Brand Loyalty or Loyalty to the Rewards?

 

 

brand loyalty or loyalty to the rewardsBrand loyalty it is what brands try and build with each customer or even before they become a customer. The ad copy, the branding, the packaging, the commercials are all set to speak to the buyer to create the emotional connection of need. You need to buy this brand because it does this or buy this one over that one because this one does this and that one does not. The buyer has hear, listen and react to the message and understand the differentiators and choose the one that best fits their needs.The brands themselves are branding their brand through creating the need but the consumers are choosing the brands that best fulfill their needs. Diapers, we may recall Pampers but yet find that Huggies fulfill the needs and is a better or more practical choice for us. We may prefer Pampers but Huggies does the job just fine. Think of making a grocery list where we write down that we need salad dressing, ketchup, cereal, we go to the product itself and not the brand name. However, most times as we are writing, we know what brands we will be bringing home. We do not need to write down Heinz ketchup as we know we are buying Heinz so ketchup suffices. As a  consumer, you are buying them and thinking only of them but why? Is it because that is what you always buy or is it driven by some sort of reward?

Brand Loyalty

Consumers that are loyal to a brand do not see any other on the shelf; there is no attention paid to the other brands pricing, packaging, location or advances to try and lure them away. Those that are brand loyal know that they were and still are being targeted with messages and pay close attention to the details. We know pricing of the brand we purchase, and, while different stores may vary on the pricing we know that over time it all evens out. As a brand there is a two fold of loyalty here (when carried at a local retailer and not their own exclusive shop) as there is loyalty to the retailer as well as the brand. As brand loyalists, we know the quality of the product or service and we feel we are receiving the ultimate value as even if the “other” brand is discounted by the retailer this week we will still make that sacrifice and pay just a little bit more than usual for our brand. We will not stray and be a brand switcher.

Loyalty to the Rewards

As consumers we cannot ignore the rewards and discounts. The door buster sales, the buy one get one, the three for X dollars. The sale items are merchandised so that we see them on the end caps of stores, the front display, the extra $.25 in the coupon that the retailer will double. We are inundated with these specials and discounts. The reward of receiving the coupon, for some keeps them loyal by making them come and buy. What happens when the rewards stop coming. Do they still buy? Do they always buy when you extend the reward? Depends on how the reward is presented and the attention given to it. Did we know that we needed before the reward was introduced to us or did the reward create the urgent need within us? Reward based loyalty is not new as casinos have built entire programs around rewarding customers for spending money at their establishment. the more they gamble, the more points and rewards they earn. This benefits they receive from losing money act as a buffer and a change of mindset as the focus is off of the loss and on what they are getting for free.  The same concept applies when we receive a 30% off coupon or see an ad on tv for up to 80% off. We forget that we are spending money to receive the reward.

Brand Loyalty vs Loyalty to the Rewards

As a brand that is relying upon retailers to sell their product, it is hard to tell if people are brand loyal or loyal to the reward. If sales are spiked during a promotion like the Superbowl or a seasonal event like the kickoff to summer and the BBQ season, we cannot look at that as brand loyalty for all buyers. Some are buyers all year round of chips, salsa, beer, hot dogs, hamburgers, buns, condiments, etc. We can better gauge brand loyalty for stand alone retailers who can track sale for sale their customer buying habits. In casinos, we can see habits of gamblers where they come in for certain promotions where they can earn double the points or for a big giveaway. The casinos know that their gamblers are choosing them this week but the very next week or even the next day, they are headed off to the casino down the road for their rewards. Free or the thought of winning matters and drives them. This is not loyalty to the brand, it is loyalty to the reward.

True brand loyalists will purchase regardless of the reward. The reward is an added benefit. If Diet Pepsi is not on sale at my grocery store, I may only indulge in one sleeve and when I have to make a mid week trip for something I either ran out of or forgot to put on the list, I will head over to the other grocery store to see their special on Diet Pepsi. Diet Coke is not an alternative. I will spend a bit more for a 12 pack or do without before I buy Diet Coke. Coca Cola could give me a 12 pack for free and I will donate it before I drink it. I am that loyal to Diet Pepsi. This is loyalty to the brand and not the reward.

Are your customers loyal to you or the reward? Or is it something completely different where they continue to purchase from you or refer you because the presumed risk of trying them is too high? This is something that we need to look at when we are considering discounting, targeting and how we interact with our customers. Are people only purchasing due to the feeling like they are receiving something back? If your prices are lowered by 20% will that pull the trigger and make them buy? For reward loyalists, you can raise your prices 50% and then discount 20% and they will buy whereas the loyalist will be willing to pay the 50% spike.

Again, can you readily identify those that are loyal to you or the reward?

photo credit: Travel 2.0