Loyalty vs Reputation-Which sells your product better?

Loyalty is based on prior experiences a customer had with a specific brand, while reputation is based on the aggregated experiences of others with a specific product. Both influence purchasing selections consumers make, but each can make a different impact on that decision. The importance of brand loyalty is decreasing, but the impact of product reputation is on the rise.

This trend does not affect all product categories the same way. The brand loyalty of frequently purchased products, like toilet paper or coffee, has a much stronger hold on a consumer than the less frequently purchased products, like a phone, a car or an appliance. Consumers are faced with less uncertainty selecting FMCG products due to:

– Relatively low price/risk levels

– Product continuity compared to endless introductions of new models

– Consistency in quality of a product experience.

On the other end of this spectrum, the selection of highly priced products, every few years, is associated with a higher level of uncertainty that cannot be easily alleviated by prior experience with that brand. A wide variation in the quality of products associated with a brand taught consumers not to rely on a brand as a dependable quality proxy. The availability of specific, nuanced descriptions of experiences, other customers had with this very product, helps shoppers to assess how likely their expectations will be met, and hence to reduce the anxiety of that choice.

My wife doesn’t spend more than a few seconds to pick out paper towels off the store shelf every week, but agonizes for a few days to chose a smartphone every two years. She is not alone in this behavior pattern.

There is plenty of research about the impact of customer reviews (experiential content) on shoppers behavior. The studies established a clear connection between a sufficient number of reviews and the visit-to-purchase conversion rate in online shopping. However, the similar behavior patterns are observed in the brick and mortar stores as well. Given the fact that 79% of consumers trust customer reviews, this is not surprising. The fact the product marketers and agencies are still trying to control product information flow to consumers, is a surprise. Most are still stuck on the first two stages of Loss and Grief denying the obvious (consumers trust the stranger’s experience more than the marketers) and angrily questioning the integrity or bias of customer reviews sites. Some, so called marketing “professionals”, are trying to regain control with ill-advised, unethical and illegal attempts to contaminate the information flow with fake reviews. They are incapable of managing their paid advertising addiction and learning to ethically stimulate customer-word-of mouth instead. My best advice is to avoid the Bargaining and Depression stages all together, and go directly to Acceptance to cause your company’s reputation the least damage.

With the growing impact of absolute value on consumer purchasing decisions, the challenge of marketing is shifting from positioning and segmentation to generation of interest among consumers and fostering creation of experiential content. Between the increasing noise and shortening consumers’ attention span, this task is getting much more difficult than it used to be.