Tag Archives: brand equity

Loyalty and the Global Stage

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Loyalty is a very tricky thing to define. Traditionally it is understood as a faithfulness or a devotion to a person, country, cause, group, or brand.  It is anything to which one’s heart can become attached or devoted.  That goes well beyond the transactional elements of a retailer and touches ideas of identity, obsession and even love.  Loyalty can be rewarded, but loyalty usually comes from within, from a story we like to tell ourselves. We’re loyal to sports teams and products (and yes, to people) because being loyal makes us happy.

Businesses seek to become the objects of loyalty, in order to have their customers return. Brand loyalty is a shopper’s preference for a particular brand, be it a retailer or product, and a commitment to repeatedly purchase that brand in the face of other choices. Traditionally, businesses establish loyalty programs which offer rewards to repeat customers, and often allow the business to keep track of their preferences and buying habits.  But is it loyalty?  It could just as easily be understood as opportunism – it is transient and fleeting, driven by a transactional relationship rather than long-term engagement.  Truly loyal customers understand that there’s almost always something better out there, but they’re not so interested in looking.

And it’s wise to remember that loyalty takes on different flavors across the globe. In terms of loyalty programs, there is a wide variety. Hong Kong offers many loyalty programs which include Octopus Rewards, which started as a chip based smartcard for transport and now, the Octopus cards can be used to earn points in certain shops, including McDonald’s and Wellcome supermarket. The idea is that the rewards and loyalty are derived from the shared wellbeing of the group.  Loyalty is about more than an individual and the business, it is about facilitating interactions within the socio-cultural network as a whole.  It is a subtle difference, but important in that it moves the decision process away from simply finding “good deals” to a reflection of one’s place in the social structure, with Octopus Rewards becoming a facilitator of what it means to be a good person.  This is reflected in the historical and cultural underpinnings of China (see The Sociology of Loyalty by James Connor for more detail).

Increasingly, companies complain that loyalty program discount goods to people that are buying their goods anyway, and that the expense of doing these programs rarely pays. Other critics see the lower prices and rewards manipulate customers, providing them short-term gains, but ultimately leading to feelings of resentment. Loyalty programs established in Russia have been less successful than anticipated because they are seen as an intrusion into a person’s life.  To some, participating in a loyalty program funds activities that violate privacy (Doing Business in Russia by Sergey Kolpashchiko).  Again, as with China, history and cultural patterns shape expectations and beliefs about these programs.

So if rewards programs are no guarantee and significant cultural differences shape whether or not a loyalty program will take root, how do you establish real, meaningful, long-term loyalty?  Well, the good news is that there are universals.

As wealth increases and people have more free time to spend shopping experience and interaction with the retail space becomes more important (see The Comfort of Things by Daniel Miller).  Loyalty becomes less about price incentives and more about catering to notions of identity, personal comfort and local identity.  It becomes intertwined with establishing emotional bonds that translate into devotion.  Part of why Heineken has done so well in the global market is that it appeal to a sense of nationalism when appropriate (sponsorship of soccer teams in Latin America).  The reward is being associated with a winning team and the Heineken give-aways that happen at games.  In retail the challenge has largely been overlooked, but the possibilities for establishing long-term relationships rather than short-gain transaction increases are virtually bursting with possibilities.

Loyalty, then, relies on shifting the conversation to achieve a specific paradigm: quality of product, service and experience leads to customer satisfaction, which leads to customer loyalty, which leads to profitability. Marketing and advertising draw upon the positive experiences of those exposed to a truly loyalty-centered business model inspired ventures to attract new customers.

Rewarding loyalty for loyalty’s sake is not an obvious path, but it’s a worthwhile one.  The idea that shifting the focus from paying people for sticking it out so the offering ends up being more attractive to one of deep engagement involves risk, commitment and a well developed strategy. But the payoff moves the business to one of volumes to one of margins. Tell a story that appeals to loyalists, engage them and you win. Treat different customers differently, and reserve your highest level of respect for those that stand by you.  That’s when you will see devotion and brand loyalty that cuts across global borders.

Stories, Invention and the Bottom Line

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The power of a good story, or even a rather mundane one, is truly phenomenal.  In it are wrapped up the hopes, dreams, symbols, and significances that shed light on who we are as individuals and as members of a culture.  But the real power comes not from the explicit statements that emerge during, say, interviews, but from the subtext and patterns of meaning people assign to objects, relationships, and thoughts as they are created by participants through narrative. Not everything can be expressed as matter-of-fact discourse, especially things one cannot really put one’s finger on, or things that do not exist yet. Some of them are central to human experience, such as falling in love or admiring the full moon rising over the sea. If we want to explore this kind of experience, we need means and methods that are suited to communicate it.

I kept thinking about this problem, and one day I decided to see what happens if I explicitly ask research participants to write stories, pieces of fiction, about a topic related to my client’s needs.  Specifically, they were asked to write a story from the perspective of someone shopping for beer.  Much to my surprise, I ended up a wide range of ideas being expressed and a degree of complex language that was poetic, mundane, funny, sad and utterly fascinating.

I have used this method of gathering insights ever since, when I want to learn about things that are beside the topic but nonetheless worth exploring. It is by no means a replacement to fieldwork, but it is another tool that can be used to tease out how people construct their world in ways they may not normally be able to express. These things concern the creative aspects of the cultural context of how meaning is constructed.

Why are stories important for interaction and knowledge? Traditional cultures are storytelling cultures in the literal sense: people tell each other stories. We have often set this fact aside in the post-modern, linear, data driven world of business, but it is still fundamental to who we are.  People do not buy products based on specs alone, they buy based on deeper issues that connect products and places to their humanity. At certain occasions the stories gain a special role, such as at a child’s bedtime or while sitting around the kitchen table (the primal campfire). Stories make it possible for us to share our world, not lists of product attributes. We actively participate in the creation of culture by listening to stories and telling them—and we learn about culture through stories. It is in the context of understanding stories that we uncover triggers and meanings that simply don’t emerge fro surveys and interviews. They supply us with metaphors and meanings that are hidden from view when people are in the participant mode. Stories give them license to explore ideas and create symbols that tap the deepest recesses of a product’s or brand’s subtler meanings.

Stories are aimed at exploring the subjective, but not the individual. They are the collective myth. The point with composing a story is to find a collective level in the invention. It is a kind of inter-subjective reality. Creative solutions and innovative ideas arrive when imagination is actively used by participants, not just the people working for the company in need of answers.

Four Elements of a Successful Brand Extension

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While executives rightly proceed with caution when considering brand extensions, the rewards of success are substantial. Although Apple’s is, rightfully, the darling of the hour (the iPod, iPad and iPhone are shining examples), Apple is certainly not unique. Other powerful brands that have created enormous equity by extending into unlikely categories include Amazon and Virgin. Customers give some brands a great deal of permission to extend into unlikely places, provided the extension can readily create a symbolic frame that goes beyond the product to what the brand represents holistically.

So how is it done?  It’s not as simple as slapping your logo on a new product in a new category.  There are several considerations to keep in mind.

1. Do you have the guts to take the leap and stick with it?

Like any new venture, remember that brand extensions are risky. “Know thyself” is a tremendous factor in deciding whether or not to extend the brand, so take time to honestly assess how much risk you’re willing to take on. If you stretch too far, customers may well reject the brand extension.  Understand how you will manage failure as well as success.

2. How well loved is the brand?

The more customers like the brand, the more likely they are to be loyal.  If they love the brand it isn’t that far from a state of near-religious devotion. Step one is for brand managers assess metrics such as awareness, familiarity and current market share – yes, I am advocating the use of numbers to evaluate human behavior. However, the metrics are only part of the equation. Metrics often do little to determine the viability of a brand extension because they focus on things that reflect anything but the emotional connections and cultural meanings brands take on.

It is in the face of culture and practice that the quantifiable looses meaning. Take Mini Cooper, for instance. Ten years ago, it was not the market leader. In fact, it was seen as a less than reliable car that cost little – but it was also a beloved reminder of all things quirky about British automobiles and the unpredictability of youth.  Its “cool” factor created a cult-like customer following.  Add to that the credibility provided by BMW engineering and you get a transformed brand that shifted from an image of being cheap to the status of a sports car.

3. Does the brand promise really deliver?

Brand promise serves as the foundation for everything that the brand does. It also has to be more than a slogan for the customer to believe in the brand. When extending to a new category, a brand promise has to be powerful, realistic and easily articulated.

In this instance the “why” is far more important to address than the “what.” Brands promises built around a list of attributes (the “what”) have a harder time extending their brand because they provide no direct connection to how the brand impacts a person’s life.  Brands promises that focus on the people exploring the brand (the “why”) are able to gain traction because their meaning can be transferred from one condition to another.  It’s not the attributes but how the brand positively shapes a range of conditions in daily life.

Returning to Apple, its success has grown because it focused on “why” it built computers. The position moved away from technical specs to how its devices fit into daily life – the computer, the iPod and the iPhone all talk to pleasure, looking cool, etc. Things like quality and RAM are simply givens. This promise Apple makes is both broad and powerful enough to be meaningful in other categories.

4. Does the brand fulfill a unique need?

For beloved brands, expectations are extremely high. It isn’t enough to follow a “me too” way of thinking.  Getting it right is paramount because extensions not only can fail, but can damage overarching brand equity. Think about Blockbuster’s failed attempt at streaming video and mail-order DVD rentals.  It was just another service that someone else was already executing beautifully.

Before a brand extension, think about whether it exceeds market expectations or if it’s just a “me too” plan. Think about what doesn’t exist or isn’t being addressed adequately – in other words, rethink the problem and spend a little time reflecting on what is really needed. Think about how you can provide meaning and value.