Provoke- The Brand Loyalty Issue

Rising Prices, Hidden Loyalty Signals, AI and Loyalty, The Heavy vs Light Buyers Debate, A Disgruntled RAM Truck Owner, and more..........

Ed Cotton

Mar 07, 2025

Five types of customer loyalty via SAP

Prices and Loyalty

“Rising prices will prompt brand loyalty to decline by 25% in 2025.”

Forrester

The Views of A Disgruntled RAM Truck Owner

“It took that long to realize something was wrong with the way the computers in these trucks handled emissions, to prove it, and to do something about it. Now, how do you feel about verifying the code behind all of the martech apps, the ad tech platforms, the data processing and anything else that helps you run your marketing? Do you possess the skills necessary to vet all that stuff? Do you know anybody that does? In case you haven’t been clued in yet, the lesson is this: By the time you figure out that a lot of the code that runs your marketing doesn’t do what it says it does, the people who sold it to you will have already escaped accountability. Just like RAM cheating for a decade on polluting our planet.”

Medium Post

Heavy Buyers Matter

“We are privileged to be able to access a panel drawn from a loyalty-card base with low levels of churn. Although the shopper behaviour may be skewed in favour of the retailer, this does not skew the brand or category level behavioural view within the retailer, since all purchases are rewarded equally. The data therefore provides a robust view of purchase behaviour from a large sample over a seldom viewed extended timescale. Heavy buyers matter The results were clear: The majority of brands analysed were closer to Pareto (80/20) than the How Brands Grow view. The average spend attributable to the top 20% of customers across all brands tested was 69% and 76% over one and five-year periods respectively. Furthermore, and in contrast to How Brands Grow, market share brand rank consistently made a big difference. The smaller the brand, the higher the observed Pareto score, meaning smaller brands are much more reliant on sales from their heaviest customers. Strip out the market-leading brands across all categories and the overall average Pareto score for the remaining smaller brands was 78%. So, what does this all mean? The research revealed FMCG categories have one thing in common: heavy buyers, of even the biggest brands, contribute more towards total sales of a brand than is commonly believed.”

Dunn Hunby piece - Campaign Asia

Byron Sharp’s Response to the Above

But the critical message is that most brand buyers are light/occasional customers yet they still account for 40% of long-run turnover. It will therefore take serious marketing attention to keep them coming back. Firstly, because there are four times as many of them, which demands clever use of broad-reach, low-cost media. And secondly, because the brand is not so mentally nor perhaps physically available for them – the challenge of improving this availability is something every marketer should be thinking about every day. There is another fact to consider. If one looks at the future, for example by asking “what will my current bottom 80% of buyers be worth next year?” the answer is always “more than they were worth this year”. And this year’s top 20% of buyers will be worth less than the 60% of sales they generated this year (i.e. about 45%). Those who are statistically minded will recognise this regresssion-to-the mean. Given that most marketing plans are about the future, not the past, it’s best then to consider the 60/20 law as an over-statement, this year’s heaviest buyers will be worth less in the future (and our lightest will be worth more). On top of this, if a brand wants to grow, then these light buyers (plus the many many non-buyers) will be the primary source of growth. Which makes the old “target your loyalists for efficiency” strategy look like a near complete dead-end.

Ehrenberg- Bass Institute

Consumers Say Loyalty Comes from the Experience, Execs Disagree

Source: PWC

Distinctive Assets in a World of AI-Agents

“Logos, colours, and aspirational design are no longer the primary drivers of consumer choice. Instead, a brand’s “voice” in algorithmic terms—its ability to deliver relevant, structured data—becomes critical.”

Get The Goods

Private Label Growth Categories- PLMA 2025 Report

Americans’ New TV Habit: Subscribe. Watch. Cancel. Repeat.

“Early last year, Josh Meisel and his wife wanted to watch a new buzzy Peacock drama, “Poker Face,” starring Natasha Lyonne. But Mr. Meisel, a scientist who lives outside Boston, did not subscribe to Peacock. He paid for half a dozen other streaming services and was reluctant to sign up for another. So he and his wife made a pact. If they weren’t watching “Poker Face” anymore after two weeks, they would cancel Peacock. Sure enough, they lost interest and canceled. And then he realized: Why stop there? In the weeks that followed, Mr. Meisel, who is 39, cut loose Max, Apple TV+ and Hulu. He eventually resubscribed to Hulu and Apple TV+ when there were shows the couple wanted to watch — Hulu for “The Bear,” Apple TV+ for “Slow Horses” — but canceled both again after they finished watching a new season.

And he is hardly alone.”

NYT

The Genesis of Tesco’s Clubcard

“The experimentation with Tesco sales data took place in 1994 over a three-month stretch, from which Dunnhumby concluded that people returned to stores more often and bought more when they were rewarded with money-off promotions. The real big breakthrough came when it presented the findings to the Tesco board. Then chairman Lord MacLaurin famously declared: “What scares me is that you know more about my customers after three months than I know after 30 years.” It was then all systems go as the starting gun was rapidly fired on the roll-out of Clubcard to all Tesco stores. “The commitment to do something so big is lost today. For the 13 February 1995 launch, they printed 16 million Clubcards, closed every store the weekend before to dress it up with Clubcard [promotional materials], put people in all the stores to sign up members, and there was national TV advertising,” says Dunn.”

Computer Weekly

Loyalty = Brand Meeting Expectations

“The better a brand meets expectations determines how loyal customers will be. On average, expectations increase 30% YOY. Brands only keep up by 8-12%, increased opportunities for exposure to and experience with a brand provides opportunities to bridge that gap, which explains why some brands do better – or worse – than others on our annual list and in the day-to-day marketplace.”

Robert Passikoff, founder and president of Brand Keys, Inc.

How to Damage Brand Loyalty Potential

“The airline and car rental industries are notorious for upselling and crossselling products. For example, when booking a flight on Spirit.com, users had to go through four tedious rounds of upselling. They had to actively decide not to purchase seats, bags, cars, hotels, or any additional flight add-ons to be able to purchase the flight for the initially advertised price. While aggressive upselling could have a positive impact on short-term profits, it will have a negative impact on user perception of the brand and the likelihood of them booking flights in the future.”

NN Group

It’s Not Easy to Get Fans

While inspiring fandom may be the goal for many brands and marketers, only 13% of respondents belonged to the fandom loyalty group. Experts like Richard Shotton, author of The Illusion of Choice, caution that such affiliations can be extremely hard to cultivate and may not make sense for every brand. Most brands are likely to have a mix of all of these customers, and a good strategy should have tactical approaches that target different levels of commitment. “I think a goal like loyalty, whereby people avoid better alternatives out of a sense of obligation or genuine passion, is phenomenally hard to achieve,” said Shotton. “The danger is that marketers overestimate their chances of achieving that and maybe convert their budget into smaller sales rather than [pursuing] the much, much simpler goal of habit.”

Intuit- MailChimp- “The Science of Loyalty”

AI’s Impact on Brand Loyalty

“63% of consumers are willing to try AI-recommended brands, even if it is not one of their usual brands. This shift threatens to redefine brand loyalty and the classic 'First Moment of Truth'.”

IPSOS

A 3D Engagement Model for Loyalty

“The 3D engagement methodology is a method for quantifying loyalty. It breaks down the three engagement dimensions into a total of nine levers, which are then prioritized according to a company’s strategy and matched with consumer preferences. This forms the basis of a new design for the customer relationship. The methodology also provides the necessary tools to quantify the maturity of a company’s engagement level. By focusing on the methodology’s nine levers, a company can translate the broad idea of engagement into a more actionable workstream. Product levers include digital innovation, sustainability, and hyper-personalization. Channel levers look at full-stack immersion, efficiency, and creating a frictionless journey. And communication levers cover diversity and inclusion, brand intimacy, and honesty.”

Roland Berger

What Loyalty Might Look Like

“Two unexpected insights arose from the extensive research and expert analysis by The Outsiders team. 1. The suggestion – let’s go for a cheeky McDonald’s – was more emotional than the actual consumption of the products. The assumption had been that the moment of release would come from the food – but just the invitation was enough to produce a host of emotional reactions such as shouts of joy, widening eyes, mischievous smiles and bursts of excitement. 1. The invitation was so universally understood that it didn’t need to be spoken. What triggered the emotional fireworks was not what was said but came from a range of unspoken cues being used to extend the invitation such as a knowing look, a head point, and emoji… an eyebrow raise!”

MRS Winning Paper- The Outsiders, McDonald’s Leo Burnett, Peek Content, house51

Delight = The Key to Customer Loyalty

“Our research showed that, in insurance, if companies delighted a significant portion of their customers who were already satisfied, this could lead to additional revenue of 8 to 12 percent—translating into several billion euros a year.”

McKinsey

QSR’s Heavy Users- Year 2000 Nostalgia Edition

“Television commercials for McDonald's, Burger King and KFC only occasionally hint at the industry's dependence on this narrow user group. Commercials often show families with children and elderly married couples biting into juicy burgers. In fact, the heavy user is most often a single male _ and the industry privately acknowledges the weakness of its grip on him. "We used to have this great sign around here that said something like, "Marriage and kids are bad for your business,' " says Nadine Brewer, senior director of consumer insight for Tricon International Inc.'s KFC unit.”

Tampa Bay Times

Negative Impacts on Brand Loyalty