From Brand Loyalty to Consumer Loyalty
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by Kevin Edwards
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From Brand Loyalty to Consumer Loyalty
- 1. From Brand Loyalty to Consumer Loyalty Kevin Edwards Global Strategy Director, Awin
- 3. The changing nature of loyalty Retailers have faced a changing landscape in the last 10 years 2007 2015 Brand loyalty -60% $32b brand loyalty Lost profit
- 4. The changing nature of loyalty 8% consumers consider themselves to be firmly committed loyalists 46% more likely to try new brands than they were five years ago 42% of consumers say they love trying new things 49% of consumers - while preferring to stick with what they know - can be moved to experiment
- 5. The internet has altered the brand/consumer dynamic
- 9. After the internet Consumer Influencer Blogger Community forum Comparison Media House Cashback Coupon Arbitrators Brands
- 10. After the internet Consumer Influencer Blogger Community forum Media House Comparison Cashback Coupon Arbitrators Brands
- 11. Amazon sets the modern benchmark for brand loyalty Improved user experience and personalised offering means users are willing to pay to be loyal to Amazon
- 12. More power to the consumer “To provide better access for consumers and businesses to digital goods and services across Europe.” Digital Single Market Pillar #1
- 13. Case study: Ofcom ‘Text-to-Switch’ legislation
- 14. Case study: Ofcom ‘Text-to-Switch’ legislation Text-to- Switch Cyber Week 2018 Cyber Week 2017 Cyber Week 2016SIMO 12M SIMO 30D Handsets 104% YoY Market Shift 51% WoW Market Shift 25% YoY Market Shift 13% YoY Market Shift 27% WoW Market Shift 6% WoW Market Shift
- 15. Millennials: The promiscuous generation Expectations around choice make younger consumers harder to reach “The millennial generation has a wider range of choices than any generation before them, they're promiscuous in their brand loyalty. It makes it harder work for all of us to earn the loyalty of the millennial generation." Steve Easterbrook, CEO, McDonalds, speaking in 2014
- 16. Using trusted influencers to break through Influencers more trusted than brands I trust what influencers say about brands much more than what brands say about themselves in their advertising 63%
- 17. Case study: VOXI and The Hook Aaron Chalmers 288k Likes Stuggy 2.1m Likes Gaz Beadle 779k Likes Results against set targets Impressions +50% Sales +27% Savings on acquisition costs 16%
- 18. The importance of cultivating trust and confidence Consumer Influencer Blogger Community forum Comparison Media House Cashback Coupon Arbitrators Brands
- 19. Constant reinvention of the HP program to drive growth The HP Days Campaign established a platform for HP to showcase their new Spectre Folio, a 2-in-1 laptop with a unique leather finish that exemplifies the best of HP design and innovation. The goal of the campaign was to generate buzz about the product while promoting a 72-hour flash sale and driving customers to HP. HP partnered with Digital Trends for a giveaway of a Spectre Folio and a gift card. • created custom content, based on their positive product reviews, already live on site, of the Spectre Folio and related laptops. • promotions through social channels, newsletters, and a featured spot on Digital Trends Live. • Giveaways featured in articles • $350 discount on the Spectre laptop, deep discounts on other items, and deals like free shipping and returns. 684% revenue uplift
- 20. Consumer reliance on affiliates Awin surveyed 1,800 online consumers in August 2019 Measuring both qualitative and quantitative How often do consumers use affiliate content to shop online? And how important are they in influencing shopping decisions? Price comparison Cashback /Loyalty Coupons /Offers Social Media /Blogger
- 21. 2 in 3 01 2 in 3 consumers have used an affiliate site in the last six months Comparison 02 Price comparison the most popular (57%) 1 in 4 03 Only 1 in 4 of the over 60s think specialist blogs are important in purchase decisions 6 in 10 04 Compared to 6 in 10 18-32 year olds 05 65% 65% of 18-32 year olds have based a buying decision on a coupon code 06 33% Compared to 33% of 60+ 07 80% 80% believe price comparison sites have an important role to play in buying decisions 08 21% 21% of 18-32 year olds go to social media to start their shopping
- 22. Personal data and the value exchange 83% of 18-32 year olds expect the internet and the services they use online to be free. An ad funded internet.
- 23. Case study: Vouchercloud geo-targeting campaign Results Mobile sales during the campaign increased 282% Revenue from mobile sales increase 156%
- 24. Clear personal benefits instil loyalty InspirationInfluencers Inspiration/adviceBloggers Inspiration/adviceMedia House AdviceForum Advice/savingsComparison site SavingsCashback SavingsCashback SALES FUNNEL
- 25. “The true source of loyalty is to create benefits for people.” Terry Leahy, former CEO of Tesco
Editor's Notes
- Today I’d like to talk to you about the nature of customer loyalty in the modern digital marketplace and how this concept has undergone a radical transformation over the last couple of decades. It’s a transformation that is inextricably linked to the rise of the internet and ecommerce and it’s one that I think has had significant ramifications for advertisers and how they can effectively reach their audiences today. This transformation means consumers are finding their information across a broad range of sources; comparison sites, loyalty platforms, sites offering the best deals and social media amongst others. Audiences are building new loyalties with these properties who they trust to guide them when making online purchases. Because of this displacement of consumer trust, such affiliate services now fulfil a vitally important role in marketing in terms of inspiration, awareness and ultimately conversions. Today I’ll discuss how we’ve reached this age of consumer disloyalty, and the new importance of building relationships with brand partners to remain competitive online.
- Let’s start by defining what we mean by loyalty in this sense and acknowledging that it doesn’t equate to the other ways in which we tend to use it in our lives more generally. Brand loyalty isn’t the same as loyalty to your family for instance, or loyalty to your football team, or your partner. Brand loyalty tends to mean those companies you buy from who you wouldn’t consider buying a similar product or service from a rival competitor. This might be due to the positive associations you have around a particular brand: the great customer experience they offer, or the social status you accrue by buying its products and what this then says about you as a person.
- Much research has been undertaken that looks into this notion of brand loyalty and how, to a large extent, the phenomenon is rapidly decreasing. The accountancy firm Deloitte conducted one such study with consumers in the US and found that between 2007 and 2015, the number of shoppers who could identify a favourite retailer had dropped by 60%. Based on that figure Deloitte suggested that this amounted to a loss of around $32bn in profits for these brands.
- A more recent survey by the data insights firm Nielsen corroborated these findings. In it, they found that just 8% of consumers considered themselves to be firmly loyal to a brand, meaning 92% have no qualms whatsoever in shopping around. In fact, the prospect of experimenting with new brands was a rising phenomenon among shoppers compared to five years ago, and for almost half of them that prospect was an enjoyable experience.
- This dynamic, between consumers and brands has radically altered, and this is largely down to the effects of the internet. The web has empowered individuals, giving them more choice and control over every facet of their lives. Whether you need a new bank, a new job or even a new lover, all of these things are attainable now with the click of a few buttons. And shopping is no different. Ecommerce provides more choice and more control over where and how consumers spend their money. In doing so it has eroded the loyalty that any consumers might have had towards any one brand.
- Let’s take a look at how this relationship between consumers and brands has changed. Before the internet consumers were faced by a very finite selection of retailers and brands that they could conceivably access. This was mostly because of physical boundaries Did the retailer have a physical presence in the local area? Did the retailer have a means of delivering its goods to the customer? Was the retailer able to promote its products or services to the customer in their area?
- The internet profoundly changed this. Physical stores were no longer a necessity, the logistics of delivery became far simpler, and online advertising was able to reach anyone anywhere with an internet connection at a far cheaper rate. This necessarily reduced the barriers to entry for retailers and brands and led to a far more competitive space where more and more of them were vying for consumer attention.
- Whilst there were undoubted benefits to this new influx of competition for consumers, it also led to consumers being overwhelmed by choice, with the wide variety of competing brands and products arguably making it more difficult than ever to choose the one you actually wanted to purchase. This phenomenon is known by psychologists as the ‘paradox of choice’ and is a sentiment summed up particularly well by Aldi’s TV advert in Australia.
- This paradox of choice has prompted the need for some form of guidance or arbitration. These arbitrators have always existed in some form. Shoppers have always sought out advice and guidance prior to buying a new product or from a new brand (via friends & family, newspaper reviews, magazine articles, TV and radio shows, etc). But the volume of consumer choice that the internet facilitated has placed ever more importance upon these sources of advice and recommendation. And the appetite for these services has laid the foundations for an entire industry of arbitration: we need trusted shortcuts in a world of infinite choice.
- Take the example of booking a summer holiday. You might initially be inspired by a blogger or influencer whose photography and travel diary incite you to go to a particular destination. You might then search out more information on the destination and recommended local accommodation via an established media house’s magazine site or a community forum where fellow travellers have shared their experiences of visiting before. And then, to ensure you are getting the best value for your money you might go to a price comparison or meta search site, or cashback or discount code site. All of these sites play an invaluable role in helping consumers find the right brand or product for them.
- All this is not to suggest that there is no such thing as brand loyalty anymore though. Amazon’s Prime scheme is a perfect illustration of modern brand loyalty in action. Amazon’s approach has always been quite simple. Understand what customers most value and find a solution that they then consider a clear personal benefit that they are willing to return to repeatedly and pay for. Back in 2005, Amazon surveyed customers on the biggest issues they faced when purchasing items online. The biggest was the cost of delivery and shipping. So they removed this cost immediately as part of Prime membership, instantly setting the service apart from its competitors. This has been a hugely effective tactic. Today Amazon has over 100m Prime members in the US alone who pay $99 p/a. Their customer retention rate for members after a year is 93%, and after two years is a staggering 98%. By bundling in additional service benefits like the exclusive sales and savings members get access to on Prime Day, or the free media content they can access through Prime Video, Prime Music and Prime Reading, Amazon make its offering an increasingly compelling one to remain loyal to. And those loyal members are clearly of value to Amazon, spending more than double the amount of money on the site than non-members.
- However a rare misstep from Amazon provides an enlightening example of where customer loyalty arguably ends and customer complacency begins. Amazon’s Dash buttons were launched in 2015 and provided customers with a physical button they could install at home and press when they ran out of a selection of household goods (dried pasta, laundry detergent, cat food, etc.). Following a legal case in Germany this year that successfully argued that these buttons violated consumer protection laws there (because prices were not displayed at the point of purchase) the buttons have now been discontinued by Amazon. The ruling is an interesting one as it clearly demonstrates an example of regulators attempting to protect and extend customer choice and ensure shoppers are empowered to decide who they buy from.
- The Amazon Dash ruling is just one example of a general current trend towards this kind of customer empowerment. And in fact we can see a concerted push coming from regulators and policy makers around the world (but particularly in Europe) which is focused upon improving customer choice, removing the friction from ecommerce and generally making it easier to change your product or service provider in industries that have historically been quite difficult to navigate and alter your status within. The EU’s Digital Single Market is probably the biggest illustration of this kind of project with one of its three core pillars being to provide “better access for consumers and businesses to digital goods and services across Europe.” Its PSD2 legislation, which was launched at the start of January last year, promises to revolutionise how individuals manage their finances online, and its UK offshoot ‘Open Banking’ has already helped to usher in a new surge of innovation in the fintech sector there.
- Telecoms is another sector that is ripe for this kind of disruption and, in the UK, the trade body Ofcom’s new initiative ‘Fairness for Customers’ is designed to make it ever easier for customers to switch their providers. Following the introduction of their ‘Text-to-Switch’ legislation on 1st July 2019, which allows users to more easily change their phone contract via text, Awin monitored the effects across its various telecoms programmes to see how the legislation change might impact consumer behaviour.
- Sure enough we saw a massive amount of activity following the change in law. The week-on-week and year-on-year changes witnessed across sim-only and handset deals all showed positive uplift, with the week that the law was enacted representing the 3rd biggest performing week the market has ever seen on the network behind only the Cyber Weeks of 2016 and 2018. Overall, the mobile market on Awin increased in sales volume by 37% week-on-week (WoW), and 57% year-on-year (YoY), suggesting a clear appetite from UK telecoms customers to switch their loyalties when given the means of doing so.
- If the loss of brand loyalty is in part thanks to increased choice and new legal frameworks and regulation empowering consumers, it may also be because of changing attitudes and expectations from younger generations too. This was something that Steve Easterbrook, McDonald’s current CEO, recognised back in 2014 when he characterised millennial customers as being more ‘promiscuous’ and harder to earn the loyalty of thanks to the amount of choice they now had.
- However, that loyalty can be earned by engaging users in online spaces where they feel most comfortable. The American PR and marketing consultancy Edelman publishes an annual ‘trust barometer’ where it considers what consumers’ perception of brands is around the world. And its most recent 2019 edition highlighted precisely this point, suggesting that for two thirds of 18-34 year olds, the information they received from influencers they followed about a brand was more trustworthy than that which they received directly from the brand itself.
- One recent example from Awin demonstrated the success of incorporating this approach into a brand strategy. VOXI is the name of Vodafone’s newly-launched youth mobile offering, providing younger customers with contracts that suit their specific needs. With a target market of under-25s, Awin was tasked with supporting the launch of the new brand with a campaign that would both raise awareness of the new brand and drive sales. By partnering with social influencer network The Hook, Awin coordinated a social video campaign with a selection of prominent influencers whose audiences accurately matched VOXI’s target market. Thanks to the relevance of the campaign and its promotion by these trusted influencers the campaign surpassed all expectations and targets amassing 50% more impressions than was originally set, 27% more sales and all whilst still keeping the acquisition costs 16% below budget.
- Similarly, in the Netherlands, Awin helped the bank Centraal Beheer market their insurance products to a younger audience than normal by partnering them with the local student proposition Studentenbox. This business provides what is literally a ‘student box’ to new students moving out of their family homes and into university for the first time. Such a relocation is traditionally a major change for young adults and the Studentenbox provides them with a helping hand in these early days by providing a mix of useful recommendations, advice and a selection of freebies tailored to this younger demographic. Awin coordinated a partnership that promoted one simple dedicated product, home insurance for students, alongside the compelling offer of a free coffeemaker which saw huge success. The campaign saw hundreds of new leads generated for the bank from a younger market they would ordinarily struggle to get any engagement from and opening up a new seam of business in a space that hadn’t existed before.
- Of course, a large part of the success of these two campaigns comes down to the level of trust that audiences have with the publisher sites they use. If we refer back to an earlier slide outlining the dynamic between consumers and brands it’s important to emphasise the direction of the arrows between the consumer and the arbitrators they use online. The dynamic is a proactive one for the consumer. They are actively visiting these websites, seeking out their content, or guidance or support in helping them to understand which products or brands match their personal requirements. Brands that are able to identify the sites that most align with their target audience and who share similar values can leverage this trusted relationship to market themselves more effectively.
- Komputronik are a leading electronics retailer in Poland and wanted to engage with local content producers. Recognising the growing popularity of YouTube product reviewers in the region, Awin coordinated partnerships with four of the most popular channels in the electronics sector. In doing so, Komputronik were benefitting not only from exposure to a combined audience of over 500k subscribers but also from being positively associated with YouTubers that were trusted authorities on quality electronic products. The loyalty that local audiences had for these YouTubers was a value that Komputronik could then tap into themselves, extending their own brand value in that market. Again, the campaign was hugely effective. Traffic, sales and revenue targets were all comfortably exceeded and the exposure Komputronik saw from these partnerships helped to boost its status within Poland as a trusted retailer for electronics.
- Intro: HP’s philosophy to ‘keep reinventing’ is one that it applied to its affiliate programme in 2018. With Awin as its affiliate partner, the brand sought to continue to develop an already successful programme by incorporating new, innovative partners and tactics that could deliver an extra 20% revenue growth to the advertiser. Among a series of innovative approaches undertaken by its team, HP partnered with both new and old publishers in a series of unorthodox campaigns designed to enhance the programme. INSERT ICONS ReviTrage Coupon Attribution Campaign Awin’s new Coupon Attribution Tool allows advertisers to offer exclusive codes to affiliates on platforms where conventional tracking isn’t viable. HP worked with ReviTrage to connect with its audiences on Twitter and Reddit to reach a valuable audience in a social environment. 2. CNET Hybrid Media Campaign (FEATURE ADVERT IMAGE) Awin secured on-site exposure along with a full-page ad in CENT magazine. Readers were invited to use a unique coupon code on the HP site which would attribute sales to the channel accurately. 3. Savings.com ‘Back to School’ PPC Exchange In exchange for brand PPC rights and a commission on sales, Savings.com sent in-home mailers to 37m households worth a media value of $175k Results: Thanks to these unconventional and experimental partnerships, Awin helped HP to grow and develop their affiliate programme, generating a 20% uplift in revenue in H1 YoY, incorporating brand new partners and tactics, and delivering all this promotion at 33% above their ROAS target for the channel. INSERT ICONS 20% revenue uplift for H1 YoY 33% above target ROAS for the channel Quote: “Coupon attribution provides a way to create an all-encompassing affiliate programme and opens the door to unique partnerships which would otherwise be impossible.” Austin Ratner, US Affiliate Marketing Manager, HP.com
- And this concept around users’ proactive engagement with such online arbitrators is becoming an increasingly important one in light of digital advertising’s evolving relationship with personal data. Awin commissioned a consumer survey of 1,800 European consumers to find out not only how often they turned to online sources to help them make purchases but also how important they are to them. The survey was both qualitative and quantitative. So not only did we want to understand how frequently shoppers interacted with affiliate content, we also wanted to know how important that content is in helping them to make better decisions. We also segmented consumers by age, so we were able to see whether there are universal trends, or indeed trends that retailers need to be aware of when marketing to different age groups. By commissioning this survey we hoped to get a better appreciation of how embedded affiliate content is in a typical shopping journey and the importance of retailers building stronger partnerships with publishers in order to both drive new customers and also cement loyalty through the relationship
- So what did we find? Overall two-third of consumers have made use of them at least once in the last six months, with price comparison sites being the most popular. There are clear age differences as well that show how brands appealing to different audiences have to be aware of the nuance in which partners they choose to focus their attention on. Take the over 60s. For them only one in four believe specialist information sites have any importance in helping them with the buying decisions. For shoppers in the 18 to 32 year olds, that figure shoots up to six in ten. Inevitably, in an age of young influencers, it should come as no surprise that 18-32 years are twice as likely than the average to see social media as a starting point for their shopping experience. For the same age groups, twice as many younger consumers have made buying decisions based on discount sites offering codes, coupons and offers compared to older shoppers. More broadly, while shoppers may not make use of them, a massive four in five consumers believe price comparison sites have an important role to play in informing them, with three-quarters saying the same about coupon and voucher portals.
- The survey also found that the majority of shoppers wanted ad-funded content, that they preferred a world where these services are offered for free and paid for through advertising budgets. While overall the figure was 53%, this rose to an overwhelming 82% of 18-32 year olds, drawing a stark distinction between the ages. It’s clear that millennials expect the Internet to be free at point of access. The challenge for brands and marketers is how to walk the tricky tightrope in avoiding overstepping the mark when it comes to invading people’s privacy and monetising their personal data without user consent. Inevitably, and in an era of GDPR, we can expect Programmatic and Display to be on the receiving end of both regulators and a better informed public, with a backlash about how these businesses use personal data for marketing purpose. By contrast affiliate marketing, and marketing that involves partnerships with these online arbitrators who have already built up trust with their audiences, is much better suited to our privacy conscious era. Only the most basic data is tracked in order for affiliate tracking to function and this makes the value exchange that sits at the heart of the online ad industry that much more palatable for consumers to accept. As our survey shows, affiliates have cemented themselves at the heart of consumers’ purchase decisions, and without the need to use intrusive and overbearing uses of personal data. In fact many of them have built user bases up in the millions. Much of this growth has been through word of mouth, positive growth through consumers wanting to let their friends and families know about new ways to shop.
- While our survey data showed that consumers are reluctant to part with their personal data in exchange for being marketed to, affiliates have to make the value exchange clear to their users in order for them to continue engaging with their content. Take Vouchercloud, now owned by Groupon and one of the largest affiliates in the UK. They have an app that uses geo-location data. Consumers have to opt-in to be targeted based on their location and receive push notification. With that in mind, VoucherCloud ingeniously used their app to target consumers at Christmas. A hotel advertiser wanted to use geo-targeting to target potential customers via mobile over the Christmas party period who may have missed their last train home. Vouchercloud set up geo-fences around popular train stations in central London that would then send hotel offers to those users who entered the vicinity of the station after the last train had departed. The campaign was hugely effective and proved popular with Vouchercloud’s users suggesting they were happy to have a deal targeted at them where there was a clear relevance to them and their needs. For us, there are few better examples that showcase the power of the clear value exchange that affiliates are offering in this privacy conscious age.
- And this is ultimately why the affiliate model can prove itself to be such an effective form of advertising in the current climate. From the influencers and bloggers who inspire us, to the online news sites, magazine titles and community forums who inform us, and the price comparison, cashback and coupon platforms that help us get more for our money, all of these services deliver value that we are happy to be loyal to as individuals. A final statistic from our survey showed that one in three millennials have no loyalty to any brands. Even among the over-60s just one in five say they are loyal to more than five brands. This is a clear manifestation of the new era we find ourselves in.
- To conclude I wanted to finish on a quote from Terry Leahy, the former CEO of the UK supermarket chain Tesco and a pioneer of one of the biggest and most successful supermarket loyalty schemes ever seen (Tesco Clubcard). And he said that “the true source of loyalty is to create benefits for people” and that’s a sentiment that I think sums up well the point we’ve been making today. Online arbitrators like the ones we’ve highlighted throughout this webinar provide these benefits to millions of people every day around the world for free. And the affiliate channel is home to many of them, helping brands constantly connect with customers (both new and old), and ensuring that they remain competitive online.