Brand loyalty under threat as consumers get busy switching

What inspires loyalty in you? Is it love? Or honesty? Or reliability? Or could it be the ability of someone you don't know from Adam or Eve to accumulate 10,000 followers on Instagram by posting an endless stream of selfies of their #OOTD?

(That’s outfit of the day, in case you’ve been left behind by the ever-shifting sands of social networks.)

A snapshot of what makes Irish consumers loyal in 2017 to be published by Accenture today might make for alarming reading for many companies which, it seems, are wasting a whole lot of money on loyalty programmes that don't work like they used to in the good old days when we consumers were as predictable as Pavlov's pooch.

It may also trouble people who thought the life cycle of the typical social influencer was going to be no longer than a butterfly’s.

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The report with the snappy title, Seeing Beyond the Loyalty Illusion: It's Time You Invest More Wisely, is pitched at businesses but has insights for us all.

It gauged the experiences and attitudes of 25,426 consumers around the world, including 351 in Ireland about their loyalty to brands and organisations.

It found that 64 per cent of Irish consumers have switched a provider in the past year. While the number is out of step with research published last week by the Competition and Consumer Protection Commission, which declared that 41 per cent of Irish consumers had switched at least one provider in the past 12 months, both studies point to an increase in consumers' willingness to switch.

Apart from switching behaviours, the Accenture study has many more insights. It shows that 77 per cent of consumers retract loyalty more quickly than they did three years ago, and there has been a shift in what drives loyalty, as more and more people move away from notions of good value and good service when asked to describe what makes them favour one brand over another.

It also shows that 23 per cent of Irish consumers demonstrate a negative or no reaction to companies’ loyalty efforts. And that number is rising, particularly among younger consumers.

New world

Accenture said that in the brave new world of consumer empowerment, traditional methods such as actually asking customers what they think about your brand is a poor way of measuring and predicting loyalty, and companies need to start looking more closely at how we advocate on their behalf on social media.

Researchers found that of the most loyal customers, more than 50 per cent recommended brands to others, while 14 per cent expressed feelings, both positive and negative, on social media and the report suggests that to take advantage of advocacy, brands need to stop looking at their best customers as cash cows and instead regard them as brand champions.

“Every consumer has a natural instinct around what makes them ‘stick’ to a brand, and the traditional ‘low price’ and ‘reliable service’ mechanics are no longer as effective at driving loyalty,” says Karen O’Regan, managing director, Accenture Strategy.

“It’s time for organisations to take a fresh look at loyalty – with 64 per cent of Irish consumers spending more with the brands they love, organisations that stick to traditional approaches and don’t explore the new drivers risk draining profitability and pushing customers away. We’re also seeing new ‘languages of loyalty’ emerging, driven by brands experimenting with creative digital experiences.”

But, apart from sounding all zeitgeisty, what is O’Regan talking about?

And more specifically, what are these “new languages of loyalty”? And should we care?

Four of the “languages” identified have a similar theme and suggest we like companies to care about us and we want them to display how much they value us by giving us small “tokens of affection” and by not flogging our data to third parties. We also like them to be there when we need them, while leaving us in peace when we don’t.

The study also suggests that we like brands to actively engage us and encourage us to design or co-create products or services (which sounds like way to much effort to Pricewatch) and we like new experiences, products or services such as “multisensory experiences, using new technologies such as virtual reality or augmented reality”.

Top down

What is clear from the report is that the top-down approach to branding is being increasingly eroded, and consumers don’t want brands to tell us how amazing they are and would prefer to hear that from either celebrities or our peers.

All told, 16 per cent of Irish consumers are loyal to brands that partner with celebrities, while 17 per cent are loyal to organisations that partner with social influencers.

“An appetite for extraordinary, multisensory experiences, hyper-personalisation and co-creation are changing consumer dynamics around loyalty,” O’Regan says.

“According to our research, almost half of Irish consumers express loyalty by recommending the brands and companies they love to family and friends, so for businesses that get it right, the possible reward is plentiful. For many companies, the first step is to look at the channels they’re using to interact with their consumers and assessing whether they are fit for purpose.”

Another recommendation contained within the report is a requirement that brands learn to communicate with millennials. This is hardly surprising, as there are so many of them. And many of them have money to spend. In fact almost two billion people fall into this cohort and they are expected to have a lifetime value of $10 trillion.

“Millennials’ values and behaviours set them apart,” the report says. “Without understanding these differences, companies will be unable to deliver the relevant loyalty experiences that this lucrative group values most.”

It encourages brands to learn millennials’ loyalty language.

“[They] aren’t enamoured with most current loyalty programs,” the research says. “In fact, our research revealed they are more likely to have a negative reaction to a company’s attempt to earn their loyalty. Therefore, it is critical companies understand millennials’ impressions of loyalty and then tailor language and experiences to their values and behaviours. Across all communications and loyalty investments, address what millennials like and dislike, and what types of promotions and rewards they are likely to embrace or shun.”

Oh, give them fancy coffee, craft beers and tell them how amazing they are. They’re mad for that stuff – although you’ll not find that nugget anywhere in the report.

We asked Twitter users last week what inspired loyalty. Disappointingly not one person mentioned virtual reality or augmented reality or social influencers.... maybe we’re being followed by the wrong people.

The fact that Tesco Potato Waffles taste like a) failure & b) cardboard, unlike Birds Eye ones. Daithi O'Laoghaire

Quality. And quality only. I was all for Blundstone boots, they changed, I found another boot that was sturdy enough for work. Anthony Morgan

Nostalgia. Sarah Jane Murphy

To me service. After being a "loyal" Samsung customer… the note 7 debacle and the way it was handled put me off Samsung and 3. William O' Connor

Quality and value for money work for me. Angela Holohan

Simplicity. Ken Fallon

Usually it's 'better the devil you know'. Susan Conway

Quality and service/customer care. In fact, I'm willing to pay slightly more for these. James McCrees

Habit – for example I just reach for Barry's Tea and never even look at any other tea. Majella Dolan

Quality and Irishness are key, especially with food. HB is still perceived as Irish but Aldi ice cream actually is. Paul O'Brien