Real brand loyalty

Updated: Aug 31 2006, 05:30am hrs
If the principal purpose of business is to acquire customers at a profit, then it is even better business to retain them. Eventually the business, even if highly profitable, is about as sound as a leaky bucket, if new customers are being added while old ones are being lost.

Sales or market-share growth, or for that matter even repeat buying behavior, are not true indicators of loyalty. In fact, they can be highly misleading. But what makes a customer stay with a brand

In the first case, the customers have too much inertia. Mainly because the category itself is low involvement and they simply could not be bothered, leave alone make the extra effort to find alternatives. Usually, the customer is shaken out of inertia only when there is a sudden change in an external factor. For example, if the brand is no longer easily available or accessible. Or when there is steep price rise. Otherwise, the brand is simply purchased time after time out of sheer habit. The second factor is to do with deliberate, rational evaluation of available choices. This is true of most functional categories, where the customers optimise their choice through a process of elimination.

While this undoubtedly creates a more stable relationship with the brand, there is no real deep bonding that forms. The moment the parameters of evaluation alter, the search for optimisation begins once again. Contentment with a brand is the third reason why customers remain with a brand. This is built over time through familiarity and a consistently satisfying experience with the brand. This makes for a stronger relationship but still does not guarantee real loyalty because this too is more habit driven than anything else.

So what is real loyalty This is the rare form of loyalty that some brands achieve. This happens when customers develop such a strong affinity with the brand that another cannot substitute it. In other words, it is a consideration set of one. In such cases, the choice completely transcends rational considerations, even beyond need. The customer only wants that brand. Nothing else will do. Functionality takes a backseat and price becomes almost irrelevant.

These brands achieve cult-like status. Harley-Davidson motorcycles, Volkswagen Beetle, Apple Computers, Absolut Vodka, Marlboro... Closer home, the brands that do enjoy loyalty to a similar degree are Old Monk Rum, Royal Enfield Bullet and perhaps to some extent even Thums Up, which is why despite the dominance of Coke and Pepsi, it still manages to hold its own.

The great advantage of building such a brand goes far beyond securing a base of loyal customers who are happy and willing to pay a premium for it. These customers become happily addicted devotees, proactively evangelising the brand with religious fervor. And nothing gives greater credibility to a brand than a customers non-induced testimonial.

The author is managing partner, Alchemist Brand Consulting