Reward Psychology

Is Brand Loyalty Dying Out?

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Brand loyalty used to be passed down from generation to generation.  If your mother used Clorox bleach so would you, and this brand loyalty would later influence your children’s purchasing decisions.  This pattern has been defined as “loyalty lineage”, and has remained the standard by which generations of consumers have informed themselves about products and brands.

brand loyalty lineage

However, the rise of the millennial consumer has left this concept of brand loyalty in a precarious place.  Where children used to look to their parents for advice and recommendations, they are now striking out on their own to explore other options.  This shift in thinking happened rapidly and guaranteed that loyalty lineage would inevitably die out.

But when did this shift begin?  More importantly, how do you fight against it?  With competition continuing to grow in both offline and online markets, knowing the answers to both of these questions is critical to securing brand loyalty from the next wave of consumers.

So let’s start at the beginning.

 

The Death of Loyalty Lineage

Many people equate loyalty lineage with “monkey see, monkey do”: if Dad swears by Volkswagen Beetles so will you because of exposure and familiarity.  This is no longer the case, though, as research has shown that children can begin expressing brand awareness as early as 2 years old.  

brand loyalty awareness

This is largely a byproduct of excessive product augmentation.  Increasingly competitive markets have forced brands to diversify their products in an effort to stay relevant and valuable.  In her book Different, Youngme Moon discusses how the need to make products better has resulted in an overwhelming number of choices for consumers.  Where there used to be only 3 options, there are now thousands.

brand loyalty augmentation

This excessive diversification has made it easier to disregard brands.  Fewer product options ensured that customers would carefully consider the pros and cons of each.  Moon accurately observes that “a lack of brand variety and too much variety [. . .] create situations in which loyalty is difficult to sustain.”  Now, customers only truly explore a product category if they love it – otherwise, there’s simply too many options to sift through.  These conditions make loyalty lineage and strong brand loyalty extremely difficult.  

 

The Millennial Dilemma

As if market competition wasn’t enough, brands are also struggling to secure brand loyalty from the most dominant customer demographic: millennials.  

brand loyalty millenial spend

With over 80 million members and an annual spend of $600 million, millennials are the largest generation by number in U.S. history and are expected to outnumber non-millennials by 2020.  They’re also already demonstrating wavering brand loyalty, with only 27% of men and 12% of women are loyal to the same brands as their parents.

brand loyalty men women compare

This deviance in loyalty come from the fact that 77% believe that they’re equipped to make better decisions than Mom and Dad and technology is largely to blame.  As digital natives with constant access to information, it’s easier than ever for these consumers to compare and contrast product offerings and make purchase decisions off the cuff.  This increases the brand loyalty disconnect between parents and their children, and that disconnect continues to pose new challenges for brands.

 

Why is Millennial Brand Loyalty Dissolving?

There are several conditions that significantly influence a millennial’s decision to switch brands.

1. Financial Situation

Millennials are highly price conscious.  By the time they were entering adulthood, North America was experiencing the largest recession since the Great Depression.  This, combined with the  bleak conditions of the job market, made money an extremely important issue.  

brand loyalty financial situation

In fact, cost is so important that 56% of millennials would change brands due to a change in their financial situation and 41% would switch if their current brands changed prices.  With these figures in mind and 62% willing to try a new brand in search of better prices, it’s clear that millennials have money – not brand loyalty – on their mind.

2. Newer, More Attractive Brands

No matter who they are, shoppers are still attracted to the words “new and improved”.  Brands that promise an improvement in lifestyle are very appealing, and customers are willing to risk experimenting with new products if the payoff is big enough.  

brand loyalty new brand

Brand loyalty is even more fragile when friends get involved.  38% of millennials would change brands based on recommendations from their peers, which means they’re only one positive review away from realigning their brand loyalty – even if they’ve bought the same brand for years.

3. Business Practices

When you’re young, positive experiences heavily influence brand loyalty.  If you had Coca Cola at every single birthday party, chances are you’ll prefer Coke over Pepsi as you continue to grow older.  However, even brands that hold significant sentimental value can be discredited in the face of social and environmental issues. 

brand loyalty business practices

Consumers are becoming increasingly aware of what the brands they choose say publicly about their commitment to these types of issues.  This passion is what prompts 32% of millennials to change brands because of bad business practices, making it clear that products need to stand for more than just good quality.

 

Building Brand Loyalty with Millennials

It might seem like developing brand loyalty with the millennial cohort is impossible, but that isn’t the case!  While millennials give many reasons for straying from their parent’s preferred brands, they’re also happy to outline what would encourage them to stay.

Millennial brand loyalty is affected by a number of factors:

brand loyalty factors

Overall, it’s clear that customer-centricity is key.  Each of these factors either directly influence or are directly influenced by the customer’s interactions with the brand.  The simplest and best way to address each of these concerns is with a well-designed loyalty program!  Here at Smile.io we’re passionate about helping brands build a loyal customer base and have developed a huge resource library to assist brands in that process.

Since we don’t have time to go over every strategy, I’ve narrowed it down to 3 loyalty hacks that you can start today to crack the millennial code.

1. Empower Customers to Influence Brand Development

There’s nothing worse than being ignored.  Too often brands ignore what customers want and need from their products.  This results in low customer satisfaction, and with so many competitors in the market it’s easy for shoppers to find another brand that will meet their needs.

brand loyalty feedback stat

Since 52% of customers want brands to evolve based on customer feedback, rewarding customers for reviews is an easy way to stop this type of customer churn in its tracks.  Reviews are an extremely profitable action for both you and the customer.  Customers trust other shoppers more than they trust brands, which means shoppers will be way more likely to try your brand and stick with it if they see that their peers already love your products.

Bare Biology has developed a dedicated customer base with the help of customer reviews.  Just look at how passionately customers recommend their products!

brand loyalty biology reviews

Initiating this type of feedback loop ensures your brand is developing in a way that resonates with customers.  Regularly reviewing the feedback provided will give you a better idea of what your customers are looking for and point your product development in a direction that secures brand loyalty.

brand loyalty reviews

2. Create a Social Community

Everyone is obsessed with social media.  Whether it’s Facebook, Instagram, or YouTube people are constantly connected to each other.  With that in mind, it’s no surprise that almost 50% of all customers want brands to engage with them through social channels.  

brand loyalty social ads

This is especially true for digital natives like millennials and Generation Z.  Mobile technology has developed a culture of immediacy, and many younger shoppers view any brands that aren’t using mobile and digital advertising as outdated.  Not only that, 60% of them also say social marketing is the most influential method of advertising, discrediting competitors who don’t engage in the social realm.

Social rewards is the perfect solution to this problem for several reasons.  For one, it continues the feedback loop you initiated by rewarding for reviews.  Secondly, it gives customers the opportunity to actively participate in building your brand’s identity with user-generated content.  Spireside encourages customers to share their experiences with their product on Instagram, and then incorporates these photos into their own social marketing.

brand loyalty spireside ugc

Incorporating UGC into your advertising strategy is a great way to build trust and integrity between you and your shoppers, giving them a reason to pledge their brand loyalty to your store.  Best of all, social rewards meets customers where they spend a lot of their time.  By incorporating your brand into their lifestyle, your store becomes convenient and stays top-of-mind.

brand loyalty community

3. Promote Common Values

Brands have always helped shape the way we’re perceived by others.  As shoppers become more aware of both responsible and irresponsible business practices, they want to be sure that the brands they support share their values.  Charitable and eco-friendly practices are of particular interest, and brands who fall short of customers’ expectations are often abandoned and vilified through social media.

While this scrutiny may seem intimidating, you can actually use it in your favour!  Publicly advertising your brand’s commitments to social and environmental issues lets customers know that you have nothing to hide while establishing trust through shared standards.  

brand loyalty tarte email

Many brands have already adopted this tactic with great success.  Tarte Cosmetics includes a “cruelty free” icon in each of their marketing emails to remind customers of their commitment to animal rights.  

brand loyalty patagonia

Similarly, Patagonia has dedicated several sections of their website to their environmental activism, including a clothing recycling program and reports and material and resource use.

brand loyalty good vibes

Images and text compiled from Good Vibes’ official website and Instagram account.

Some brands are taking this further still by incorporating activism into their loyalty program.  Good Vibes Juice Co has built their entire rewards program around bottle recycling, encouraging customers to return their bottles for a deposit or reuse them in creative ways.  This commitment and promotion of responsible practices resonates with shoppers, and has helped them develop a dedicated customer base.  

While there are many other examples of this principle at work, each of these clearly illustrate how you can begin to build brand loyalty through conscientious business practices.

brand loyalty hack values

 

Securing Brand Loyalty

Over the past several decades, brand loyalty has adapted to fit evolving markets.  As the number of products increased, loyalty lineage began to suffer as there were simply too many products for each shopper to carefully consider.  This, combined with the rise of the millennial, resulted in more customers switching brands for financial and personal reasons.

Thankfully, these trends can change!  Merchants can develop strong brand loyalty in their customers by using feedback to build truly valuable experiences.  With active social channels and clear values, you can make interacting with your brand valuable for customers every time they shop with you.  Now that’s how you build brand loyalty!

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