Most companies overlook that emotional engagement is the dominant driver of purchase decisions and brand loyalty rather than price promotions, discounting, social networking, Internet marketing and similar efforts, according to the findings in the 17th annual 2013 Brand Keys Customer Loyalty Engagement Index® (CLEI) released today.
The findings are based on a survey of more than 39,000 U.S. customers across 54 different product categories.
Most companies have become just “placeholders” in their categories, Robert Passikoff, president of Brand Keys, told Loyalty 360. Customers have increased their expectations of what they expect from brands, but brands for the most part have cut back in terms of what they are doing to engage customers.
Much of that cut back as a result of the downturn in the economy that started about six years ago, according to Passikoff. “Rather than investing in brands and brand values, companies instead decided to coupon and discount the heck out of themselves. Brand loyalty has disappeared in a number of categories.”
As a result, consumers have been largely trained to expect the couponing and discounting and will wait for better pricing, cutting into firms’ margins.
Brands have largely become interchangeable in the minds of customers, according to Passikoff. As long as companies have adequate products, pricing, promotions and placement (the “four Ps”), they are nothing more than category placeholders.
“And if you look at what drives consumer emotional engagement in a category, it’s clear that the rational stuff is but table-stakes,” Passikoff said. “If you don’t have a handle on the emotional side of the purchase and engagement process, you might as well spend your marketing budget on coupons and promotions.”
The companies that are the leaders in Brand Keys Customer Loyalty Engagement Index® have established a degree of emotional engagement with customers, according to Passikoff. These loyalty engagement leaders enjoy what Passikoff refers to the “Rule of Six.”
Loyal customers are six times more likely to reject competitive offers, even if they offer discounts, Passikoff explained. Additionally, loyal customers are six times more likely to think better of a brand and six times more likely to recommend the brand to friends.
“It should come as no surprise to marketers that consumers seek greater levels of emotional engagement with products and services they stick with and make profitable,” Passikoff added. “The rule of thumb should be to view the decision process to buy a brand – and then buy it again – as more emotional than it is rational. Estimates for most categories report a 70-30 ratio.”
Passikoff continued: “Marketers have made some initial stabs at trying to understand emotional engagement via flavor-of-the moment approaches like neuromarketing and brain activity measures, which are assumptive and aren’t really generalizable, and none of it identifies what products and services need to do to remain successful brands.”
Brands – products and services that consumers do not see as being freely interchangeable – that appear at the top of the 2013 year’s survey, include: Samsung (taking the top spot from Apple in the smartphone category), Amazon (which took the top spot from Apple in the tablet category) and kept its’ top ranking for e-readers, and Hyundai and Ford which tied for the top position in the automotive category.
All of these firms exhibit much higher delivery against emotional category engagement drivers, according to Passikoff, citing the increased expectation in personalization and a sense of personal productivity in the smartphone category for Samsung’s move past Apple.
“Unfortunately, those things don’t show up in tracking studies, ‘neuro-sensiomotor responses to market stimuli,’ or digital traffic counts. You need to identify real emotional engagement drivers to do that,” Passikoff said.
“Real brand loyalty and emotional engagement is still the Holy Grail of marketing. Loyalty is still a leading-indicator of consumer behavior and profitability,” Passikoff said. “Brand power is one of the first measures of competitive advantage that investors seek, since companies that can leverage their brand always profit from long-lasting customer loyalty that drives sales.”
Brands with highest levels of consumer engagement in their respective categories, based on emotional engagement strength achieved versus a consumer-generated, category-specific Ideal, calculated to be 100 percent:
· Airline: US Airways (85 percent)
· Athletic Footwear: Sketchers (86 percent)
· Automotive: Ford/Hyundai (93 percent)
· Bank: JP Morgan Chase (79 percent)
· Beer (Light): Coors Light (89 percent)
· Beer (Regular): Coors/Sam Adams (90 percent)
· Breakfast Cereal: Cheerios (91 percent)
· Car Insurance: State Farm (82 percent)
· Car Rental: Avis (92 percent)
· Casual Dining: Applebee’s (82 percent)
· Coffee; Dunkin’ Donuts (90 percent)
· Computer (Laptops): Samsung (91 percent)
· Cosmetics (Luxury): Clinique (93 percent)
· Credit Card; Discover (94 percent)
· Diapers: Pampers (95 percent)
· E-Readers: Kindle (92 percent)
· Evening News Shows: ABC (97 percent)
· Flat Screen TV: Samsung (88 percent)
· Gasoline: Shell (89 percent)
· Hotel (Luxury); Inter-Continental (82 percent)
· Hotel (Upscale): Hilton/Marriott (81 percent)
· Hotel (Midscale): Best Western (86 percent)
· Hotel (Economy): Days Inn (88 percent)
· Insurance: New York Life (81 percent)
· Major League Gaming: Call of Duty – Modern Warfare (93 percent)
· Major League Sports: National Football League (86 percent)
· MFP Office Copier: Canon/Konica Minolta (81 percent)
· Morning News Show: Good Morning, America (ABC) (94 percent)
· Mutual Funds: American Funds (79 percent)
· Natural Food Stores: Whole Foods (93 percent)
· Online Brokerage: Fidelity.com (85 percent)
· Online Retailers: Amazon (96 percent)
· Online Travel Sites: Expedia (88 percent)
· Packaged Coffee: Dunkin’ (95 percent)
· Parcel Delivery: UPS (87 percent)
· Pet Food (Canned) for Cats: Fancy Feast (93 percent)
· Pet Food (Canned) for Dogs: Cesar (94 percent)
· Pizza: Domino’s (84 percent)
· Printers: Canon (88 percent)
· Quick-Serve Restaurants: Subway (95 percent)
· Retail Store (Apparel): J. Crew (82 percent)
· Retail Store (Department): Kohl’s (80 percent)
· Retail Store (Discount): Walmart (89 percent)
· Retail Store (Home Improvement): Home Depot (90 percent)
· Retail Store (Sporting/Recreational Goods): Dick’s (83 percent)
· Search Engine: Google (85 percent)
· Smartphones: Samsung (87 percent)
· Social Networking Sites: Facebook (88 percent)
· Soft Drinks (Diet): Diet Coke (89 percent)
· Soft Drink (Regular): Coke (90 percent)
· Tablets: Amazon (92 percent)
· Toothpaste: Colgate (94 percent)
· Vodka: Grey Goose (91 percent)
· Wireless Phone Service: AT&T (87 percent)