Does Brand Loyalty Still Matter?

By June 22, 2020 August 28th, 2020 No Comments

We’ve witnessed and read time and again how companies transformed into industry leaders, largely by building intensely loyal relationships with customers and employees. Before I delve into this matter, let me briefly take on the concept of loyalty. Loyalty, according to Frederick F. Reichaheld, is “the willingness of someone—a customer, an employee, a friend—to make an investment or personal sacrifice in order to strengthen a relationship”. Oh, what companies will do (or not do) to get their customers to this point!

So, for example, Bolaji, a property developer, has this reliable supplier (reliable is a keyword) that provides him with tiles for his properties across the country. The supplier isn’t necessarily the most affordable, but the supplier treats him very well (always delivers), including credit facilities. That’s one business operations problem the property developer can strike out of his many daily business doldrums.

Please stay with me on this Bolaji “Lekki big boy” example. So, does this actually mean that Bolaji is loyal to the tiles supplier and the latter can just fold his arms or put his feet up? I’d say no and here’s why. Customer loyalty goes beyond recurrent purchase. Frequent purchase is a weak indicator of how loyal customers are to your brand. Bolaji may be glued to this guy simply because he is short of funds and other suppliers are not willing to accommodate his credit requests. We have, in recent years, witnessed customers doing groceries, switch from neighbourhood stores to shopping malls and now neighbourhood supermarkets. It was loyalty until when convenience showed up! Shopping around the neighbourhood was convenient until when the customer realized they couldn’t conclude all the shopping in one location. Then came Shopping malls that had everything under one roof with more variety, including categories beyond groceries, like fashion and entertainment. Then the city witnesses a burst in population and gridlock and traffic becomes the order of the day. Commuting around the city got much worse while employed and self-employed folks spent more hours at work or on the road. Then came neighbourhood supermarkets to the rescue.

That a customer regularly visits and buys does not mean they’re loyal. They may be trapped by high costs of switching suppliers, indifference, inertia or current circumstances. So Bolaji may fly frequently to inspect some of his properties in Abuja via Air Peace simply because the airline has got more scheduled flights to the capital city. Conversely, as his business expands, Bolaji may start making less frequent travels as a result of appointing a resident manager to oversee his projects in Abuja. You get my point? Repeat purchase does not necessarily equate to brand loyalty.

Brand loyalty is indeed very important. It affects the bottom-line, profitability of the business and even growth. Profit and growth are indeed the reasons why we bother to leave our bed in the morning; unless it’s a charity, of course. Brand loyalty however should be properly measured. Retention is good but limited. It only concentrates on the ability of a company to keep existing customer base. So, from our example, Bolaji’s business has expanded and he has appointed site managers and property custodians to oversee his properties where he is not domiciled. Air Peace would want to treat that as a defection but in truth, his circumstance has changed and he would not need to fly as often as when his business was still growing.

So, we recently conducted a research on 4 filling stations along a long stretch of express road. As at the point when we were concluding our research, one of the filling stations had closed down. The first was Con Oil, Total, Acorn and Heyden. Heyden happened to be the last filling station for drivers plying that road.

Ideally, Heyden should not stand any chance by face value. I mean, they were the last option for a vehicle owner. Why would a driver needing fuel take chances and ignore 3 filling stations and opt for the last option? It makes no type of sense.

It would interest you however, to note that Heyden is doing 3 times as much conversions as the other 2 operating stations. The question is why? Total have got the ambience and a worthy automobile service delivery add-on. Con Oil has got the space and “first appearance” advantage before any of their other competitors. But 7 in 10 cars needing fuel would rather detour into the last filling station to refuel.

We decided to dig deeper. Turns out that the major reason across the different users was a common one. We engaged Uber/Bolt drivers, public transport drivers, sales attendants, private car owners and they unanimously shared their reason had to do with the fuel pumps! Even for owners of luxury SUVs, you would think this little difference would hardly matter to them. Fuel pump machines? Really? Yes. They had been comparing notes over the years and they could see some consistency in the Heyden fuel pump machines. That there was no form of distortion whatsoever.

How did this spread across the customers? It’s the point businesses must strive to attain. Moving from brand loyalty to the next level… the evangelistic type of customer loyalty. Profitable growth can’t be attained without it. As far as we know, Heyden had not engaged any publicity platform or mass marketing channel to inform car users. The car users just spread the word chatting with passengers, amongst their peers and friends. This type of customer loyalty is clearly one of the most important drivers of growth.

So how likely is it that your customers would recommend your business to a friend, family member or colleague at work? Think about it. They’re paying and using your product while doing your marketing for you. That complements all your marketing efforts doesn’t it? This is an enviable path to profitable growth—your company’s ability to get its loyal customers to become, in effect, your brand ambassadors.

Companies may want to rethink their model and figure out that one USP that appeals to your target audience and other competitors are less concerned or bothered about. Customers see Heyden as adding value in form of savings and ethical business practices. And although margins are quite low in that industry, car drivers and owners have been switching in droves to Heyden. I suspect they’re making up for that business decision with more conversions and ultimately more profit.

While that USP still exists, companies must not sit still. There are other areas competitors may be better at that companies may want to match or preferably execute “simply better” service. It may be in the form of latent needs, or what customers value and are willing to pay for. GIG logistics is currently making in-roads in the logistics business. A lot of the time, their growth has been closely associated with word of mouth. Has your brand got evangelicals?

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