Crisis: litmus test for brand loyalty

Loyalty crisis

According to a McKinsey study, 78 per cent of U.S. consumers and 65 per cent of German consumers have switched stores, brands or the way they shop because of the pandemic in 2020. The findings align with those of Adobe’s latest Digital Trends Report, in which the majority of 13,000 marketing and IT professionals surveyed across Europe, the Middle East and Africa said they believe customers are less loyal to products or brands today than they were a year ago.

The authors of the McKinsey study call the phenomenon “Shock to loyalty”, which – on the surface – is linked to changes in how people shop. Delivery bottlenecks at your favourite retailer or avoiding brick-and-mortar stores voluntarily or out of necessity, including switching to the world of e-commerce, have caused people to abandon established brand loyalties. Added to this is a psychological factor in times of crisis à la “Let’s try something new”.

Consumer infidelity

If the figures are correct, then this actually means a major shock to many companies. After all, a loyal customer base is a fundamental cornerstone of any business. Loyal customers are not only a safe haven, they also generally spend more money on their favourite brands and thus generate sales that cannot be achieved with volatile one-off customers. Accordingly, companies urgently need to ask themselves why consumers are becoming less loyal – and not just on a superficial level. If you are willing to accept that a partner, who has been loyal for years, is suddenly unfaithful because of a change in general circumstances, you are not doing yourself any lasting, solution-oriented favours. We know this from the domain of personal relationships. There is usually more to an extramarital affair than simply being presented with the opportunity. Basically, ‘cheating’ is a clear sign that a relationship has not been running smoothly for some time.

What the crisis reveals

The crisis is revealing what has long been concealed. It is also testing preconceived notions of loyalty. Of course, this applies not only to the consumer goods sector, but also to the real estate sector. While people don’t tend to questions established habits when everything is normal, a crisis suddenly gives them a reason to put long-established business relationships to the test. In reassessing their loyalty, customers or partners take a closer look at the promises made by the brands they buy from – and justify their willingness to switch brands if they notice that their needs aren’t being ideally served, or haven’t been for some time. This willingness to change is all the more pronounced when brands lack a clear profile. This is particularly the case when a brand has fallen into the ‘one-stop-shop trap’ and, in their desire to be an ‘all singing, all dancing’ real estate brand, fail to paint a clear picture of their services.

Looking from the outside through data

In order for a brand not to fall out of the relevant set of customers and partners, it is necessary to take measures to ensure a sharp profile and clear positioning. This undertaking is problematic if only the internal perception is used as a yardstick. This inevitably leads to the famous blind spot of self-perception. Countering this involves incorporating external perceptions and comparing self-perceptions with those of others. This means that the company’s own data collection is not only insufficient, it can even be misleading – a fact that threatens to be the undoing of many companies, especially in times when there is little customer-brand dialogue, such as during the coronavirus pandemic. Only brands who use external, objectively analysed data to understand outside perceptions of their brand and use this analysis to establish an optimal market position and a high-profile, customised strategy to manage topics that are then communicated internally and externally to provide new guidance and pre-emptively addresses customers’ potential conflicts of loyalty.

What needs to be done when a corporate brand has lost its shine? What measures can be implemented to restore the brand’s profile and return it to the relevant set? I will provide specific answers to these questions in my next blog – on Thursday, 18 March.

“With this in mind – continue to nurture your most important asset: Your brand”.