BRAND LOYALTY

s vice president and research director at Forrester Research, where he leads a team that serves consumer product strategy professionals. You can follow him on Twitter at @jgownder and read his blog or his team’s blog.

Between 2006 and 2010, American brand loyalty has declined sharply. During that same time span, fewer consumers self-reported that “owning the best brand is important to me.”

Why did this happen? One glaring reason was that the recession diverted priorities, particularly among the jobless, away from brand names and toward lower prices.

Brand loyalty (the propensity to repurchase a brand) isn’t merely an elite or expensive proposition. Economic instability can actually promote brand loyalty for lower price bands. (The Wal-Mart brand name was built on the promise of low prices, as was Payless shoes and 99-cent stores.) There’s more to the story than the recession alone.

Technology Erodes Brand Loyalty



Beyond economic conditions, there’s an even bigger culprit affecting the decline in brand loyalty. Rapid innovations in consumer technology have provided buyers with new tools for discovering, comparing, evaluating, choosing and experiencing brands. Smartphone app ShopSavvy literally expands buyers’ choices on the spot and offers alternative products (along with peer reviews and location-tagged alternative stores nearby). Amazon’s customers have increasingly become loyal to the channel – Amazon – rather than to the products within. Finally, comparison shopping sites like Bizrate, Google Products or Expedia offer shoppers both product and channel comparisons, increasing the likelihood shoppers will find a new brand or a better deal to entice them away.

Armed with these technologies, customers are becoming increasingly brand agnostic. Furthermore, statistical analysis shows that the more technology-optimistic a consumer is, the less loyal she becomes. Technology optimists – consumers who value and report using technology – tend to be higher-income, quicker adopters of new technology products (smartphones), new technology channels (iPad shopping apps) and new technology promotions (Groupon). Because technology optimists like to have the latest and greatest, they’re more likely to switch to new brands because of their high expectations and strong desire to be on the leading edge.

This effect has only increased over time. The correlation between technology optimism and lower brand loyalty grew more pronounced over the past five years, according to a quantitative study conducted by my company.

Nearly every company is seeing its best, most digitally fluent customers become less attached to the brand names they’ve nonetheless bought before.

Digital Product Experiences Can Reestablish Brand Loyalty



If technology optimists are abandoning their brand loyalty, what can companies do about it? The answer is to empower consumers with digital technologies that reinforce a brand, rather than erode it.

Let’s take a hypothetical example. Imagine that executives at The Gap want to use digital technology to reinforce brand loyalty. They could do this by building a digital product experience that links together:

Brand. The Gap could link up with a media brand, such as Lifetime’s Project Runway, to co-brand a digital experience, perhaps a design contest partnership.
Simulation. The Gap could choose to offer this Project Runway experience in the form of a game. The brand could leverage a platform such as Xbox Live with Xbox Kinect, empowering a group of friends to compete with one another in a contest to design (for example) its fall fashion wardrobes. But the game would allow consumers to engage in real clothing design (because mass customization is the future of products). Each contestant designs his or her own outfits, based on configurable clothing from Gap.
Product. Ultimately, Project Runway fans who participate in their own gamified simulation don’t just want a game — they want to receive real clothes. Mass customization would allow Gap and its partners to sell actual clothing tailored to each buyer. Customers could plausibly buy any design that contestants concocted during the game — presumably with a bias toward the winning outfit.
Companies Should Think – And Staff – Differently

Executing on a digital product experience is hard. It requires new partnerships (like Lifetime), new technologies (like mass customization) and new platforms (like Xbox). Yet executives at companies like The Gap should see that a failure to construct those digital product experiences makes them more vulnerable to the declining brand loyalty facing every consumer company today.

If there’s a single move executives in all industries can make to jump-start their digital product strategy, it’s hiring employees who understand digital in a deeper way. “We have an iPad guru” is a common refrain we hear from companies today. It’s a start, but the number and richness of computing devices is constantly expanding.

Hire talent that can spot the best digital product opportunities across a wide range of devices (game consoles, smartphones, tablets, ereaders, connected TVs, Blu-ray players, etc.). These devices are flooding the market; your product/service needs to as well. See the connection?

Image courtesy of iStockphoto, PeterPhoto