Loyal Buyers: Did you have more at the end of 2011 than you started with?

How many loyal buyers did you start 2011 with? How many did you end up with?

With all the time and money spent to increase brand loyalty, it seems that tracking the total number of loyal buyers in a brand franchise would be a standard exercise. But I’m surprised how many times brand managers or their loyalty partners can’t answer that question.

Do you know whether your base of loyal buyers is growing or shrinking?

If so, please jump in with comments to this article to help others understand how you define a “loyal” buyer for your organization. How and why do you track your overall number of loyal buyers from year to year? How has this buyer-centric look at loyalty helped you revise your loyalty strategies or overall marketing efforts?

If you don’t know whether you ended the year with more loyal buyers than you started with, I’d like to know why you don’t track that. Is it that you track overall retention rates, share of wallet, or your Net Promoter Score, and think one or more of those gives you enough of a picture of your loyalty landscape? Or maybe you just haven’t applied a standard definition of a loyal buyer, and then used that consistently to track the total number of people who fit that description from year to year?

Why should you draw a line in the sand?

I’ve seen brand managers glean tremendous insight and power from painting a clear picture of a loyal buyer, and using that definition to track and trend the total number of people who fit those criteria over the years. Applying a standard definition of a “loyal” buyer is like drawing a line in the sand to see how many people you can get across it. It helps brand teams define more specifically what they want a customer to do and what relationship they want someone to have with their brand. It adds a dimension of simplicity and focus that the organization can rally around to guide specific strategies and refinements to the marketing mix and measure their results.

A CPG Example

One of my consumer packaged goods client in the OTC drug industry was planning a loyalty initiative with a goal of improving overall retention, specifically slowing defection to private label products. They were using an aggregate measure of this year vs. last year retention as their guide. Profiling a “loyal” buyer as someone who had at least a 75% share of wallet and rated this brand as his or her “preferred” brand added a new dimension to the team’s thinking. It helped them get a more specific picture of who they were trying to influence. The brand discovered that most people who fit this profile had been in the franchise for many years and had a distinctly different demographic, psychographic, and usage profile than other buyers. Further digging revealed a specific reason these “loyal” buyers were occasionally using other drug options – one that was not based on price, which was the original assumption. With these insights, their loyalty-building initiatives and measurement criteria were very targeted, handled with relevant communication and promotion, not a cumbersome points and prizes based program.

Did you lose too many “loyal” buyers in 2011?

If you don’t have a standard profile of a “loyal” buyer for your brand, now is a great time to have that discussion. When final 2011 data is available, take a look at how many people meeting those criteria you started 2011 with and how many you ended 2011 with. You may even want to go back to past years and see how you’ve been doing. If you discover you’ve lost too many loyal buyers, imagine how your 2012 planning for increasing brand loyalty can be facilitated by those insights.