Brief #149: The Good, the Bad, and the Ugly of Brand Loyalty - Future Of Marketing

As marketers, the landscape of brand loyalty is one we navigate with both anticipation and caution. It is the wild west out there. Recent findings reveal a mixed (saddle) bag of good and bad news for efforts to foster brand affinity. Strap on your spurs, saddle up and let’s ride into this issue of Future of Marketing.

The Ugly: Brand Loyalty in Tight Economic Times

When the well runs dry, cattle rustlers start taking your customers. McKinsey’s recent report highlights the sobering trend: 79% of consumers are opting for more affordable shopping alternatives, with 38% frequenting lower-priced retailers and 25% switching to cheaper brands or private-label products. This shift has contributed to a 14% decline in customer loyalty over the past year, as reported by eMarsys.

The Bad: Loyalty Program Fatigue

There are more punch cards than prospectors in a gold rush. Despite this proliferation of loyalty programs, many fail to hit the mark. Traditional models focusing on purchase-based incentives—discounts, gifts, or cashback—are proving insufficient. These approaches often reduce customers to transactional participants, who are quick to move on when the perks dry up. True loyalty, it turns out, cannot be bought with points and discounts alone.

The Good: Community-Building as a Loyalty Strategy

There’s gold in them there hills. Community engagement offers a promising avenue for building sustainable brand loyalty. Engaging customers in online brand communities can significantly bolster loyalty, with 40% of consumers more likely to stick with their favorite brands when they are active in such communities (Article 2). Furthermore, 70% of marketers recognize community-building as pivotal to customer retention.

Golden Nuggets from the Info Mine

Key Insights from the State of Community Power Marketing and Social Recommendations Index

96% of consumers trust recommendations from friends and family, up from 86% in 2013
76% consider online communities influential in product recommendations.
Trust in product reviews shared on retail websites has surged, increasing by 25% over the past decade to 88%.
96% of consumers research new products after initial discovery, highlighting the importance of accessible and credible information.
82% of consumers are more likely to purchase new product varieties because of their involvement in an online brand community.
69% of marketers believe community-building is crucial for fostering emotional loyalty.

#BrandCrush – GrubHub

Wrangling Brand Loyalty: How GrubHub Rounded Up 53,000 Community Members

GrubHub needed a watering hole for key diners to spread the word and drive conversions among new customers. They corralled the ‘Tastemakers’ online communities, catering to both general diners and Gen Z. This strategy spurred thousands of brand engagements, authentic user-generated content (UGC), and proprietary insights.

Stampeding Success:

– 90% Positive Brand Opinion

– 53,000+ Community Members

– 33,000+ Pieces of UGC & Recommendations

– 110,000+ Survey Responses Collected

GrubHub saw a notable uptick in brand loyalty through this initiative. Amanda Allbee, Sr. Marketing Associate at GrubHub, tipped her hat to the community-driven success: “Our advocates have become more brand loyal due to our connection with them through this platform.”

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