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Frisk Special: LOYALTY
February 2015
Frisk Special: LOYALTY February 2015
Frisk Special: LOYALTY February 2015
Howdy. Welcome to the latest Frisk special.
We’re deep into 2015 now – still not quite sure how that happened, something to do
with the Higgs Boson probably – and it’s been making us think a lot about the subject
of Loyalty.
Did you make a new year’s resolution? And if so, did you stick to it? We’ve found a
fairly even split between people who’ve remained loyal to their self-imposed vows
and those who gave up after about fifteen minutes…
Of course, Loyalty spreads much wider than simply remembering to cycle to work
because you told everyone you would. Giles Hedger’s Admap piece, which you’ll find
within, posits that we need to think about brand loyalty as an outcome of successful
brand building. We’ve also spoken to Canvas8, who suggested that a key facet of
building customer loyalty is to be a bit annoying and rude, as well as quizzing the team
in Arc Sponsorship for their views on the loyalty journey. And, as ever, we’ve picked
the brains of the Planning department to get their own entertainingly disparate views
on the subject.
So, plenty there to stimulate the ol’ grey cells. I do hope that you enjoy what you read.
If so – or indeed, if not – be sure to fire some feedback into the Twittersphere: the
handle’s @LeoBurnettLDN.
See you next month for more of this thoughtsmithery.
Daniel Bevis
Senior Knowledge Editor
Leo Burnett London
Frisk Special: LOYALTY February 2015
“If you think about brand loyalty as an outcome of successful brand building, as opposed to a marketing
objective in its own right, several good things happen. First, you sidestep fifty years of plaguing and
unresolved questions around the meaning, anatomy, cause, measurement and pursuit of brand loyalty.
Second, you refocus on the long-term charisma of a brand as opposed to short-term repeat purchase
tactics. And third, you give yourself an immediate competitive advantage, because the majority of your
peers will still be stuck down that dark and L-shaped rabbit hole.”
BUILD BRANDS NOT LOYALTY….
Our CSO, Giles Hedger, has his own a perspective on Loyalty in his recently
published article:
Frisk Special: LOYALTY February 2015
Frisk Special: LOYALTY February 2015
Frisk Special: LOYALTY February 2015
According to the world of online dating, coming across as an arse to some can make others love you more.
If having haters makes those who like you like you all the more, does the same psychology apply to our
relationships with brands? And does it actually pay for a brand to rub part of its audience up the wrong
way?
We work closely with Canvas8, a deep-dive insight network who ‘make the complex simple by
helping us make the simple significant’.
We posed the Loyalty question to them this month, and they came back with this absolute
belter on how to artfully irritate people…
IS THERE AN ART TO PISSING PEOPLE OFF?
Bailey Weaver (2010) ©
“Don’tmessagemeif:Baconisimportant
toyou…Youthinkworldpeaceisan
actualgoalofsomesort…Youusesexas
currencyinarelationship…Youbelieve
everyoneisentitledtotheiropinion,no
matterhowinane… Fouroutoffiveof
yourphotosareofyouatweddings…
YoureadVice.”
[1] And the list goes on. This isn’t a joke; it’s taken from an
actual profile on OKCupid.
Drawing on claims made by the site’s co-founder, Christian
Rudder, in his book Dataclysm, the chances are, for each
person who considers this man to be an objectionable
prick, someone else will be falling over themselves to drop
him a line. Because apparently, “having haters somehow
induces everyone else to want you more. People not liking
you somehow brings you more attention, entirely on its
own.” [2]
Frisk Special: LOYALTY February 2015
So if we can say this about the unscrupulous world of online dating, can we apply similar precepts when
thinking about our relationships with brands?
In Dataclysm, Rudder analyses years of data from OKCupid to proffer insights into, as the book’s subtitle
states, ‘who we are when we think no one’s looking’. Writing in relation to attractiveness ratings, he
somewhat counterintuitively concludes that, “To be universally liked is to be relatively ignored. To be
disliked by someone is to be loved all the more by others.” [2]
It comes down to something called ‘variance’ - “a measure of how widely data is scattered around a central
value.” [2] In other words, if 3 is the average, the combination of 1 and 5 has a greater variance than 2 and
4. Rudder found that “A very low-rated woman (20th percentile) with high variance in her votes gets hit
on about as much as a typical woman in the 70th percentile.” Overall, “being highly polarising will in fact
get you about 70% more messages.”
The equivalent of variance in marketing-speak is ‘brand dispersion’, and similar to the online dating paradigm,
in lists of ‘most hated’ and ‘most popular’ brands, the same names crop up: Google, Apple, Facebook etc.
Perhaps there’s an element of statistical inevitability at play, given the ubiquity and scale of such brands,
but for Associate Professor of Marketing Michael Wiles, brand dispersion is primarily attributable to a
tension between “how brands deliver on value proposition” and “the values that people hold dear.”
HATE AT FIRST SIGHT
Ed Yourdon (2013) ©
Frisk Special: LOYALTY February 2015
Take Facebook. It’s a service that connects you with your friends, and it does this very well. Yet, when it
comes to matters of privacy, Facebook is highly problematic - morally spurious, even. “These values are
at odds, and fulfilling one comes at the expense of another,” explains Wiles. “If you value privacy, you’re a
hater; if you value connecting with your friends, you’re a lover.” [3]
For Chris Malone, co-author of The Human Brand, the way we perceive and interact with brands - and
ultimately whether we love or hate them - is determined by two categories of perception: warmth and
competence. Terms coined by social psychologists, they denote “the processes we go through when
subconsciously and instantaneously trying to ascertain and judge the intentions and abilities of others.”
[4] As humans, our skill at reading people according to the warmth and perception framework has been
evolving ever since the ‘the original game of Survivor.’ [4] Only now, we invoke this instinctive, primal
deftness when we’re trying to suss out brands.
These notions of warmth and competence historicise Wiles’ theory: “How brands deliver on value
proposition” is synonymous with competence; “the values that people hold dear” relates to warmth and
our impressions of others’ intentions towards us. If, to recall our previous example, privacy is important to
you, then warmth would be the last emotion evoked by Google or Facebook.
“Warmth and competence perceptions trigger predictable patterns of emotion,” explains Malone.
“Particularly in the case of brands we dislike, theses emotions can be really strong.” [4] Whereas positive
impressions of a brand’s intentions and competence only develop over time - and through regular
reinforcement - if a company demonstrates ill-will and incompetence, (such as with the BP oil spill), we
become very angry very quickly. It’s a case of ‘hate at first sight’. [4]
Mark Kidsley (2013) ©
Frisk Special: LOYALTY February 2015
Knowing that you fall into a brand’s love or hate contingency can be very seductive - even if hate is the
more rousing emotion. “All the evidence we’ve seen suggests that our brains perceive, respond and interact
with brands as if they were tribes,” says Malone. “My interactions with the tribe inform my expectations,
beliefs and loyalties… In terms of loving and hating, the degree to which a brand demonstrates it is aligned
with, or against, your principles will make them more attractive to you.” [4]
So, polarisation can be a matter of principle. Take Chick-Fil-A, a large, US, chicken shop chain known for
its religious and conservative leanings. In 2012, the CEO made some controversial comments about gay
marriage, and it was revealed that the company helped fund an anti-gay organisation. On the one hand
there were pickets and boycotts; on the other, it secured more regulars because of the CEO’s stance. In the
same year as the scandal, their sales increased by 12%. [6]
The basic premise of social identity theory states that identifying with a group helps us to define our own
identity, as well as experience a sense of belonging. As such, we relate to ‘in-groups’, we disavow ‘out-
groups’, and simultaneously exaggerate the differences between ‘us’ and ‘them’. Ultimately, “the degree
to which we’re disliked by one group makes us more attractive to another.” [4] It’s simply part of what it
means to be human, a powerful force of social cohesion.
BELONGING
chotda (2008) ©
Frisk Special: LOYALTY February 2015
In the same way that Marmite’s leveraging of ‘love it or hate it’ is so successful that ‘marmite’ has become
a neologism for anything divisive, in 2011 Miracle Whip built an entire campaign around the tagline ‘We’re
not for everyone. Are you Miracle Whip?’ A slew of famous faces came out to rally for and against the
product, with Pauly D from Jersey Shore saying he’d break up with a girl if she liked Miracle Whip. During
the campaign, sales increased by 14% and there was a staggering 631% increase in social media postings -
presumably from people passionately defending and denigrating the wannabe mayonnaise. [5]
And then there’s Lululemon. After complaints about transparency and piling on Lululemon yoga pants, and
a product recall, the company’s founder Chip Wilson declared that not all women’s bodies ‘worked’ in their
leggings. Lululemon has been tipped as a brand that won’t survive 2015. Yet it’s still here…
Malone explains how “Lululemon built this tremendous loyalty without competing on price or without
a lot of advertising. It was very much about getting into communities, building relationships with yoga
instructors and getting people into stores for yoga classes. After the controversy, they continued to grow,
just not as fast: 5% instead of 40%. In one respect, it’s a clear example of how the CEO’s comments were
a negative demonstration of intention and warmth - and it had a harmful, measurable impact. Yet on the
other hand, it evidenced the loyalty of their core customers.” [4]
To many, the imputation that some women are too fat for yoga is odious; but to those whose ass looks
great in any asana, you’re part of an elite club. Being in this exclusive gangis a form of bonding between
you and your fellow hot, skinny yoginis; the mark of membership is, of course, the sporting of Lululemon
head to toe.
In 2012, Grey Poupon mustard played with this very concept of exclusivity. They encouraged people to
apply to their ‘Society Of Good Taste’, then applicants’ Facebook pages were vetted for ‘good taste’
credentials. And even more brazenly, Abercrombie & Fitch CEO Michael Jeffries infamously proclaimed,
“we go after cool kids, we go after the attractive, all-American kid with a great attitude and lots of friends.
A lot of people don’t belong [in our clothes] and they can’t belong. Are we exclusionary? Absolutely.” [7]
ARE YOU IN OR OUT?
Lululemon (2015) ©
Frisk Special: LOYALTY February 2015
SOURCES
1. ‘This guy’s insane “Don’t message me if…” list on OKCupid probably rules you out. He’s that good.’, Happy Place (July 2014)
2. Dataclysm: who we are when we think no one’s looking, Christian Rudder (2014)
3. Interview with Associate Professor Michael Wiles conducted by the author
4. Interview with Chris Malone conducted by the author.
5. ‘Make the most of a polarizing brand’, Harvard Business Review (November 2013)
6.’Chick-Fil-A sales soar in 2012 despite bad PR’, Huffington Post (November 2013)
7. ‘Has Abercrombie & Fitch’s CEO really made a ‘Big fat marketing mistake’, The Guardian (May 2013)
8. ‘10 brands that will disappear in 2015’, 24/7 Wall St (July 2014)
9. ‘Spirit Airlines: embracing the hate’, GlobalNewsWire Video (July 2014)
By all accounts - and in many different respects - being polarising puts you in a fortuitous position. The
more repellent you are, the more magnetic you become. And this reciprocity results in an intensification
of the love and the hate because, as humans, our desire to identify with a group that shares our values is
instinctive and compelling.
As far as brands are concerned, making unequivocal statements about who you are, what you stand for
or against is, opines Malone, ‘humanising’ - it makes it easier for us to know where we stand, and that’s
something we like. [4]
In an article for Harvard Business Review, Wiles et al suggest that manufacturing polarisation can be a
good thing. ‘Driving a wedge in the market’ by targeting a specific demographic or being provocative are
two ways that a brand can effectively win over one group by alienating another. [5] McCoy’s ‘Man Crisps’
and Yorkie’s ‘It’s Not For Girls’ immediately spring to mind.
Yet, warns Malone, “it’s not the kind of thing you’d want to conduct an opinion poll about in the way
a politician might. Saying and doing what you think people want you to won’t work. We see through
the pandering and patronising as we’re judging [brands] the way we would an individual: do they have
integrity? are they being consistent? do they stand for something? etc.”
If you have an inherently divisive brand, then, say Wiles et al, it’s possible to capitalise on this quality equally
by placating or poking the haters; essentially by amplifying a polarising attribute. For example, General
Mills started its own blog and partnered with the Celiac Disease Foundation to assuage critics’ concerns
about obesity. Ryanair winds up its detractors by making scandalous proposals such as charging for going
to the loo. Miracle Whip was able to galvanise the ‘middle-of-the-road consumers’ to try the faux mayo by
dialling up - and owning up to - its divisive nature. People wanted to know what the fuss was about. [5]
Or, you can take the humorous approach. [3] Spirit Airlines did a phenomenal job of saying ‘up yours’ to its
vociferous slanderers withhatethousandmiles.com. By publicly acknowledging its disgruntled flyers, subtly
mocking their comments, and not apologising, they sent out a clear message: “This is who we are. Take it
or leave it. If you don’t like it, go somewhere else.” [9] [4]
There is an art to pissing people off; but it must come from a place of unwavering principle, or from
knowing that your product has such a strong identity, flavour, style or aesthetic that some people are
guaranteed to absolutely love it; that you can afford to say ‘f**k the rest’. From getting laid to convincing
people to try condiments, it seems the winning formula = “lots of yes, lots of no, but very little meh.” [2]
INSIGHTS AND OPPORTUNITIES
Frisk Special: LOYALTY February 2015
As a vehicle to engage directly with people, not as consumers but as fans, sponsorship presents a unique
opportunity to deliver brand loyalty, often unachievable with more traditional marketing techniques. By
tapping into pre-existing passion points – a favourite sports team, musician, or arts festival for example –
sponsors can effectively ‘piggyback’ on the allegiance afforded to these and convert it into brand loyalty.
That said, whilst the ability of sponsorship to delivery lifelong customers is hard to deny, there is much more
ambiguity over how to effectively execute such a strategy. One thing’s for sure, when a brand attempts
to muscle in on consumers’ enjoyment of the things they love most, the stakes are high. Enhance that
experience and you’ll convert passionate fans into loyal customers… damage it and you’ll turn them off
forever.
What the Arc Sponsorship team (our specialists within the Leo Burnett Group) don’t know about sponsorship
really isn’t worth knowing. This month, we’ve asked them to flex their brain-muscles on the subject of Loyalty
as it relates to their specialist subject of Sponsorship…
THE APPEAL OF SPONSORSHIP FOR DELIVERING BRAND LOYALTY
One of the strongest, and most commonly cited, case
studies for creating brand loyalty through sponsorship
is that of O2’s sponsorship of the Millennium Dome
[1], now known as The O2 Arena. Reported results
show that the activations arising from this partnership
led to customers being ‘significantly more likely to
rate the brand highly across a range of attributes’.
Key to the success of this partnership was the long-
term commitment to consumer benefits shown by the
brand. O2’s sponsorship of the venue was an extension
of their ‘A world that revolves around you’ campaign
which itself was born out of the brand’s ‘customer first’
strategy launched in 2005.
Famously, through their sponsorship of The O2 arena,
the brand launched ‘Priority Tickets’ giving their
customers the opportunity to register for concert
tickets on sale up to 48 hours before general release.
Additionally, on arrival customers were eligible for
fast-track entry, special offers and access to exclusive
zones treating them as VIPs. Many consider these
steps taken by O2 to have triggered a change in the
industry by raising standards of consumer experience
and encouraging sponsors to add true value to the
events they sponsor. This is indicative of the evolution
of the sponsorship industry which has moved from
talking to everyone (via logos, signage and branding),
through two-way communication (which offered
fans/consumers some right of reply), to targeted
personalised communications which truly add value to
the fan experience.
Frisk Special: LOYALTY February 2015
1 https://www.marketingsociety.com/the-library/2012-o2-long-term-marketing-excellence-case-study
2 http://www.brandwatch.com/wp-content/uploads/2013/05/Brandwatch-Barclays-Premier-League-Report-May-2013.pdf
3 http://www.theguardian.com/football/2013/may/30/bolton-fans-petition-quidquick-sponsorship
http://www.dailymail.co.uk/sport/football/article-2336577/Bolton-Wanderers-scrap-QuickQuid-kit-sponsorship-deal.html
These changes have led to more and more brands using sponsorship as a vehicle to capitalise on the loyalty
of fans, particularly within the sporting landscape. Within the UK for example, loyalty to a football team is
created at a young age and is doused in tradition with family and geographical links creating a community
of fans. Sponsorship enables brands to work with these team owners and rights holders to target the
customer segments of their fan base with the aim of creating and sustaining a long-term relationship.
But brand loyalty, by its very nature, is not something that can be created overnight. Brands must commit
to their partnerships over the long term, consistently delivering the kind of added value that fans are now
coming to expect, avoiding quick PR fixes that savvy fans can see through. Barclays [2], for example, have
held the title sponsorship of the English Premier League for over decade using their rights as a springboard
for a series of related campaigns including Spaces for Sport, BPL Trophy Tour and Player of the Month to
name just a few. In a difficult time for the banking sector, this long-term commitment to enhancing the fan
experience has helped consolidate the brand’s image, generating positive sentiment for both Barclays and
the league.
But even with the best will in the world, it is of great benefit that there is a good ‘perceived fit’ between
brand (sponsor) and event (rights holder) in the eyes of fans, before loyalty can be expected. As obvious
as this importance may seem, you don’t have to look far to find examples of brands and rights holders
failing to appreciate the damage that can be done by mismatched partnerships. Indeed, back in 2013, fans
of Bolton Wanderers FC protested against their team’s shirt sponsorship agreement with payday loans
company, QuickQuid [3]. Their protests were heard and the club scrapped the partnership, stating that
“we don’t want our commercial relationships to come between us and our community.’ In this instance, the
football club took action to protect their brand, an option not available to QuickQuid who received a lot of
negative press in the aftermath.
As shown by O2, sponsorship enables a vehicle to create brand loyalty. However, this is not a straightforward
campaign, sponsors must ensure their campaigns talk regularly to fans offering them content which is both
relevant and adds value. But adding value alone is not enough, it’s crucial that brands also demonstrate a
long-term commitment to the teams, events and festivals that they support if they are to truly deliver the
kind of consumer relationships which drive brand loyalty. Loyalty through sponsorship is a journey, not a
destination.
Frisk Special: LOYALTY February 2015
The loyalty paradox
Received wisdom has it that a brand’s ‘loyal’ customers are a rich source of business, that focusing efforts on
retention of them (rather than acquisition of less ‘committed’, lighter buyers) via loyalty and ‘engagement’
programmes is the route to success. However, the reality, as revealed by Professor Byron Sharp and the
Ehrenberg-Bass Institute, is different.
For a start, ‘loyalty’ in the ‘faithful, devoted, committed’ sense is not really a relevant concept when it comes
to consumer buying behaviour. Yes, brands tend to have a core of relatively frequent buyers, but this is more
about habit and laziness (it’s easy to stick with what you know) than conscious fealty. It’s near-impossible
to find examples of brands that command genuine loyalty in the sense of fanatical, ‘passionate’ repeat
purchasers that is often peddled by marketing commentators. Apple is often cited as a prime example of
a brand that inspires exceptional devotion; its buyers cast as ‘fans’, disciples even. Surely a brand that has
exceptional loyalty? Well, Apple’s loyalty (repeat purchase) is only slightly higher than would be expected
for its market share and can be explained by the in-built advantage of the unique operating systems and
software that make it more of a hassle to switch away from.
Brands have far more light buyers than heavy, ‘loyal’ ones. And there are so many of them that they make
a far more significant potential contribution to sales volume. To give one example: the purchase frequency
of Coke is so widely spread that someone who buys as little as three or more cans or bottles a year counts
as a heavy buyer. Very light buyers who hardly ever buy it dominate in the total universe of Coke buyers.
Yes, there are a few buyers who buy Coke every week, and of course they count for a lot of sales volume
– classic ‘brand loyalists’. But the paradox is that they’re not a great target for marketing. Their habits are
ingrained and comparatively unresponsive to advertising and even promotions. They’re already buying a
lot and will continue to do so. By contrast, the mass of infrequent (but typical) buyers offer great potential
for growth simply because there are so many of them and they are each ‘open’ to being nudged into at
least one more purchase if marketing efforts reach them.
LB LDN’s Planning department pops and fizzes with ideas like some kind of deranged cartoon
laboratory. This month we asked them to give us a viewpoint on Loyalty – their responses were
varied and intriguing…
IAN HILTON
Frisk Special: LOYALTY February 2015
Marketing analysts estimate that recruitment of new customers costs four to seven times as much as
retention of existing customers [1], so it’s easy to see why driving customer loyalty is the Holy Grail for most
business.
I’m an Ocado advocate. I’m beyond loyal. I tell anyone who will listen how easy, how cheap, how cornucopious
the online grocer is and I know that us loyalists are legion. So when I saw that Ocado was only just making
a profit after 15 years, and that the profit is pretty much just what Morrison’s are paying them to be their
delivery partner, I was a little surprised. How can a company that inspires such vocal customer loyalty have
so far failed to thrive?
Meanwhile, those evil energy overlords are still raking it in [2]. Presumably suffering a 15% churn [3] is easier
and more profitable than a fair pricing strategy and fixing their diabolical customer service.
There are two types of loyalty: behavioural (share of wallet) and attitudinal (share of heart). Although
Ocado is the only company I feel any loyalty for, I’m also loyal to other companies. Southern Trains, BT,
Lambeth Council. All of whom I loathe. I am forced into resentful loyalty by a lack of alternatives. That’s
behavioural loyalty. They have far more of my share of wallet than I would willingly give companies half as
hopeless as that Trinity of Misery, but there’s no real choice. I’d leave at the drop of a tariff if I felt I would
genuinely be better off with someone else.
Apple has nailed behavioural and attitudinal loyalty. Apple’s unique, beautiful and game-changing products
won hearts, and; despite super premium pricing; wallets. This week they were the first company ever to
reach a value of over $700 billion. At the end of January they recorded the highest ever quarterly profits
made by a public company, having made $18bn in just three months, that’s SIX TIMES more in the last
quarter than Google, and enough to buy up the entire S&P SmallCap 600. Their secret is simple: a brilliant
product, outstanding customer service, huge gross margins. And a lot of advertising.
Fun fact: One of our very own planners, Kit Altin came up with the name Ocado in her first job in branding.
FRANCES GIBBS
Frisk Special: LOYALTY February 2015
When it comes to brands, there is no such thing as loyalty, there is only habit.
There is loyalty to an idea, a cause or a friend. That goes hand in hand with honour, honesty, belief and
decency. None of these high concepts are relevant to your choice of toothpaste.
There are several paradoxes about apparent brand loyalty (i.e. people tending to buy the same brand each
time they shop a category).
The first is that bigger brands tend to have more loyal customers. But that is an illusion. It’s an illusion
because big brands have disproportionate numbers of light category users. These people have low interest
in the category and default to bigger brands because they aren’t interested enough to think about their
choice. That’s the second paradox – the less interested someone is in a category, they more loyal they
appear to be.
Smaller brands thus tend to have a higher proportion of people who care about the category – because
those people care enough to have sought out and tried the littler brands. But those people are probably
heavier category users and buy lots of brands, thus appearing less loyal.
Loyalty is thus not only an illusion, it is completely misleading.
The truth is that in almost every category of product, brands share users in proportion to market share.
If brand X has 20% market share, then ~20% of every other brand’s users will also use brand X. The only
exceptions to that rule are where the pattern fits but the numbers are multiplied, such as in food retail,
where Tesco has 30% share and 90% of all other retailer’s shoppers also shop at Tesco (the trebling pattern
holds across the board, except at the edges, e.g. overlap between M&S and Iceland).
Loyalty to brands is a myth. Save the concept for things that matter to people. Be loyal to your friends.
Don’t pretend to be loyal to brands and don’t pretend that your brand engenders loyalty in any meaningful
sense.
JUSTIN CLOUDER
References:
1 – Ipsos
2 – http://www.theguardian.com/business/2015/jan/29/energy-companies-boost-profits-despite-gas-price-cuts
3 - Capgemini
Frisk Special: LOYALTY February 2015
Loyalty is one of the most misused words in marketing. It suggests an unshakeable commitment to a
brand or service, whereas in fact it usually reflects habitual behaviour borne of inertia rather than active
preference. But whatever the truth behind it, it’s good for brands to have - provided they understand how
to keep it.
ELENI CHALMERS
Frisk Special: LOYALTY February 2015

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Frisk February 2015: Loyalty

  • 2. Frisk Special: LOYALTY February 2015
  • 3. Frisk Special: LOYALTY February 2015 Howdy. Welcome to the latest Frisk special. We’re deep into 2015 now – still not quite sure how that happened, something to do with the Higgs Boson probably – and it’s been making us think a lot about the subject of Loyalty. Did you make a new year’s resolution? And if so, did you stick to it? We’ve found a fairly even split between people who’ve remained loyal to their self-imposed vows and those who gave up after about fifteen minutes… Of course, Loyalty spreads much wider than simply remembering to cycle to work because you told everyone you would. Giles Hedger’s Admap piece, which you’ll find within, posits that we need to think about brand loyalty as an outcome of successful brand building. We’ve also spoken to Canvas8, who suggested that a key facet of building customer loyalty is to be a bit annoying and rude, as well as quizzing the team in Arc Sponsorship for their views on the loyalty journey. And, as ever, we’ve picked the brains of the Planning department to get their own entertainingly disparate views on the subject. So, plenty there to stimulate the ol’ grey cells. I do hope that you enjoy what you read. If so – or indeed, if not – be sure to fire some feedback into the Twittersphere: the handle’s @LeoBurnettLDN. See you next month for more of this thoughtsmithery. Daniel Bevis Senior Knowledge Editor Leo Burnett London
  • 4. Frisk Special: LOYALTY February 2015 “If you think about brand loyalty as an outcome of successful brand building, as opposed to a marketing objective in its own right, several good things happen. First, you sidestep fifty years of plaguing and unresolved questions around the meaning, anatomy, cause, measurement and pursuit of brand loyalty. Second, you refocus on the long-term charisma of a brand as opposed to short-term repeat purchase tactics. And third, you give yourself an immediate competitive advantage, because the majority of your peers will still be stuck down that dark and L-shaped rabbit hole.” BUILD BRANDS NOT LOYALTY…. Our CSO, Giles Hedger, has his own a perspective on Loyalty in his recently published article:
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  • 7. Frisk Special: LOYALTY February 2015 According to the world of online dating, coming across as an arse to some can make others love you more. If having haters makes those who like you like you all the more, does the same psychology apply to our relationships with brands? And does it actually pay for a brand to rub part of its audience up the wrong way? We work closely with Canvas8, a deep-dive insight network who ‘make the complex simple by helping us make the simple significant’. We posed the Loyalty question to them this month, and they came back with this absolute belter on how to artfully irritate people… IS THERE AN ART TO PISSING PEOPLE OFF? Bailey Weaver (2010) © “Don’tmessagemeif:Baconisimportant toyou…Youthinkworldpeaceisan actualgoalofsomesort…Youusesexas currencyinarelationship…Youbelieve everyoneisentitledtotheiropinion,no matterhowinane… Fouroutoffiveof yourphotosareofyouatweddings… YoureadVice.” [1] And the list goes on. This isn’t a joke; it’s taken from an actual profile on OKCupid. Drawing on claims made by the site’s co-founder, Christian Rudder, in his book Dataclysm, the chances are, for each person who considers this man to be an objectionable prick, someone else will be falling over themselves to drop him a line. Because apparently, “having haters somehow induces everyone else to want you more. People not liking you somehow brings you more attention, entirely on its own.” [2]
  • 8. Frisk Special: LOYALTY February 2015 So if we can say this about the unscrupulous world of online dating, can we apply similar precepts when thinking about our relationships with brands? In Dataclysm, Rudder analyses years of data from OKCupid to proffer insights into, as the book’s subtitle states, ‘who we are when we think no one’s looking’. Writing in relation to attractiveness ratings, he somewhat counterintuitively concludes that, “To be universally liked is to be relatively ignored. To be disliked by someone is to be loved all the more by others.” [2] It comes down to something called ‘variance’ - “a measure of how widely data is scattered around a central value.” [2] In other words, if 3 is the average, the combination of 1 and 5 has a greater variance than 2 and 4. Rudder found that “A very low-rated woman (20th percentile) with high variance in her votes gets hit on about as much as a typical woman in the 70th percentile.” Overall, “being highly polarising will in fact get you about 70% more messages.” The equivalent of variance in marketing-speak is ‘brand dispersion’, and similar to the online dating paradigm, in lists of ‘most hated’ and ‘most popular’ brands, the same names crop up: Google, Apple, Facebook etc. Perhaps there’s an element of statistical inevitability at play, given the ubiquity and scale of such brands, but for Associate Professor of Marketing Michael Wiles, brand dispersion is primarily attributable to a tension between “how brands deliver on value proposition” and “the values that people hold dear.” HATE AT FIRST SIGHT Ed Yourdon (2013) ©
  • 9. Frisk Special: LOYALTY February 2015 Take Facebook. It’s a service that connects you with your friends, and it does this very well. Yet, when it comes to matters of privacy, Facebook is highly problematic - morally spurious, even. “These values are at odds, and fulfilling one comes at the expense of another,” explains Wiles. “If you value privacy, you’re a hater; if you value connecting with your friends, you’re a lover.” [3] For Chris Malone, co-author of The Human Brand, the way we perceive and interact with brands - and ultimately whether we love or hate them - is determined by two categories of perception: warmth and competence. Terms coined by social psychologists, they denote “the processes we go through when subconsciously and instantaneously trying to ascertain and judge the intentions and abilities of others.” [4] As humans, our skill at reading people according to the warmth and perception framework has been evolving ever since the ‘the original game of Survivor.’ [4] Only now, we invoke this instinctive, primal deftness when we’re trying to suss out brands. These notions of warmth and competence historicise Wiles’ theory: “How brands deliver on value proposition” is synonymous with competence; “the values that people hold dear” relates to warmth and our impressions of others’ intentions towards us. If, to recall our previous example, privacy is important to you, then warmth would be the last emotion evoked by Google or Facebook. “Warmth and competence perceptions trigger predictable patterns of emotion,” explains Malone. “Particularly in the case of brands we dislike, theses emotions can be really strong.” [4] Whereas positive impressions of a brand’s intentions and competence only develop over time - and through regular reinforcement - if a company demonstrates ill-will and incompetence, (such as with the BP oil spill), we become very angry very quickly. It’s a case of ‘hate at first sight’. [4] Mark Kidsley (2013) ©
  • 10. Frisk Special: LOYALTY February 2015 Knowing that you fall into a brand’s love or hate contingency can be very seductive - even if hate is the more rousing emotion. “All the evidence we’ve seen suggests that our brains perceive, respond and interact with brands as if they were tribes,” says Malone. “My interactions with the tribe inform my expectations, beliefs and loyalties… In terms of loving and hating, the degree to which a brand demonstrates it is aligned with, or against, your principles will make them more attractive to you.” [4] So, polarisation can be a matter of principle. Take Chick-Fil-A, a large, US, chicken shop chain known for its religious and conservative leanings. In 2012, the CEO made some controversial comments about gay marriage, and it was revealed that the company helped fund an anti-gay organisation. On the one hand there were pickets and boycotts; on the other, it secured more regulars because of the CEO’s stance. In the same year as the scandal, their sales increased by 12%. [6] The basic premise of social identity theory states that identifying with a group helps us to define our own identity, as well as experience a sense of belonging. As such, we relate to ‘in-groups’, we disavow ‘out- groups’, and simultaneously exaggerate the differences between ‘us’ and ‘them’. Ultimately, “the degree to which we’re disliked by one group makes us more attractive to another.” [4] It’s simply part of what it means to be human, a powerful force of social cohesion. BELONGING chotda (2008) ©
  • 11. Frisk Special: LOYALTY February 2015 In the same way that Marmite’s leveraging of ‘love it or hate it’ is so successful that ‘marmite’ has become a neologism for anything divisive, in 2011 Miracle Whip built an entire campaign around the tagline ‘We’re not for everyone. Are you Miracle Whip?’ A slew of famous faces came out to rally for and against the product, with Pauly D from Jersey Shore saying he’d break up with a girl if she liked Miracle Whip. During the campaign, sales increased by 14% and there was a staggering 631% increase in social media postings - presumably from people passionately defending and denigrating the wannabe mayonnaise. [5] And then there’s Lululemon. After complaints about transparency and piling on Lululemon yoga pants, and a product recall, the company’s founder Chip Wilson declared that not all women’s bodies ‘worked’ in their leggings. Lululemon has been tipped as a brand that won’t survive 2015. Yet it’s still here… Malone explains how “Lululemon built this tremendous loyalty without competing on price or without a lot of advertising. It was very much about getting into communities, building relationships with yoga instructors and getting people into stores for yoga classes. After the controversy, they continued to grow, just not as fast: 5% instead of 40%. In one respect, it’s a clear example of how the CEO’s comments were a negative demonstration of intention and warmth - and it had a harmful, measurable impact. Yet on the other hand, it evidenced the loyalty of their core customers.” [4] To many, the imputation that some women are too fat for yoga is odious; but to those whose ass looks great in any asana, you’re part of an elite club. Being in this exclusive gangis a form of bonding between you and your fellow hot, skinny yoginis; the mark of membership is, of course, the sporting of Lululemon head to toe. In 2012, Grey Poupon mustard played with this very concept of exclusivity. They encouraged people to apply to their ‘Society Of Good Taste’, then applicants’ Facebook pages were vetted for ‘good taste’ credentials. And even more brazenly, Abercrombie & Fitch CEO Michael Jeffries infamously proclaimed, “we go after cool kids, we go after the attractive, all-American kid with a great attitude and lots of friends. A lot of people don’t belong [in our clothes] and they can’t belong. Are we exclusionary? Absolutely.” [7] ARE YOU IN OR OUT? Lululemon (2015) ©
  • 12. Frisk Special: LOYALTY February 2015 SOURCES 1. ‘This guy’s insane “Don’t message me if…” list on OKCupid probably rules you out. He’s that good.’, Happy Place (July 2014) 2. Dataclysm: who we are when we think no one’s looking, Christian Rudder (2014) 3. Interview with Associate Professor Michael Wiles conducted by the author 4. Interview with Chris Malone conducted by the author. 5. ‘Make the most of a polarizing brand’, Harvard Business Review (November 2013) 6.’Chick-Fil-A sales soar in 2012 despite bad PR’, Huffington Post (November 2013) 7. ‘Has Abercrombie & Fitch’s CEO really made a ‘Big fat marketing mistake’, The Guardian (May 2013) 8. ‘10 brands that will disappear in 2015’, 24/7 Wall St (July 2014) 9. ‘Spirit Airlines: embracing the hate’, GlobalNewsWire Video (July 2014) By all accounts - and in many different respects - being polarising puts you in a fortuitous position. The more repellent you are, the more magnetic you become. And this reciprocity results in an intensification of the love and the hate because, as humans, our desire to identify with a group that shares our values is instinctive and compelling. As far as brands are concerned, making unequivocal statements about who you are, what you stand for or against is, opines Malone, ‘humanising’ - it makes it easier for us to know where we stand, and that’s something we like. [4] In an article for Harvard Business Review, Wiles et al suggest that manufacturing polarisation can be a good thing. ‘Driving a wedge in the market’ by targeting a specific demographic or being provocative are two ways that a brand can effectively win over one group by alienating another. [5] McCoy’s ‘Man Crisps’ and Yorkie’s ‘It’s Not For Girls’ immediately spring to mind. Yet, warns Malone, “it’s not the kind of thing you’d want to conduct an opinion poll about in the way a politician might. Saying and doing what you think people want you to won’t work. We see through the pandering and patronising as we’re judging [brands] the way we would an individual: do they have integrity? are they being consistent? do they stand for something? etc.” If you have an inherently divisive brand, then, say Wiles et al, it’s possible to capitalise on this quality equally by placating or poking the haters; essentially by amplifying a polarising attribute. For example, General Mills started its own blog and partnered with the Celiac Disease Foundation to assuage critics’ concerns about obesity. Ryanair winds up its detractors by making scandalous proposals such as charging for going to the loo. Miracle Whip was able to galvanise the ‘middle-of-the-road consumers’ to try the faux mayo by dialling up - and owning up to - its divisive nature. People wanted to know what the fuss was about. [5] Or, you can take the humorous approach. [3] Spirit Airlines did a phenomenal job of saying ‘up yours’ to its vociferous slanderers withhatethousandmiles.com. By publicly acknowledging its disgruntled flyers, subtly mocking their comments, and not apologising, they sent out a clear message: “This is who we are. Take it or leave it. If you don’t like it, go somewhere else.” [9] [4] There is an art to pissing people off; but it must come from a place of unwavering principle, or from knowing that your product has such a strong identity, flavour, style or aesthetic that some people are guaranteed to absolutely love it; that you can afford to say ‘f**k the rest’. From getting laid to convincing people to try condiments, it seems the winning formula = “lots of yes, lots of no, but very little meh.” [2] INSIGHTS AND OPPORTUNITIES
  • 13. Frisk Special: LOYALTY February 2015 As a vehicle to engage directly with people, not as consumers but as fans, sponsorship presents a unique opportunity to deliver brand loyalty, often unachievable with more traditional marketing techniques. By tapping into pre-existing passion points – a favourite sports team, musician, or arts festival for example – sponsors can effectively ‘piggyback’ on the allegiance afforded to these and convert it into brand loyalty. That said, whilst the ability of sponsorship to delivery lifelong customers is hard to deny, there is much more ambiguity over how to effectively execute such a strategy. One thing’s for sure, when a brand attempts to muscle in on consumers’ enjoyment of the things they love most, the stakes are high. Enhance that experience and you’ll convert passionate fans into loyal customers… damage it and you’ll turn them off forever. What the Arc Sponsorship team (our specialists within the Leo Burnett Group) don’t know about sponsorship really isn’t worth knowing. This month, we’ve asked them to flex their brain-muscles on the subject of Loyalty as it relates to their specialist subject of Sponsorship… THE APPEAL OF SPONSORSHIP FOR DELIVERING BRAND LOYALTY One of the strongest, and most commonly cited, case studies for creating brand loyalty through sponsorship is that of O2’s sponsorship of the Millennium Dome [1], now known as The O2 Arena. Reported results show that the activations arising from this partnership led to customers being ‘significantly more likely to rate the brand highly across a range of attributes’. Key to the success of this partnership was the long- term commitment to consumer benefits shown by the brand. O2’s sponsorship of the venue was an extension of their ‘A world that revolves around you’ campaign which itself was born out of the brand’s ‘customer first’ strategy launched in 2005. Famously, through their sponsorship of The O2 arena, the brand launched ‘Priority Tickets’ giving their customers the opportunity to register for concert tickets on sale up to 48 hours before general release. Additionally, on arrival customers were eligible for fast-track entry, special offers and access to exclusive zones treating them as VIPs. Many consider these steps taken by O2 to have triggered a change in the industry by raising standards of consumer experience and encouraging sponsors to add true value to the events they sponsor. This is indicative of the evolution of the sponsorship industry which has moved from talking to everyone (via logos, signage and branding), through two-way communication (which offered fans/consumers some right of reply), to targeted personalised communications which truly add value to the fan experience.
  • 14. Frisk Special: LOYALTY February 2015 1 https://www.marketingsociety.com/the-library/2012-o2-long-term-marketing-excellence-case-study 2 http://www.brandwatch.com/wp-content/uploads/2013/05/Brandwatch-Barclays-Premier-League-Report-May-2013.pdf 3 http://www.theguardian.com/football/2013/may/30/bolton-fans-petition-quidquick-sponsorship http://www.dailymail.co.uk/sport/football/article-2336577/Bolton-Wanderers-scrap-QuickQuid-kit-sponsorship-deal.html These changes have led to more and more brands using sponsorship as a vehicle to capitalise on the loyalty of fans, particularly within the sporting landscape. Within the UK for example, loyalty to a football team is created at a young age and is doused in tradition with family and geographical links creating a community of fans. Sponsorship enables brands to work with these team owners and rights holders to target the customer segments of their fan base with the aim of creating and sustaining a long-term relationship. But brand loyalty, by its very nature, is not something that can be created overnight. Brands must commit to their partnerships over the long term, consistently delivering the kind of added value that fans are now coming to expect, avoiding quick PR fixes that savvy fans can see through. Barclays [2], for example, have held the title sponsorship of the English Premier League for over decade using their rights as a springboard for a series of related campaigns including Spaces for Sport, BPL Trophy Tour and Player of the Month to name just a few. In a difficult time for the banking sector, this long-term commitment to enhancing the fan experience has helped consolidate the brand’s image, generating positive sentiment for both Barclays and the league. But even with the best will in the world, it is of great benefit that there is a good ‘perceived fit’ between brand (sponsor) and event (rights holder) in the eyes of fans, before loyalty can be expected. As obvious as this importance may seem, you don’t have to look far to find examples of brands and rights holders failing to appreciate the damage that can be done by mismatched partnerships. Indeed, back in 2013, fans of Bolton Wanderers FC protested against their team’s shirt sponsorship agreement with payday loans company, QuickQuid [3]. Their protests were heard and the club scrapped the partnership, stating that “we don’t want our commercial relationships to come between us and our community.’ In this instance, the football club took action to protect their brand, an option not available to QuickQuid who received a lot of negative press in the aftermath. As shown by O2, sponsorship enables a vehicle to create brand loyalty. However, this is not a straightforward campaign, sponsors must ensure their campaigns talk regularly to fans offering them content which is both relevant and adds value. But adding value alone is not enough, it’s crucial that brands also demonstrate a long-term commitment to the teams, events and festivals that they support if they are to truly deliver the kind of consumer relationships which drive brand loyalty. Loyalty through sponsorship is a journey, not a destination.
  • 15. Frisk Special: LOYALTY February 2015 The loyalty paradox Received wisdom has it that a brand’s ‘loyal’ customers are a rich source of business, that focusing efforts on retention of them (rather than acquisition of less ‘committed’, lighter buyers) via loyalty and ‘engagement’ programmes is the route to success. However, the reality, as revealed by Professor Byron Sharp and the Ehrenberg-Bass Institute, is different. For a start, ‘loyalty’ in the ‘faithful, devoted, committed’ sense is not really a relevant concept when it comes to consumer buying behaviour. Yes, brands tend to have a core of relatively frequent buyers, but this is more about habit and laziness (it’s easy to stick with what you know) than conscious fealty. It’s near-impossible to find examples of brands that command genuine loyalty in the sense of fanatical, ‘passionate’ repeat purchasers that is often peddled by marketing commentators. Apple is often cited as a prime example of a brand that inspires exceptional devotion; its buyers cast as ‘fans’, disciples even. Surely a brand that has exceptional loyalty? Well, Apple’s loyalty (repeat purchase) is only slightly higher than would be expected for its market share and can be explained by the in-built advantage of the unique operating systems and software that make it more of a hassle to switch away from. Brands have far more light buyers than heavy, ‘loyal’ ones. And there are so many of them that they make a far more significant potential contribution to sales volume. To give one example: the purchase frequency of Coke is so widely spread that someone who buys as little as three or more cans or bottles a year counts as a heavy buyer. Very light buyers who hardly ever buy it dominate in the total universe of Coke buyers. Yes, there are a few buyers who buy Coke every week, and of course they count for a lot of sales volume – classic ‘brand loyalists’. But the paradox is that they’re not a great target for marketing. Their habits are ingrained and comparatively unresponsive to advertising and even promotions. They’re already buying a lot and will continue to do so. By contrast, the mass of infrequent (but typical) buyers offer great potential for growth simply because there are so many of them and they are each ‘open’ to being nudged into at least one more purchase if marketing efforts reach them. LB LDN’s Planning department pops and fizzes with ideas like some kind of deranged cartoon laboratory. This month we asked them to give us a viewpoint on Loyalty – their responses were varied and intriguing… IAN HILTON
  • 16. Frisk Special: LOYALTY February 2015 Marketing analysts estimate that recruitment of new customers costs four to seven times as much as retention of existing customers [1], so it’s easy to see why driving customer loyalty is the Holy Grail for most business. I’m an Ocado advocate. I’m beyond loyal. I tell anyone who will listen how easy, how cheap, how cornucopious the online grocer is and I know that us loyalists are legion. So when I saw that Ocado was only just making a profit after 15 years, and that the profit is pretty much just what Morrison’s are paying them to be their delivery partner, I was a little surprised. How can a company that inspires such vocal customer loyalty have so far failed to thrive? Meanwhile, those evil energy overlords are still raking it in [2]. Presumably suffering a 15% churn [3] is easier and more profitable than a fair pricing strategy and fixing their diabolical customer service. There are two types of loyalty: behavioural (share of wallet) and attitudinal (share of heart). Although Ocado is the only company I feel any loyalty for, I’m also loyal to other companies. Southern Trains, BT, Lambeth Council. All of whom I loathe. I am forced into resentful loyalty by a lack of alternatives. That’s behavioural loyalty. They have far more of my share of wallet than I would willingly give companies half as hopeless as that Trinity of Misery, but there’s no real choice. I’d leave at the drop of a tariff if I felt I would genuinely be better off with someone else. Apple has nailed behavioural and attitudinal loyalty. Apple’s unique, beautiful and game-changing products won hearts, and; despite super premium pricing; wallets. This week they were the first company ever to reach a value of over $700 billion. At the end of January they recorded the highest ever quarterly profits made by a public company, having made $18bn in just three months, that’s SIX TIMES more in the last quarter than Google, and enough to buy up the entire S&P SmallCap 600. Their secret is simple: a brilliant product, outstanding customer service, huge gross margins. And a lot of advertising. Fun fact: One of our very own planners, Kit Altin came up with the name Ocado in her first job in branding. FRANCES GIBBS
  • 17. Frisk Special: LOYALTY February 2015 When it comes to brands, there is no such thing as loyalty, there is only habit. There is loyalty to an idea, a cause or a friend. That goes hand in hand with honour, honesty, belief and decency. None of these high concepts are relevant to your choice of toothpaste. There are several paradoxes about apparent brand loyalty (i.e. people tending to buy the same brand each time they shop a category). The first is that bigger brands tend to have more loyal customers. But that is an illusion. It’s an illusion because big brands have disproportionate numbers of light category users. These people have low interest in the category and default to bigger brands because they aren’t interested enough to think about their choice. That’s the second paradox – the less interested someone is in a category, they more loyal they appear to be. Smaller brands thus tend to have a higher proportion of people who care about the category – because those people care enough to have sought out and tried the littler brands. But those people are probably heavier category users and buy lots of brands, thus appearing less loyal. Loyalty is thus not only an illusion, it is completely misleading. The truth is that in almost every category of product, brands share users in proportion to market share. If brand X has 20% market share, then ~20% of every other brand’s users will also use brand X. The only exceptions to that rule are where the pattern fits but the numbers are multiplied, such as in food retail, where Tesco has 30% share and 90% of all other retailer’s shoppers also shop at Tesco (the trebling pattern holds across the board, except at the edges, e.g. overlap between M&S and Iceland). Loyalty to brands is a myth. Save the concept for things that matter to people. Be loyal to your friends. Don’t pretend to be loyal to brands and don’t pretend that your brand engenders loyalty in any meaningful sense. JUSTIN CLOUDER References: 1 – Ipsos 2 – http://www.theguardian.com/business/2015/jan/29/energy-companies-boost-profits-despite-gas-price-cuts 3 - Capgemini
  • 18. Frisk Special: LOYALTY February 2015 Loyalty is one of the most misused words in marketing. It suggests an unshakeable commitment to a brand or service, whereas in fact it usually reflects habitual behaviour borne of inertia rather than active preference. But whatever the truth behind it, it’s good for brands to have - provided they understand how to keep it. ELENI CHALMERS
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