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Where Has All The Loyalty Gone?

Joseph Michelli, Ph.D. | Oct 25, 2017 114 views No Comments

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“Where Has All The Loyalty Gone? – Long Time Passing”

sung to a Peter, Paul and Mary melody

A long, long time ago (20 years) in a galaxy far, far away (actually main street USA) customers were basically loyal to brands. For example, my father was a “Ford man” and ne’er a new model launch occur without us going to the showroom to kick those tires.

A Different Era

But today…it’s a very different story! Customer loyalty is at a premium and to the surprise of many that premium is not just for Millennials.

Shelagh Daly Miller, VP, Group Publisher for AARP Media Sales recently wrote a provocatively alarming article for Ad Age titled Is Brand Loyalty Dead? As you probably know AARP originally stood for the American Association of Retired Persons, and it is a membership group focused on issues of people in the US age 50 plus (a cohort usually thought of as loyalists).

According to Shelagh, hundreds of consumer packaged goods (CPG) brands have:

Lost 20% or more of their Boomer business, according to recent data from GfK MRI, and are now waking up to the fact that they need to reconnect with this enormous market segment.

Consumers over 50, control 51% of all consumer spending—and 70% of our country’s wealth. Marketers can make a huge impact on their bottom lines simply by re-engaging just a fraction of this demo.

The Erosion of Loyalty

So, what’s happened to turn a previously “loyal” consumer segment into a roaming hoard? More importantly, what can be done to reconnect with this powerful economic group? Shelagh identifies three factors that have contributed to the loyalty fracture:

  • The disruption of traditional categories. (She gives examples of Uber, Lyft, Airbnb, and the proliferation of new products in the food category.)
  • The role of technology in the shopping experience. (Shelagh highlights a brand I’ve written about in my book The Zappos Experience, as well as their parent company Amazon.)
  • The readily available sharing of product opinions online. (This essentially means that Baby Boomers are reading a lot of product reviews – many of which are negative and being written by their children and grandchildren.)

Onward

Enough about how we got here, let’s look at Shelagh’s recommended solutions for re-establishing CPG loyalty before I add my thoughts on the opportunities ahead. According to Shelagh, there are three ways to regain the loyalty of Boomers:

  • Market to and sustain your focus on the lifecycle needs of Boomers. In essence, pay attention to the important moments encountered by a generation that often is taking care of the needs of aging parents and adult children.
  • Market across platforms. Boomers may be digital aliens (meaning they were born before the advent of smartphones and digital technology) but they are digitally savvy with smartphone penetration in excess of 73% for the segment.
  • Market with a positive message and build loyalty programs anchored to doing good in the world. Shelagh points out that Allure magazine moved away from the term “anti-aging” because of its negative connotations.

A Consultant’s View

Shelagh’s assessment of the decline of loyalty for the 50 plus segment resonates with my own experience as a consultant to leaders seeking to drive loyalty in their businesses. Her views on how to market to the 50 plus population are also extremely sound, and I’m sure linked to an inordinate amount of AARP membership data. From my vantage point, there are a few additional elements missing from the discussion of Boomer loyalty and customer loyalty more broadly.

  • Consumer packaged goods are uniquely challenging from a loyalty perspective and they are highly dependent on marketing. The data Shelagh cites concerning the loyalty churn of Boomers comes from research on products that typically sit on store shelves and for whom emotional connections are largely formed by marketing impressions and product interactions.
  • Most people want to be loyal. Irrespective of generational differences, people typically are creatures of habit. From an evolutionary standpoint, humans seek familiar, foundational, safe, beneficial, and pleasurable experiences. We may crave some variety, but we connect to those products and experiences that give us security and comfort.
  • Loyalty is typically the joinder of products and experiences. While loyalty with consumer product goods is highly dependent upon the products themselves, most customers churn from businesses not due to product limitations but because of the way they are treated during interactions.

We can forgive a favorite restaurant for an item that is not prepared correctly on a given day, if:

The staff acknowledge the problem,

apologize for the shortcoming,

fix the problem,

make a gesture to address our dissatisfaction, and

thank us for allowing them to make it right.

Never Assume Loyalty

I’ve never felt that any consumer group “will be loyal.” Loyalty is earned. It is the reaction of people who feel a business has authentically sought to personalize service to meet their needs, wants, and desires.

Any business who has taken Boomers for granted should get a wake-up call from Shelagh’s article. The rest of us should never fall asleep in the first place when it comes to giving people reasons to be loyal in this highly competitive, global economy.

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Republished with author's permission from original post.


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