Insight: Is brand loyalty dead?

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By: RickFerguson |

Posted on August 9, 2016

Over at Forbes, contributer Kathleen Kusek tells consumer packaged goods (CPG) manufacurers to forget about brand loyalty. However, her rationale for this advice - that cultural shifts have seen Millennials (remember them?) abandon the very concept of brand loyalty in favor of forever seeking the new - leaves out important considerations about human psychology that remain true regardless of technological and cultural shifts.

Kusek correctly points out a seismic shift in CPG brand loyalty: thanks to systemic factors such as price pressure, the rise of grocer-labeled generic brands, and the decline of the power of traditional advertising, long-dominant CPG manufacturers such as General Mills, Kellogg, Procter & Gamble and Unilever have experienced significant market share declines.

Kusek's stated reasons for this decline are, however, somewhat problematic. She blames macro-cultural trends that have seen Millennials move en masse away from any measure of fealty to any brand, institution, or social norm in favor of forever seeking out new experiences. Her argument is worth quoting at length. To wit:

"Consumers are not inclined to be loyal to brands as they once were because the underlying value of loyalty itself is no longer particularly relevant. In the old world, loyalty was good and something we aspired to give and receive across all aspects of life... with friends, family, employers, dentists, doctors, bankers, and maybe even the federal government. But generational experiences have made sticking with 'tried and true' a sucker bet. Loyalty means remaining the same. Not exploring alternatives. Putting your head in the sand and maybe even missing a beach party.

"Over the last three generations, major trends in marriage, religion, politics, and corporate America have reframed expectations for surviving and thriving in this world. The consistent theme is that change is not something to be feared or avoided. Change is inherently good. And the hankering for change is increasing at an accelerated rate.

"The historical concept of loyalty as a value is hinged in the desire for long-term connections and mutual trust on both sides of the equation. The reasons we believed that loyalty was an important social value are no longer valid."

The problem with this argument is that it makes several blanket assumptions about Millennials that, if I were one instead of the graying Gen-Xer that I am, I might find suspect. First, her argument assumes that Millennials no longer desire "long-term connections and mutual trust." She paints a picture of Generations Y and Z who eschew such venerable human institutions as marriage, religion, and even civic duty in favor of perpetual over-stimulation that mimics their virtual smartphone-addled lives, even to the point that technology has fundamentally altered their brain chemistry and made the very concept of "loyalty" as dated as a commercial jingle for a 100-year old cereal brand. Her conclusion: "Lifetime consumer loyalty is no longer a valid goal in the world of CPG because as much as it suits manufacturers, it's simply no longer meaningful to consumers."

With this conclusion, I'll have to respectfully disagree. There are two inherent flaws in Kusek's argument:

1. Millennials still value loyalty. Millennials most definitely seek long-term connections and trust. Copious research studies - some of which I've authored - have demonstrated that Millennials are far more likely than older consumers to seek out brands that recognise and reward them. They're more likely to trade personal information to brands in exchange for personalised and relevant offers. And they're far more likely to recommend their favorite brands to their social networks. While it's true that they demand more from and have higher expectations of brands, they reward those brands that meet these expectations with loyalty and advocacy.

2. Building loyalty is the job of brands, not consumers. To the extent that CPGs have seen a sustained erosion of market share, this erosion is due not to the dismissal of the very concept of "loyalty" by Millennials, but rather due to the failure of brand marketers to meet Millennials' desire for connection. Marketers who expect consumers to do the work to build loyal brand relationships are bound to be disappointed. The onus is rather on CPG brands to demonstrate loyalty to their most valuable customers through targeted applications of recognition and reward. Success requires more than, as Kusek puts it, treating "each and every purchase occasion as a victory and [investing] in innovation that meets a constant need for change." It requires instead investing in marketing activities that demonstrate relationship continuity at the level of the individual consumer.

Kusek paints a rather cynical picture of Millennials as a distracted, distrustful, immediate gratification-seeking, technology-addled, disloyal generation with no interest in building long-term relationships in any aspect of their lives as citizens or consumers. I suspect that many Millennials would take issue with this characterization.

Instead of taking Kusek's advice and jettisoning brand loyalty as an achievable goal, CPG brands might do better to demonstrate loyalty by listening to their customers and meeting their expectations of personalisation, relevance, and a frictionless customer experience. Extend your hand, and Millennials will take it.

Read Kusek's article here.

- Rick Ferguson



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