Marketers need to stop spending a disproportionate amount of time worrying about brand loyalty; instead, they should focus on brand relevance.
The concept of loyalty flourished in an environment where marketers assumed customers would stay with them, given the right incentives. But if brand strategy is centred on “buying” loyalty with discounts and price schemes, you incur a high cost to retain customers at the expense of building brand relevance.
Research agency Kantar Retail reports that 71 per cent of consumers now claim that loyalty incentive programmes don’t really make them stick to a brand. Instead, the digital world is forcing them to seek brands that are relevant.
What contributes to this shift?
It is the availability of more choices, option to personalise products, and transparency of offerings that are contributing to this shift. At its peak, in the 1990s and 2010s, brand loyalty was enabled by enterprise IT management and advanced customer relationship management techniques. Today, the digitisation of almost everything has made brand relevance a more important parameter.
Thus, the management’s focus needs to move towards providing customers with such an experience. This means brands have to become living entities and cannot afford to stagnate; they need to have mutually rewarding relationships with customers, similar to that with a close friend, where there’s constant interaction and personalisation.
Personalisation is key
Customers need to feel a personal connect to brands, as if they are tailor-made for them. CVS Pharmacy, the retail pharmacy of CVS Health, is a good example. Traditionally, it has adopted a transactional model where customers fill prescriptions and buy what they want.
But in order to stay in the minds of consumers, CVS is embracing technologies that send reminders to customers about their medications. It has teamed up with AI giant IBM Watson to anticipate patient needs, including when they might require more urgent care. All this is helping CVS become a more relevant brand.
Another component of staying relevant is timing. Predictive analytics has helped car rental giant Hertz arrive at a strategy that targets customers with relevant deals just as they are evaluating other options. The company uses the data it collects from call centre agents, counter terminals, hand-held devices, or even from the Hertz website.
Loyalty to what?
It is important to understand what kind of brand proposition customers were loyal to in the first place. And if that proposition is changing, then it is imperative that relevant platforms are developed for it.
Many sports companies do this well. Rather than assuming the customers come to Nike to buy their running shoes, the organisation has put in place a fitness ecosystem, offering a series of fitness products for a range of uses. This helps the brand stay relevant.
A tool called the Brand Relevance Index looks at aspects of pragmatism, inspiration, customer obsession, and innovation. The most consistently relevant brands create disruptive innovation and are constantly working to reinvent not only themselves, but their categories as well. Facebook and Tesla offer experiences so fundamentally modern that even their recent past feels like ancient history.
Brand relevance is never a 100 per cent surety; hence, smart brands understand the rules of relevance, and earn their position in the market place every day.
Here are a few things your brands can do to up the ‘Brand Relevance Quotient’:
Take smart risks: Do something that will surprise your customer. This means spending time understanding them first. The reward for this will be worth it. Once you make this a habit, your brand’s relevance will increase.
Build the core: Be sure of what you’re offering and find ways to deliver it to customers relentlessly and in better ways. Take, for example, Southwest Airlines, a unique value proposition in the industry, which bases its entire business strategy — right from flight décor, employee profile, in-flight activities and the like — to align with its brand. And, of course, Apple, which continuously innovates and reinvents its brand while staying relevant.
Measuring brand relevance
The best way to measure brand relevance is by ‘social listening’. By paying attention to what is being said about your brand on social media, you can gauge the buzz, not just among customers, but also among employees, the trade, vendors, and the like. Is the excitement palpable? If yes, you are building something relevant.
The most relevant brands among millennials are Amazon, Netflix and Google — all of which have been around for less than 15 years! So the concept of loyalty with regard to time is in need of recalibration.
Today’s connected customers are constantly evaluating and comparing products before making a purchase. They are willing to pay the premium for relevance. Organisations need to make their brands living entities in the minds of consumers and only this will drive repeat purchases.
Brand relevance is the new brand differentiation.