Two perspectives- Advertisers want dogs; consumers are cats
In an advertisers febrile fantasy, consumers come home, grab a comfy sofa and cuddle up with their favorite brand. Advertisers like loyalty. Loyalty is good: it is much cheaper to retain a customer than to obtain a new one. And it is a good bet that a loyal customer will increase her consumption, meaning that she will be more valuable with every passing year.
Or so the story goes.
Consumers have their own view of the world. Like cats, they dont really care that much for loyalty and, like cats, they go where their interests lie. And the truism, of course, is that you can buy a customer’s loyalty for 25 cents.
We are a fickle bunch. How fickle? Really, really fickle.
In 1996 Joel Rubinson and Allan Baldinger published one of the most amazing pieces of research ever: Brand Loyalty: The Link between Attitude and Behavior in the Journal of Advertising Research. What was amazing? The study contacted 4,000 people and asked them about their buying loyalties, then, a year after, recontacted 56 percent of them again and asked them the same questions about their buying loyalties.
For the study, low loyals had anywhere from 0 to 9 percent probability of purchasing the brand; moderate loyals had a 10 to 50 percent probability and high loyals had more than 50 percent probability of purchasing the brand. This study covered 27 brands.
Seventy-four percent of consumers were not loyal at all. But, at least the number of highly loyal consumers held from year to year at 12 percent. Or did it? The most interesting aspect is how quickly a brand can lose its loyal consumers. Take a look at what really happened from year one to year two.
Yep, the percentage of consumers who were highly, medium and low loyal remained the same. But, of the 12 percent of consumers who were highly loyal to their brands on year one, only 50 percent remained highly loyal. Another 50 percent had become either medium or low loyal.
So, in a years time, a brand could lose 50 percent of its loyal consumers. How bad is that?