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A bottle of Coca-Cola is shown in this photo illustration in Encinitas, California October 10, 2013. (MIKE BLAKE/REUTERS)
A bottle of Coca-Cola is shown in this photo illustration in Encinitas, California October 10, 2013. (MIKE BLAKE/REUTERS)

persuasion

Why marketers need to adapt to fading brand loyalty Add to ...

Thanks to the proliferation of social media such as Facebook and Twitter, brands are talking to us all much more as though we’re friends. Feigning familiarity, they chat about the Monday morning slog and joke about the news in a bid to win attention by acting like the people we actually care about.

But marketers may want to get used to the idea that people don’t like them as much as they think. If consumers are friends, they’re a rather fickle sort.

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According to a new report from Veritas Communications and Northstar, brand loyalty in Canada is slipping fast. Roughly three-quarters of people they surveyed said they had switched away from a “preferred” brand in the past year. And nearly 7 in 10 plan to do so in the coming year.

“These are large numbers, and we’re not talking about any brand; we’re talking about favoured brands,” Tricia Benn, Northstar’s chief marketing and strategy officer said. “This is becoming more common.”

Other research, such as Deloitte’s Pantry Study, has found that brand loyalty has been on a steady decline in recent years. Recently, Bond Brand Loyalty, an agency that focuses on loyalty marketing specifically, released a report that found 29 per cent of consumers said they would not be loyal to a brand without its loyalty program.

“Many brands rely overly heavily on points, discounts and rebates to influence customer behaviour. The risk for these brands is that customers are loyal to the discount, not to the brand,” Scott Robinson, a senior director with Bond, said.

The team at Veritas and Northstar attribute slipping brand loyalty partly to a growing cynicism toward advertising, as well as the way communications have changed.

One-third of survey respondents said they see themselves as influencers. Veritas’s research shows that the endorsements of friends and family have twice as much effect on decision making as any other source, including experts. As the media people use to converse with each other make it easier to solicit advice or influence others, it is complicating things for marketers. Businesses have always known that word of mouth is powerful, but now it has become amplified. That means the opportunities have grown for people to consider a different brand or to be influenced to try something new.

“The result of this is that brand loyalty is fleeting,” Veritas president Krista Webster said.

But it also complicates how brands speak to people. Because friends have such a big influence on consumer decisions, many brands try to speak in the voice of a friend, especially on social media. They are attempting “to mirror the most trusted sources,” Ms. Benn said.

That can work against marketers when consumers see through it. And since consumers are feeling more empowered than ever to communicate their like or dislike with brands and to influence others in their lives, they see through marketing more than ever.

The best strategy for marketers, then, is to quit pretending their brands have a special place in consumers’ hearts. Instead, they should provide experiences that are actually valuable to people.

“Too many brands are making themselves the hero of their story,” said Darren McColl, global chief brand strategy officer for marketing agency SapientNitro, and author of Storyscaping. “There’s an impatience with it.”

He points to an example that he worked on: the 2009 “best job in the world” campaign for Tourism Queensland in Australia. People competed to be hired as caretaker for Hamilton Island on the Great Barrier Reef.

The offer attracted more than 34,000 video applications from all over the world and was covered in more than 6,000 news stories. That’s the kind of promotion Queensland could not buy.

But it did something else as well: Rather than pushing tourism to Queensland, it encouraged people to think of themselves as the centre of the story. Contestants created their own video stories as part of their applications. But even those who did not enter but simply saw the campaign likely spent a few minutes daydreaming about living in an island paradise.

In other words, the job was a vehicle to make people put themselves in the story.

“My client at Coke once said it perfectly. I’ll never forget it: ‘How much of a relationship does a mum want to have with her orange juice? Not much. But we have to find a way to make it meaningful,’” Mr. McColl said.

Sometimes, that’s as simple as being useful. Mattel Inc. and its agency Ogilvy & Mather Paris came up with an ingenious way to promote the company’s classic Scrabble game to smartphone users. It provided free WiFi Internet connections in public places. In order to connect to the Scrabble Network, users had to spell a word from Scrabble tiles. Higher scoring words gave users longer access to the network.

People spelled more than 6,000 words in two weeks and the company gave away more than 110,000 minutes of WiFi. It was a campaign that rewarded people for their time by being useful and fun. (Those who shared their scores on Facebook got even more free time.)

Walt Disney Co. has been working on a way to make its experiences at its parks more tailored to individual visitors. Last year it introduced MagicBands, rubber wristbands embedded with RFID (radio frequency identification). The wristbands work as hotel keys, tickets, and authentication to charge meals and other purchases to a visitor’s room.

It also allows the company to personalize visitors’ experiences: Disney characters might wish your child a happy birthday by name, for example. And the company can use the data it collects about how people move around the parks to better tailor their services in future. Some have reasonably criticized this level of tracking as creepy. But the manufactured “magic” is a sign of how smart marketers are trying to create some of the brand love that is increasingly hard won.

“It’s critical not that they sound like your friend, using the same familiarity and language. It’s about understanding me,” Veritas’s Ms. Webster said. “You can’t have that authentic voice if you don’t understand the true context of your consumer.”

*********

74 per cent: Canadians surveyed who reported switching away from one or more of their “preferred” brands in the past year

69 per cent: those who said they are planning to switch from a “preferred” brand in the coming year

39 per cent: people who looked to traditional media for information before trying a different brand

32 per cent: those who sought out information online before switching

31 per cent: those who looked for information on social media such as Facebook or Twitter

25 per cent: those who were influenced by online communities such as chat rooms or review sites

19 per cent: those who found information on a company’s app or blog

43 per cent: survey respondents who said they look for advice from others before trying out a new brand

*Source: Veritas Communications Influencer study, conducted by research firm Northstar. The company surveyed 500 adult Canadians across the country in English and French.

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