Piaggio Vespa scooters cost about €4,000. I could pick up a replica scooter from a brand called LML for just under €3,000. Exactly the same. Same chassis. Same engine. Everything. Except the badge. Even up close, you wouldn’t notice the difference. At 25% cheaper, LML scooters are selling just fine, according to a local scooter dealer. “Honestly, only a desperate, insecure idiot would buy a Vespa these days”, he tells me. I own two.
I won’t even try to defend why I continue to pay a price premium for a Vespa. I’m too busy defending the fact that I’m in my mid-40s and am still driving a scooter at all. But make no mistake, I am a devoted, loyal customer of the Vespa brand. The words ‘brand loyalty’ cause mass confusion inside the walls of companies. A meeting to discuss loyalty makes for puzzling, unproductive, but potentially quite entertaining meetings. If you’re having a tough week, and need a pick-up, put yourself down for the next cross-departmental loyalty session.
Many non-marketers assume loyalty is about feelings. Feelings of loyalty. How loyal are our customers? How strongly do they feel about us? An emotional attachment of some sort. And in fairness, there is something in this. Agencies do measure things like ‘attitudinal loyalty’.
So when we talk about loyalty strategies, do we mean strategies to get people to become more attached to us emotionally?
Well, not exactly. We might have an emotional attachment. Like me and my gorgeous scooters. But we might not. I’m guessing the evidence will show I’m an outlier for Vespa. Part of a minority. More than a handful, but still a minority. Most Vespa drivers are not that attached to the brand. If they were, they would stop driving those new, automatic bikes and get hold of a proper vintage, PX model instead.
It appears that most customers of most brands are not that emotionally attached to them. When we talk about loyalty, we’re generally not talking about feelings of loyalty. We mean sales. Purchases. Yep – money. Feelings may well have a role in this, but, when measuring loyalty, we are referring to how much of a brand we buy. So, the starting point for measuring loyalty is not in feelings or attitudes, but in repeat business.
All is not lost though. Because, while we might not be emotionally attached to most brands that we buy, we are loyal. We’re loyal in the sense that we repeat buy. Yes, customer loyalty is alive and well. There’s buckets of evidence on this.11
Repeat buying is critical for most brands. We don’t expend much of our brain-processing energy when picking up a product from the shelf, but it is not a random decision either. When we’re buying, we have in our minds a handful of brands that we feel can do the job.
Fox lesson: We are loyal to brands, even if not emotionally attached to them.
8
I’m breaking up with Tesco
I don’t have any emotional attachment to Tesco, the retail chain. But I think even Tesco would admit that I have been a pretty loyal customer. It has been getting a good chunk of my family’s weekly food shopping for the past three years. We must be in the place two or three times a week. And we use their online delivery service too.
Now that I think about it, though, it is entirely plausible that my twin boys do have an emotional attachment to the place. Tesco was one of the first words they learned. Tesco and Apple. Not the fruit – the trillion-dollar brand. They genuinely appreciate all that Sir Jony Ive has done.
So, we are a very Tesco-loyal household. But this is all going to end. I’m breaking up with Tesco in a few weeks. I’m sure the marketing folks in Tesco headquarters would rather we stay together. Everybody knows that it is far cheaper to keep a customer than to acquire a new one. Right? Well maybe. But hold that thought.
Advertising is expensive. Surely the better strategy for Tesco and others would be to move its advertising budget into customer experience and loyalty initiatives. Improve the customer experience. Really look after them. Contact them more often. Make them happy. In a nutshell – invest in them instead of blowing a rake of cash on chasing new customers. Do right by our customers and they will be customers for life.
Except they won’t. They won’t stay. Tesco was good to me. They even just revamped my local store with a lovely bakery. So why am I done with them? Did they did piss us off? Did we have a bad customer experience? Too expensive? Nope. Nope. Nope. Nothing as dramatic. We’re moving house. Tesco was an eight-minute walk from my home. It will soon be a 60-minute drive. So, in a few weeks, our local supermarket will be Dunnes Stores, a well-known, national store.
Sure, Tesco may get the occasional scrap I throw their way, if I’m passing by. But, scraps aside, it is losing me as a customer. Well, for the next ten or 20 years anyway. Unless they are willing to move closer to my new house.
Tesco – it’s been good, but I’m moving on. I’ve already started correcting my boys when they say Tesco. Dunnes, boys. Dunnes.
I’ll also be ending my loyal relationships with my local pub and local coffee shop – the wonderful Butler’s Pantry and Browne’s, a lovely little restaurant in Sandymount, where I’m sitting right now tap-tapping away. If my new local pub does not stock Brewdog’s Punk IPA beer, it is quite possible I’ll be ending that relationship too. Reluctantly, I admit. They have all treated me exceptionally well. I’ve no complaints and would recommend them all. But I won’t be a customer of theirs for life, unfortunately.
Now, I accept that not every Tesco customer is moving house every year. But there is a more common reason why brands can’t rely on customers for life. It’s known as the leaky bucket.12 I asked the wise and wonderful Peter Field about this bucket. He explained that the leaky bucket is a fact of life for any brand. It needs to be replenished all the time. He advised me that, “if we just rely on selling back to our existing customers, we are going to be dealing with a dwindling customer base, and ultimately this is not a recipe for growth”.
So, I’m breaking up with Tesco, but what about my favourite retailer – Amazon? I’m a loyal Amazon customer. I buy almost all my books there. I just checked when I bought my first book from Amazon. February 2005. It was, Cracking the GMAT with sample tests on CD-ROM. A classic, I assure you.
So, 15 years of loyalty. And I suspect that unless Amazon closes down or stops making Kindles, I’ll be buying my books there for the next while. Jeff Bezos is, by all accounts, genuinely customer-obsessed. But Amazon seem to know about this damn leaky bucket too, given the amount of mass advertising it does now.13 This suggests that not even Amazon can rely solely on existing customers for growth.
Fox lesson: Don’t rely on existing customers for growth. Keep filling the leaky bucket.
9
Loyal. Just not faithful
So the leaky bucket is a reality for brands. But why? Why are we losing customers? Well, the answer is competition. Yep, our pesky competitors. We are always stealing from each other.
Actually, losing them is possibly misleading for most categories. Brands are sharing them. “Your customers are really other people’s customers who occasionally buy from you”, is how Andrew Ehrenberg explained it.
We are loyal to brands. We’re just not 100% faithful. We are polygamous, loyal shoppers.14 Essentially, your customers are sneaking around, behind your back, giving their business to your competitors too. We don’t buy the same shampoo, deodorant or soap brand on every shopping trip. In many categories, the top brand often gets bought no more than 30% of the time. No doubt Starbucks would love it if their customers bought coffee only from them every time, but this doesn’t happen.
Why don’t we buy the same brand every time? Depends on the category. One reason is we want variety. I saw this when working in online poker. Poker players like to mix it up and play in a few places. Try their luck at a different table. Meet a different group of players. So it was not unusual for customers to have a couple of poker apps on their laptops or phones.
Kevin Gray, a data scientist