent studies that I’ve read…

1. Emotional Advertising Lowers Price Sensitivity

In a new book called “Brand Immortality,” Hamish Pringle, Director General of The Institute of Practitioners in Advertising, shows that emotional advertising is much more powerful than rational, hard-selling ads. Here’s an excerpt:

What the data show us is that emotional campaigns are almost twice as likely to generate large profit gains than rational ones…  It turns out that emotional campaigns… excel in one noteworthy area: reducing price sensitivity, and hence strengthening the ability of brands to secure a premium in the marketplace.

2. Advertising Price Is Not Very Effective

In a recent post called Time Is More Valuable Than Money, I discussed research that shows how advertising that mentions time drives more sales than ads that mention price. Here’s some of the research from Stanford:

Because a person’s experience with a product tends to foster feelings of personal connection with it, referring to time typically leads to more favorable attitudes-and to more purchases

3. Loyalty Programs Must Build Attitudinal Loyalty

An article in AdAge called Redesigning Loyalty Programs to Last Beyond the Next Purchase discusses the difference between behavioral loyalty (temporary) and attitudinal loyalty (which is lasting). According to the authors:

Behavioral loyalty might be described as consumers doing what you want them to do, while attitudinal loyalty involves consumers believing what you want them to… As a result, loyalty programs that provide only economic benefits may be appropriate in some instances but may actually conflict with brand-building efforts that ultimately attempt to create attitudinal loyalty.

The bottom line: Don’t let your brand go to waste!

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I am a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. I am also a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Simply put, I am passionate about spotting emerging best practices and helping companies master them. And, as many people know, I love to speak about these topics in almost any forum. My “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Our goal is simple: accelerate the path to delighting customers. I am also the co-founder and Emeritus Chair of the Customer Experience Professionals Association (CXPA.org), a non-profit organization dedicated to the success of CX professionals.

4 thoughts on “CMOs: Start Building (Real) Loyalty”

  1. Zappos is a good example of point #3. I remember reading a story of a customer who called Zappos to return a pair of shoes she had purchased for her husband. Her husband had died before she could give him the gift. The customer rep not only took the return, she ordered a bouquet of flowers for the customer. Actions like this makes the customer believe the company is not just there to make money, and it’s more about provide the best services.

    1. Anh: Thanks for sharing your comments. Companies with great customer service all seem to have legendary stories about how they’ve treated customers. In my work on how companies build customer-centric cultures, I identified the “6 C’s of customer-centric DNA:” Compelling stories, Clear beliefs, Consistent trade-offs, Collective celebrations, Constant communications, Commitment to employees.

  2. This is all fascinating in the wake of Microsoft’s new campaign. Is MS and its ad company not aware of these basic advertising truths? Or do they simply believe that they are above them? Not only are they concentrating on price as a differentiator, but they are purposely avoiding any focus on the Windows brand. The shopping experience portrayed in these ads plays right into Apple’s hands by emphasising the comoditization of PC’s, perhaps even more so than Apple’s “I’m a Mac” series.

    It has been my feeling on a purely intuitive level that this campaign will yield short-term results, but will fail to stem the momentum which Apple has built in the long-term, particularly once the resession has ended. The information in this post has only served to formalize those feelings.

    1. Hi Steven: I agree. Microsoft is such a well known brand, but I do think it has lost its identity. Microsoft needs to re-imagine and then redefine its brand and then create an advertising campaign to reinforce that branding. Sometimes its difficult to figure out when you need to step back and rethink what you’re doing. For Microsoft, I think that time is now. Thanks for the comment.

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