Brands can no longer rely on price promotions and discounting to spark customer engagement, according to Robert Passikoff, president of Brand Keys consultancy. Emotional engagement, Passikoff told Loyalty 360, is the dominant driver of purchase decisions and brand loyalty.

Passikoff’s company has compiled the Brand Keys Customer Loyalty Engagement Index for 17 years and he has seen the evolutionary factors that impact brand loyalty. This year’s edition comprised 39,000 participants (aged 18-65) who self-selected the categories in which they are consumers, and the brands for which they are customers.

Passikoff said there has been a “seismic shift” in how customers emotionally engage with products. Advertising and promotions drive consumer behavior, but “no matter how entertaining the ad, it’s extraordinarily less powerful than being able to leverage emotional aspects of the product and service themselves.”

Too many brands have become “placeholder” products, Passikoff said – meaning people know the brand name, but nothing else. He said the indisputable finding from the 2013 Brand Keys Customer Loyalty Engagement Index is the primacy of emotional engagement with successful brands.

“It should come as no any surprise to marketers that consumers seek greater levels of emotional engagement with products and services they stick with and make profitable,” Passikoff said. “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.”

Passikoff said the following brands achieved high grades in the Customer Loyalty Engagement Index:

Samsung (which took the No. 1 spot from Apple in the Smartphone category)

Amazon (which took the No. 1 spot from Apple in the Tablet category, and maintained its top ranking among E-readers)

Hyundai and Ford (tied for No. 1 in the Automotive category)

Passikoff said those brands exhibited much higher delivery against emotional category engagement drivers.

“Increased expectation in personalization and a sense of personal productivity in the Smartphone category was what contributed to Samsung’s triumph over Apple,” he said. Passikoff said if brands don’t have a handle on the emotional side of the purchase and engagement process, they may as well spend their marketing dollars on coupons and promotions.

Below are the brands with highest levels of consumer engagement in their respective categories. The percentages reflect the emotional engagement strength achieved versus a consumer-generated, category-specific ideal calculated to be 100%.

Airline: US Airways (85%)

Athletic Footwear: Sketchers (86%)

Automotive: Ford/Hyundai (93%)

Bank: JP Morgan Chase (79%)

Beer (Light): Coors Light (89%)

Beer (Regular): Coors/Sam Adams (90%)

Breakfast Cereal: Cheerios (91%)

Car Insurance: State Farm (82%)

Car Rental: Avis (92%)

Casual Dining: Applebee’s (82%)

Coffee: Dunkin’ Donuts (90%)

Computer (Laptops): Samsung (91%)

Cosmetics (Luxury): Clinique (93%)

Credit Card: Discover (94%)

Diapers: Pampers (95%)

E-Readers: Kindle (92%)

Evening News Shows: ABC (97%)

Flat Screen TV: Samsung (88%)

Gasoline: Shell (89%)

Hotel (Luxury): Inter-Continental (82%)

Hotel (Upscale): Hilton/Marriott (81%)

Hotel (Midscale): Best Western (86%)

Hotel (Economy): Days Inn (88%)

Insurance: New York Life (81%)

Major League Gaming: Call of Duty – Modern Warfare (93%)

Major League Sports: National Football League (86%)

MFP Office Copier: Canon/Konica Minolta (81%)

Morning News Show: Good Morning, America (ABC) (94%)

Mutual Funds: American Funds (79%)

Natural Food Stores: Whole Foods (93%)

Online Brokerage: Fidelity.com (85%)

Online Retailers: Amazon (96%)

Online Travel Sites: Expedia (88%)

Packaged Coffee: Dunkin’ Donuts (95%)

Parcel Delivery: UPS (87%)

Pet Food (Canned) for Cats: Fancy Feast (93%)

Pet Food (Canned) for Dogs: Cesar (94%)

Pizza: Domino’s (84%)

Printers: Canon (88%)

Quick-Serve Restaurants: Subway (95%)

Retail Store (Apparel): J. Crew (82%)

Retail Store (Department): Kohl’s (80%)

Retail Store (Discount): Walmart (89%)

Retail Store (Home Improvement): Home Depot (90%)

Retail Store (Sporting/Recreational Goods): Dick’s (83%)

Search Engine: Google (85%)

Smartphones: Samsung (87%)

Social Networking Sites: Facebook (88%)

Soft Drinks (Diet): Diet Coke (89%)

Soft Drink (Regular): Coke (90%)

Tablets: Amazon (92%)

Toothpaste: Colgate (94%)

Vodka: Grey Goose (91%)

Wireless Phone Service: AT&T (87%)

Passikoff said brands can’t build loyalty by relying on lower price strategies and promotions and be viewed as different or better than their competition. Rational aspects still drive many categories, he added, such as primacy of product (does it do what it says well enough that I don’t complain?), location (is it on the shelves where I shop?), and is it selling at a good price (where’s my coupon?).

“But it doesn’t drive emotional engagement or brand loyalty,” he said.

Some categories are fading away, such as Cellphones (with consumers moving to Smartphones); Blu-Ray players; Digital Point & Shoot; Digital SLR cameras, and Movie Rentals.

“The categories are there, but consumers are migrating to newer and different technologies,” Passikoff said.

Apple had a stranglehold on the Smartphone category since it was created, Passikoff said.

“Apple fell behind in being able to personalize the technology,” he said. “Samsung and Amazon moved ahead of Apple in terms of being able to offer technology that keeps people engaged. Samsung did an excellent job in playing up the touch technology feature offered by the latest version of the Galaxy phone around the time of the iPhone 5 launch with television commercials showing Galaxy owners using the technology while Apple users were waiting in line for the newest iPhone.”

In areas of personal and emotional engagement, it’s fair to say that “Apple has slowed down,” Passikoff added. “There’s no substitute for emotional engagement. If technology is what matters, you can lose your emotional edge when you lose your technology edge.”

Real brand loyalty and emotional engagement is still the “Holy Grail of marketing,” Passikoff said.

“Loyalty is still a leading-indicator of consumer behavior and profitability,” he 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.”

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