We measure the percent of customers who have our name tattooed on one of their body parts.” (Harley Davidson Annual report) Measuring brand loyalty “ Retention is for wimps. Crucially, they therefore measure something, which conveniently may be labeled ‘loyalty’.” – Ehrenberg & Scriven Measuring brand loyalty “ The good news is that all the different loyalty-related measures tend to vary together. Generating and keeping brand loyalty Brand image Product experience Service experience Personal bonding EVERYONE IS A CRITIC NOW POWERFUL HUMAN TO HUMAN CONVERSATIONS MAKE BREAK What have we learned? Building brand loyalty is less and less in your hands. What have we learned? Source: Henley Institute Why are customer disloyal? Indifference What have we learned? Smaller brands are punished twice for being small, following the well-known “Double Jeopardy” pattern (Ehrenberg) Source: Ehrenberg Buying volume Buying frequency Weak Strong Weak Strong Small brands Large brands (Service Profit Chain) Non-competitive zone : regulated monopoly, few substitutes, dominant brand equity, high switching costs, powerful loyalty program, proprietary technology Highly competitive zone: many substitutes, fierce competition, low switching costs, commodization of low differentiation, consumer indifference Satisfaction low high Behaviour high low NMBS Airlines Hospitals PC’s Cars What have we learned? Spurious loyal True loyal Not loyal Latent loyal Loyal to the brand is MORE than satisfied with the brand ! Source: Adapted from Heskett et al. (2006), “Understanding the Buzz That Matters: Negative vs Positive Word of Mouth,” International Journal of Market Research Brand loyalty is connected with revenues and profits “ Consumers mostly have habitual on-going or polygamous split-loyalties to a ‘repertoire’ of several brands.” – Ehrenberg & Scriven How big is the challenge? Source: Ogilvy Loyalty Index, 2000-2003 % loyal % price-driven % repertoire Globally Belgium Consumers don’t think of themselves as loyal. % of detractors substracted from the % of promoters Recommendation to a friend or colleague can be seen as an ultimate act of loyalty Displays results of “Would recommend” answers in a clear manner Ten-point scale Ten means “extremely likely” to recommend Five means “neutral” Zero means “not at all likely” to recommend 1 2 3 4 5 6 7 8 9 10 Detractors Neutral Promoters Mobile operators: -34.8% Banking/insurance: -34.1% Supermarkets: -12.7% Fixed phone/TV/internet: -42.3% Utilities: -70.8% Automotive: -5% Belgian findings How big is the challenge? Source: Carlson Marketing Group / Vlerick Leuven Gent Management School Belgian brand net promoter scores are not looking great. How big is the challenge? 5 4 1 In years, 50% of customers leave In years, 50% of employees leave In year, 50% of investors leave Source: The Loyalty Effect, Frederick Reichheld CUSTOMER BRAND LOYALTY INTERNAL BRAND LOYALTY INVESTOR BRAND LOYALTY Kristof De Wulf Managing partner, InSites Consulting Associate marketing professor, Vlerick Leuven Gent Management School March 20, 2008Ĭontent 1. Brand loyalty management: an introduction Prof.

Capitalism ii negative brand loyalty