As Consumer Expectations Rise, Brand Loyalties Wane

By Jason Compton

Consumer expectations continue to rise, and brands are struggling to consistently meet them. The result? Rapidly and dramatically shifting loyalties. This is the main theme of strategy consultancy Brand Keys’ 2017 Customer Loyalty Engagement Index.

 

The shift is evident in the results. New companies rose to the lead positions in nearly 60% of the 83 categories the index tracks. Atop this year's list are national stalwarts including Coors (both for regular and light beer brands) and Nike (footwear), along with first-time entrants like Five Guys (co-leader for casual/fast casual dining) and Magnum (ice cream).

 

Brand Keys surveys more than 49,000 consumers with a free-response, psychology-oriented series of questions. The answers determine four key path-to-purchase drivers in each of the 83 segments. Brand Keys then evaluates how well brands are meeting those expectations and engaging along the four key pathways in their segment.

 

Brands that understand rapidly changing tastes and know how to engage in conversations with consumers tend to fare better in the study. Those that rely on old-world approaches to dominate the brand conversation are falling. Because consumers can now research brand and products through a wide variety of channels, showing consumers what a brand stands for can be much more powerful way to engage them than simply repeating a catchy tagline.

 

That success can be seen as younger, fresher, and more aware brands climb the rankings. “It's surprising to have Zara show up at the top of the retail apparel list, but everybody knows what the brand means and it's easy to see that they're meeting the demand for fast fashion,” says Robert Passikoff, Brand Keys president. “When you can't articulate what a brand means, the 'umm' sound you make is the sound of a brand dying.”

 

Rising expectations

Consumer expectations typically rise in every category every year in the model. The top gainers were rises in expectations for social networking (35%), technology (32%), and B2B services and equipment (30%) brands.

 

Sharply rising expectations are not necessarily a bad thing. Consumer expectations for non-alcoholic beverage brands grew only 9%. The Brand Keys model interprets that modest advance as a way to understand that industry's 11-year slump. “The non-alcoholic beverages category has reached a ceiling. People are defecting from that category and going to others to get their needs met,” Passikoff says.

 

In general, the closer a brand is to meeting 100% of consumer expectations, the more stable that market will be. The further away the category and its leaders are from meeting expectations, the more ripe the market is for disruption. Financial services is a key area to watch. Expectations in the financial segment rose 24%, but brands only increased their ability to meet expectations by 2%. Banking leader Chase and online brokerage leader Fidelity.com meet less than 80% of consumer expectations, some of the poorest results for category leaders.

 

Passikoff says that financial brands have an inherently difficult time responding to emotional needs rather than product-based solutions. By overlooking what their consumers want most, they are leaving themselves wide-open to being supplanted by upstarts who can find new ways to connect with consumers. “The gap in expectations doesn't exist because there aren't enough ATMs. In financial services, if you add a feature today, your rival can have it a week and a half later,” he says. “The gap exists because of consumer trust and needs for empowerment. And it's a gap that's just yelling for disruption.”

About the Author

Ginger Conlon found freelance writer Jason Compton shoved in a desk drawer by her predecessor at CRM magazine. He has covered CRM and marketing topics extensively since 1999, largely in her service.

Find him at @jpcwrites and on LinkedIn

 © 2019 MKTGinsight/DMCNY

 

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