Category Archives: brand loyalty

How Innovation Affects Brand Loyalty

Brand loyaltyA company that retains a high percentage of its customers must be doing a lot of things right. That’s why Retention Rate is the best indicator of a company’s long term viability.

But keeping customers can be very challenging. To succeed, you need to understand how and why your customers buy your products and how innovating can affect their type of loyalty they have. There are four types of purchasing styles.

First is Brand Laziness. That’s when customers want to exert minimal buying effort. They don’t want to be bogged down with a lot of information. They just want to buy something.

Consumers use this style with old, familiar products and services that have worked well in the past, so they buy them out of habit without even thinking about it. They have no commitment to the brand. Think about how you buy flour, for example. This approach is highly efficient for low risk, simple products because it saves time and effort.

The key here is to be careful not to disrupt anything about your customers’ purchase flow. If you change the shelf location, packaging, or anything that makes them have to think too much about the purchase, you may lose them to another brand.

Next is Brand Loyalty. Truly brand-loyal customers are highly involved with the brand. They’ve had a good experience with it, and they know a lot about it. Instead of buying it out of habit, they buy it because they’re emotionally attached to it.

The key here is to continue to deliver high levels of quality and service. Consistency is the name of the game. If you let them down, they start drifting away.

Next are the Variety Seekers; people who shop for new alternatives over more familiar ones. Variety Seeking is the opposite of Brand Loyalty. Consumers use this style because they have yet to fall in love with a particular brand.

Try to get your customers out of this style as quickly as possible; otherwise, they’ll keep switching back and forth between you and competing brands. Try to lock them in with free trials, follow-up service, discounts, and loyalty programs.

And finally are the Problem Solvers. As the name implies, consumers use this style when dealing with complex products involving a lot of risk and uncertainty. They need to be highly involved, and they need to gather lots of information, especially if the product or service is expensive and purchased infrequently.

Think about buying a car, for example, or shopping for a plastic surgeon. It takes time and information to make a good decision.

As an innovator, you have to help customers when they’re using this style. First, provide as much information about the product as you can. Make sure it's where people can find it—in your stores, online, or with your salespeople. And, show comparisons between your product and the competition.

Loyalty drives high retention rates. The best innovators are those that understand each type of loyalty so they can continue to give their customers exactly what they want.

Innovating to Attract the Multi-Brand Loyal Customer

MultibrandFor many categories of products and services, consumers buy from a number of brands. Take the clothing category, for example. I’m willing to bet that every item of clothing you’re wearing right now came from a different manufacturer. The same is true of most food categories and many others. It’s just the nature of these fragmented industries that consumers will buy from many sources.

We call customers in these categories ‘multi-brand’ customers. They already buy products from you, and they also buy from your competitors. The good news is they understand the category, and they understand your products and brands. So they’re a great source of new sales growth if you can increase your share.

Like most strategic marketing opportunities, the key is how you spot multi-brand customers and what you do once you find them. Let’s dive into it.

The first question you have to ask yourself is: why are my customers also buying products from my competitors? There could be many reasons for that. Perhaps customers want more variety than what you can offer. Do they like the competitor’s pricing in certain situations? Maybe they just saw a new advertising campaign that made them stock up more of your competitor’s products.

There are too many reasons to list here, but you still have to ask...and answer...this very important question. In fact, this question is so important that you may want to consider investing in marketing research. It’s probably best to find out the reasons right from the source. 

So let me give you some guidance on ways to tap into this important source of new sales growth.

One of the most effective ways is to create new products. Think about a clothes manufacturer like L.L. Bean. Once they have you hooked on their footwear products, they continue to grow in sales with you by offering outerwear and other clothing items.

Another way to boost sales is to provide a new feature to an existing product or service. Once customers are familiar with your product, they appreciate when you keep it updated and fresh, especially with a new feature that meets one of their unmet needs. Think about online networks like LinkedIn. It continues to add new features and offerings causing customers to stay satisfied AND spend more time on the site.

A third way to increase market share is to boost the performance of an existing product or service, even if it’s a minor feature. For example, a grocery chain in a highly competitive market might focus on getting people through checkout lanes faster than other grocery stores. Even a small advantage could yield a big swing in share. If that advantage lasts for a short period of time, it’s still worth the gain in revenue.

And finally, you may want to target the multi brand customer by offering some new service around your existing product. For example, Best Buy, the electronics retailer, has their famous Geek Squad that comes to your home and fixes all of your tech products. They do it for any product even if you didn’t buy it there. That makes customers more loyal.

So look at your customer base and think about why some of them buy from multiple sources. They already like you and your products or they wouldn’t be buying from you at all. Go in there and get them by creating new sources of value.