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Tuesday, August 15, 2017

World Wide Reputations and Their Impact for Word of Mouth

When we advise marketers that to increase recommendations and word of mouth for their brands they need to provide motivation, content and opportunity, we frequently hear the response, that’s a great idea, but HOW?
 
A study of the international reputations of companies, conducted by the Reputation Institute (RI) and reported in Quirk’s Survey Monitor, June 2017,
(https://www.quirks.com/articles/survey-monitor-june-2017) offers a flood of ideas about how to build one’s reputation – and from our point of view how to also build positive word of mouth. RI’s 2017 RepTrak 100 report identifies the most reputable brands in the world.  Findings are based on more than 42,000 respondents’ feelings about 800 companies.  RI claims to have quantified the linkages between reputation and various behaviors including willingness to: purchase a company’s products, recommend a brand, invest in or even work for a company.
 
The RI questionnaire asks consumers to rate brands on seven factors which RI says comprise reputation, with the following percentages indicating their relative influence as ‘drivers of reputation’:
          
19.3% - Products and Services
          14.5% - Governance
          13.7% - Citizenship
          13.6% - Innovation
          13.3% - Performance
          13.2% - Workplace
          12.4% - Leadership


Want Some Specific Positives?

One big gainer in the RepTrak 100 rankings this year was Kimberly-Clark. The company’s strong focus on CSR with key initiatives around sourcing sustainability and product donations, plus product innovation helped to drive Kimberly-Clark’s “excellent” rating.
 
A strong improvement was also enjoyed by Google.  According to RI they enjoyed a notable ranking increase by focusing on sustainability and donations to charity in lieu of employee-bonuses.
 
We imagine that to achieve such advances in their rankings both Kimberly-Clark and Google likely promoted their good efforts.  Hopefully that promotion included well-crafted communication to their loyal customers and employees (though we don’t know that they took full advantage of those potential advocates and ambassadors.   Perhaps they missed that opportunity.)


On the Negative Side

Not surprisingly, RI reports that Samsung dropped from #3 to #63 in the top 100 ranking based on the headlines about its Galaxy Note 7s catching on fire and the subsequent recall. Other companies that fell in the rankings were American Express and Yahoo! (Yahoo’s decline no doubt a result of the long delays in Verizon’s acquisition of the web portal as well as its reported series of data breaches.)
 
Ironically, these declines in reputation might possibly have been blunted by communicating more effectively with loyal customers and employees thereby allowing them to generate their own flood of supportive word of mouth.

An Insight from the RepTrak 100 Report
From our point of view the categories of RI's model suggest some great thought-starters for those charged with developing content for more active and effective customer advocates and employee brand ambassadors. Don't assume that customers and employees have sufficient information across these categories! Be they customers or employees (see our recent article,
"Employees: Your Best Brand Ambassadors?") your potential advocates need specific stories about your brand’s efforts in: innovation, product quality, citizenship, and more.  With this sort of information they'll be 'armed' to write or speak to their friends, relatives, neighbors, co-workers and followers about your brand.  They need your help.

2:40 pm edt          Comments

Tuesday, August 8, 2017

Is "Loyalty a Crock"?

Author Byron Sharp was given cover story coverage by Ad Age magazine a few weeks ago.  Sharp's book How Brands Grow: What Marketers Don't Know and its challenges to conventional thinking have, according to Ad Age, "taken root with major marketers".  Having ourselves written, Loyalty Myths, for many of the same purposes, we were interested in what a fellow writer had to say, and the proof he offered for his beliefs.
 

Sharp's Pronouncements Include...

While the impact of this marketing professor from the University of South Australia may be strongest on media and advertising - the way they're purchased and used, his theories have a potentially far greater influence.  His pronouncements include both cavalier attacks on industry maxims and provocative alternate explanations of some loosely-authenticated tenets.  Among them:

  1. Loyalty is a crock.
  2. Broad reach can be more productive than surgical targeting.
  3. 20% of your brand's biggest buyers don't really account for 80% of sales.
  4. Those "loyal" consumers aren't really that loyal.
  5. The best way to grow is to get more sales from people who care even less about your brand than the loyalists.
  6. We're all "polygamist consumers". We're loyal, but within a range of things, which is why people have two or three types of shampoo in their shower.
  7. Ditch influencers: They are too small to be of consequence.
  8. The odds of moving the needle by getting light-buyers to buy just a little more is better than going after heavy-buyers, in part because there are so many light- buyers, and the heavy-buyers are more likely maxed out.
  9. People don't care much about your well-reasoned messages: Buying is based more on emotion, habit and established "memory structures".  Distinctive brand names, logos, taglines, symbols, celebrities or ad campaigns all help create these structures that make a brand easier to buy during the snap decisions people make.
  10. Most advertising only maintains market share: Just because sales don't rise doesn't mean the ad isn't working. Since competitors are always fighting to take fickle customers away, it may be helping the brand prevent declines—often by replacing heavy buyers who drop off with more purchases by light buyers.

Where We Think Sharp's Right

In some cases we agree with Sharp when he claims (#1) “Loyalty is a crock”.  Our agreement, of course, depends on how loyalty is being defined, and what type of products and services are included in the discussion. Loyalty that doesn’t produce profit is a crock. Much of the hype about loyalty is a crock.  Sharp may be guilty of using shock appeal to sell his book, rather than presenting a well-documented counter argument.  He backs down on his bold statement when in (#6) he admits that, in fact, consumers are ”loyal within a range of things”.
 
We might also agree if he is referring to loyalty programs.  That's because with so many consumers being polygamists (buying a variety of brands and joining all their programs) it’s very possible that when all real-costs are accounted for few if any such programs can actually be shown to have increased profits.

We also agree with Sharp that in most product categories (though not all as he seems to suggest) that (#9) "People don't care much about your well-reasoned messages: Buying is based more on emotion, habit and established memory structures." While Sharp is likely directing this message at advertising strategies we think he’s inadvertently explaining why loyalty does work and why loyal customers are so important to a brand.  Habit, emotion and established memory structures cause consumers to look for one cereal brand over another and whether he wants to call that “loyalty” or not, that’s why big brands that provide the right value equation for their customers continue to be market leaders.

“Most advertising only maintains market share. Just because sales don't rise doesn't mean the ad isn't working. Since competitors are always fighting to take fickle customers away, it may be helping the brand prevent declines” (#10).  We won’t claim to be ad experts, but we do remember that existing customers are more likely to pay attention to messages from their favored brands, therefore helping to retain (current) customers.

Where We Think Sharp's Wrong

We will be honest and admit that we haven't read How Brands Grow, so our comments are based solely upon Jack Neff’s Ad Age article. We will assume that this entire philosophy is based on a review of fast-moving consumer package goods like snack foods, shampoo and soft drinks.  But we know some of Sharp’s readers will attempt to apply his message more broadly, so we feel it's important to challenge some of his key points.

There’s a lot of generalizing going on here. The author tells us that “all” consumers are polygamists (#6), as if a consumer who buys their favorite brand 99% of the time, but purchases a competitor when his/her brand is out of stock, is not loyal. He supports this with a UK research study that reported “More than half of Coke buyers also buy Diet Coke, Fanta or Pepsi in a given year”.  But he apparently doesn’t answer the logical follow-up questions of: Was the consumer very thirsty and in a location where Coke was not served?  Was it just one glass of the competitor’s product in the entire year? And most importantly, did the consumer like the competitor’s drink, or did they even drink it all?
 
Yes, the chance of “getting light buyers to buy just a little more” is probably a better bet than getting those who are totally loyal and “maxed out” to buy any more (#8), but increasing the consumption of light buyers could be horribly expensive.  It also appears to ignore the fact that if a brand ignores its current loyal/heavy buyers, causing these loyal customers to defect, that will leave a huge hole to fill.
 
"Ditch influencers: They are too small to be of consequence." (#7).  We have long believed in the value of satisfied customers as advocates for a brand.  Twenty years ago we had a difficult time convincing most marketers of the value of word of mouth.  Today the internet and social media make word of mouth a potent tool; Sharp appears to overlook the dynamics of today's market.  We aren’t just thinking about high-priced, paid influencers and their millions of followers, but of the power of online product and service reviews and of the millions of consumers communicating online and offline with their 50 or 100 best friends, relatives, neighbors, fellow students and co-workers.
 

Duh...

“The best way to grow is to get more sales from people who care even less about your brand than the loyalists"(#5). Sounds great, but it’s not that easy to do, and it can be downright impossible for a brand that cares about being profitable in the next few quarters (or even the next few years).  Sure you can saturate the market with advertising, lower your price, deluge the landscape with coupons – and you will get some new trial purchase. But it will cost plenty, and the consumers you attract are likely buying competitive brands today which means fighting an uphill battle against what Sharp himself admits is embedded “habit, emotion and established memory structures”.

"Broad reach can be more productive than surgical targeting" (#2).  The key word here is “can”.  Yes, in certain circumstances, in certain product/services categories, for brands of a certain maturity, broad reach can be more productive. But the wonderful thing about this claim by Sharp is that it really doesn’t take a position at all. It can just as easily be flipped to state "Surgical targeting can be more productive than broad reach".
 

Would Love to See How Sharp Supports His Position

We would love to understand what Sharp means in claim #3 ("20% of your brand's biggest buyers don't really account for 80% of sales"), and how he supports it.  Does it apply to brands in general, both B2B and B2C, or did his research address only a narrow collection of packaged-goods?  How many brands did he study?

We support provocative attacks at ‘sacred cows’.  We think such attacks strengthen our knowledge and expand our belief systems.  And, we’ve ‘thrown quite a few stones’ ourselves.  But we’ve always tried to provide sufficient evidence to justify our criticism.  Bold statements lacking definitive support, don’t help a science grow, they only cause momentary disruption.
 

 

2:31 pm edt          Comments

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Customer Experience Partners, LLC
Measurement, Management, Optimization
Contact us at: 203-655-0090 or
pruden@customerexperiencepartners.com

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