Blog Post - Patrick Munden, May 8 2017

Brand Loyalty is dead: Long live brand dis-loyalty

Brand Loyalty is dead: Long live brand dis-loyalty

We all have our own favourite brands. From choosing football boots – it has to be Nike every single time – to having a preferred grocery store, shoppers always tend to consciously (and sometimes subconsciously) choose a single brand. While this can change according to sector, brand loyalty is a significantly strong factor in the retail sector… or is it? Ever since the rise of Amazon brands have been forced to tackle an entirely new shift away from brand loyalty in favour of service loyalty.

Think about the success of Amazon Prime. It offers one day, no cost delivery for a minimal consumer subscription and encourages loyalty to Amazon via its efficient delivery service as well as adding to its online services which include content and TV programming. Already this is shifting buying behaviour as it encourages purchasing through Amazon over competitor sites or directly through the brands themselves.

Shoppers’ traits have changed and are driving the need for immediacy & innovation

Take delivery services as an example – a recent consumer study launched by IBM and Bridge Solutions found that 74% of consumers would buy from a retailer they’ve never purchased from, over a retailer who they have previously used, if they were offered free shipping. Incredibly a further 86% of consumers said they haven’t purchased a product due to shipping costs. The survey demonstrates that customers will choose convenience and cost savings over anything else. Amazon Prime recognised this trend before it emerged and has contributed to delivery expectations today.

While delivery was pinpointed as crucial, retailers can also thrive if they implement a strong omnichannel strategy that involves in-store pickup and returns. Free shipping may well generate more sales, but in-store pickup is an easy way to tempt customers back as it offers the opportunity to interact with the customer and generate new orders.

Programmatic Commerce – the automatic reordering of products via IoT-connected devices – strives to take this one step further and change the very fabric of how customers interact with their favourite brands. Programmatic Commerce is another very loud warning that retailers must embrace the very latest technology-driven ideas if they are to thrive and succeed. Those that do not will fall behind Amazon and like-minded innovative companies.

The dilemma for brands is how to manage and deliver this new consumer desire for an instant and convenient service. If it’s managed by the brand a degree of control can still be exerted, but if, as with Amazon, the experience is managed by a third party brands risk losing control over this part of the customer journey.

In any event, it’s clear that there’s a need for more investment into the entire supply chain, from stock and order management, through dispatch and CRM, to delivery and follow-up. If consumers increasingly become loyal to service, then that service had better be loyalty-inspiring!