If you can’t compete on price, compete on customer service instead

In January of this year, Reuters reports on the decline of consumer brand loyalty. The study conducted by Catlina Marketing Corp.’s Pointer Media Networks’ was only a portion of how consumers where changing their shopping behavior.

Today, consumers are more conscious on price and promotions. Krogers and Wal-mart are just two of the trending grocers that are seizing the opportunity to expand their private labels. Private labels attract the wallet-strapped consumer away from choosing the leading brand. The competition is rising and consumers are taking second thoughts on traditional buying habits. The only place left for brands to sustain and regain customers is through service.

Brands need to aware of how the retail storefront represents their image. Quality and service is first felt through sales associates and then the product display. Customer’s may question and analyze their purchasing decisions. Friendly and warm customer service associates have the ability to sooth customer concerns. Messy and ill-stocked shelves or racks bruise the brand’s image. Overall poor service can ruin the SATISFACTION customers receive from choosing your brand.

Customer’s want reassurance their purchases are backed by brand quality and honesty. Living up to your promotional promises, quality guarantees, and first-rate follow up service is essential.

Customers won’t return to a brand that is not receptive to their needs. Receptive attitude starts with listening. Listening to the customer voice, employee satisfaction, and market trends. Impeccable service begins with a questionnaire, a storefront quality audit, and continues until service is measured with positive results.

In today’s market, what is your brand waiting for? Measuring your success with customer experience takes initiative and commitment. A commitment to the brand’s integrity and quality.

Role of Brand Loyalty

Everyday you make purchase decisions. Some of which are based on brand loyalty. Stop and think abut when you became loyal to a specific brand. Childhood? College? Constant availability on the grocery shelves? You and millions of other consumers make the decision to purchase a brand over and over. This is loyalty.

Fostering Brand Loyalty
In a dream world, brands would love an abundance of loyal customers. Unfortunately we are in the real world which requires brands to foster loyalty with consumers. One of ICC/ Decision Services experts, Terry Vavra, has coauthored “Loyalty Myths: Hyped Strategies That Will Put You Out of Business and Proven Tactics That Really Work“. The authors found consumers who had high involvement levels with their brand where more loyal. So how does a brand engage consumers?

Taken from “Loyalty Myths” , customer involvement can be fostered by:

1.Increase the purchase’s importance for the customer
2. Adding emotional significant to the purchase
3. Associating the purchase with an ongoing interest
4. Associating the purchase with a relevant reference group.

All of these considerations are directly related to the customer’s experience. Significance can be added by brand’s promoting their top benefits. For example, take laundry detergent. Military members are a niche market whose uniforms require laundry detergent with no certain additives. There are very few brand which fill this need. These brand should ensure availability in every grocery store which surround military installations. This takes the importance of purchasing the right brand within the reach of the customer.

The only way for brands to foster involvement is to know your consumer. Proactive consumer and industry research provides important insight to consumer needs, interests, and emotional attachments. Brands should know which benefits they offer their customers. Whether it’s being gluten free, organic, or offer an advantage over the competition, this is the information consumers are looking for. This is information that needs to be visible at the retail shelves.

The point of purchase is the last place and the most important place brands can reach a customer. How is your brand using point of purchase to foster customer involvement? Do you offer coupons? Free samples? There is not one right answer for all brands. Brands who research and ask customer’s for feedback, will know what are the most effective ways to foster customer involvement.

What are the techniques brands get you, as a consumer, involved? Does it help foster brand loyalty?

Starbucks pulls a U-Turn back to loyal customers

Imagine your brand is a car driving along picking up customers on the way. In your journey you expand product lines, store, and different marketing campaigns. Next thing you know, the loyal customers are hearing advertising which claims your brand is too expensive. You stop and make a U-Turn back to your loyal customers.

This is what Starbucks new marketing campaign is focusing on – loyal customers. The past year, Starbucks has been the target of media claiming the brand is too expensive. Providing an opening for competing brands to market as the cheaper coffee choice. Starbucks is aiming to change that assumption.

Starbucks new strategy is to focus on it’s existing customer experience. The company opened a store in Seattle with a new look that resembles the golden era of a “coffee house.” The brand is not touting frozen drinks but putting the good old Starbucks coffee blends in the spotlight. Coffee promotions and store layouts will be focused on what attracted Starbucks first customers: the coffee.

In an article by the Wall Street Journal, Howard Schultz, CEO is quoted ” The issue at hand … is the cost of losing your core customer…It’s very hard to get them back.”

Loyal customers will be the ones to carry you through tough times and be your evangelists in good times. It’s always important to listen to your customer’s voice, they will be the ones who will tell if your headed off track.

Brand Equity: Steps to build a solid loyalty program

Loyalty programs are used across the board among service industries. There is a difference in creating a successful loyalty program and a program that fails to increase customer satisfaction.

Terry Vavra, who is on the ICC/Decision Services team, shares the process in building a great loyalty program. Taken from “Loyalty Myths”, co-written by Vavra, Timothy Keiningham, Lerzan Aksoy, and Henri Wallard, here are the essential steps in starting a loyalty program:

5 Step Customer Loyalty Program

1. Observation. The first step is dedicated to accumulating customer data. This would include purchase history, service costs for each customer, demographic data, and share of wallet the customer contributes.

2. Scoring. If you organization took no further steps to promote purchases with a customer, what portion of sales would future purchases be? The value of doing nothing to excellerates more purchases from customers. This is a base score from where a loyalty program would improve on.

3. Selection. Prioritizing each customer based on scores from the above information, with further delegation into three categories: Desired, Break-even, and Costly customers.

4. Prioritization. Companies should prioritize the consumer categories in order of importance. Then narrow the focus of the loyalty program to concentrate on the biggest priority. Each company will have to decide what their desired goals are from the loyalty program. For example, determine whether it is to improve share of spending or controlling costs per customer group.

5. Leveraging. This is the combination of brand equity, value equity, relationship equity, and satisfaction, used to create a loyalty program. The end result is have the combination of four tools to move the customers from the starting score to the next level.

There are numerous aspects to creating a quality loyalty program. These are your first five steps to help get your organization off running. You can read more information on loyalty programs and the customer experience effect in “Loyalty Myths“, or contact Terry Vavra at ICC/ Decision Services.

What tactics has your organization used to develop loyalty programs? Are you measuring the effectiveness of the programs?

Tags: brand equity, Brand Loyalty, customer loyalty programs

2009 Ad Spending: Zappo’s Vs. General Mills

Zappo’s CEO Tony Heish is an advocate for building your brand on next to nothing marketing budget. In today’s market, that sounds like a great plan but not one General Mills will be using.

During an interview with Adweek, Heish mentions the explosive impact of worth of mouth marketing. Of course Zappos encompasses workers who are well versed at social networking on Twitter and Facebook, which helps spreads the brands good reputation farther. So why would General Mills up their ad spending in 2009 if a company like Zappos isn’t? Read more…

Brand Loyalty: Ben & Jerry’s Launches Social Media Campaign

Ben & Jerry’s has launched a social media site/campaign titled “Imagine Whirled Peace” tying in both their new flavor “Imagine Whirled Peace” and  2008’s Peace Day on Sept. 21.

The site/campaign aims to build engagement and loyalty among the broader customer base which tends to be older as well as to gain new customers among the younger crowd.

Ben & Jerry’s will evaluate the success of the campaign based on registrations/postings on the peace site compared with metrics for its main brand site.

For More Information Click Here

Brand Loyalty: Three Elements Your Incentive Program Must Have

I came across an article on managesmarter.com emphasizing the importance of incentive programs during hard economics times to increase brand loyalty. The article mentioned that in order for your incentive program to be successful, it must encompass three elements: communication, motivation, and reward.

Communication- You must get the word out to your target audience clearly and efficiently.

Motivation- The goal must be realistic and attainable. If your incentive program gives points in increments of two and a prize offering starts at 150,000 points, then consumers will not be motivated.

Reward- Your rewards have to be great. A pen with your company logo for 150,000 points might not be as appealing as you think. On the other hand, a customer might just keep on purchasing your product if they know that enough points will earn them an Ipod.

Marketers Turn to Customer Loyalty Programs During an Economic Downturn

Adam Burke, senior VP-customer loyalty at Hilton Hotels, knows its time to focus on the 21-year-old Hilton Honors Loyalty Program during an economic
downturn. During times like this, loyalty and retention marketing become even more important. It’s cheaper to keep an old customer than go after a new one, especially when there are no marketing dollars to go after new customers.

Mr. Burke says, “Our Honors members tend to be the group that buoys us through a downturn. They are the core audience and tend to stay loyal and sustain the business especially through those downturns.”

For More Information Click Here

Study Finds Baby Boomers are Less Brand Loyal

TV Land’s “Generation BUY” study found that 40 and 50-somethings are more open to new brands and less brand loyal than people under 40 making 40-59s. The willingness of 40 and 50 year-olds to buy new brands carries over across virtually every product category including electronics, personal care products, restaurants, automobiles and more.

For More Information Click Here.

Should Low Budget Hotels Offer Free Wi-Fi?

Low budget travelers do not expect a cookie upon check-in, Ritz quality bed sheets, and a robe in the bathroom, but do they expect free Wi-Fi? There’s been recent discussion on hotelsmag.com about hotels offering free Wi-Fi.

Adam Kirby says, “I think most travelers are willing to give a little ground here. A nominal charge for Wi-Fi access—say, US$3 or US$4—would generally be seen as fair, if perhaps slightly annoying. But when a hotel charging US$300 a night wants an extra US$15 for 24 hours of Internet access, that doesn’t do much for guest satisfaction or brand loyalty. That’s especially true when travelers see that budget brands like Fairfield Inn can afford to offer free Wi-Fi, and thus realize that it is not an inabsorbable cost.”

I have to agree with Adam. If a hotel is charging $300 or $400 a night, then
free Wi-Fi should be included. However, there should be some leeway for budget brands. At low budget hotels, Wi-Fi should be free of charge for low-bandwith users and an extra $4 a day for high bandwidth users. I think this is fair.

What do you think?