Corporate Eye

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Susan Gunelius

Susan Gunelius

The 50-20 Principle of Brand Loyalty

grocery store cartsAll marketers know the 80-20 rule that tells us 80% of sales come from 20% of a business’ customers, but research from Epsilon and Wylei Research has introduced us to the 50-20 principle, which tells us that 50% of sales come from 20% of a brand’s customer base known as brand loyalists.

According to the study of U.S. consumers, brand loyalists consider price but they also consider a variety of other factors to determine their personal valuation of a brand’s product or service (e.g., availability, convenience, quality, etc.). As an industry gets more competitive, these “other” factors become more important in the purchase decision-making process, particularly if perceived value is low.

This is evident in the data provided in the Get to Know Your Loyalists report from Epsilon and Wylei Research, which shows the following percentages of U.S. consumers who claim to be loyal to the six retail sectors included in the survey:

  1. Financial service providers: 53% of consumers are brand loyalists
  2. Grocery retailers: 47% of consumers are brand loyalists
  3. Insurance: 43% of consumers are brand loyalists
  4. Travel: 36% of consumers are brand loyalists
  5. Clothing retailers: 34% of consumers are brand loyalists
  6. Consumer packaged goods: 29% of consumers are brand loyalists

The research also found that more than one in two brand loyalists are women (52%). These brand loyalists have above average household incomes and are between the ages of 35-54. This demographic profile of the majority of brand loyalists is the same for five of the six retail sectors studied. Only the retail sector varied. According to the study, most brand loyalists in the retail sector are still women with above average household incomes, but they are a bit younger (18-34 years old).

The report provides some insights as to why brand loyalty is more prevalent in some industries than others. For example, the financial services industry is one where consumers don’t often switch products or brands. It’s too much of a hassle to switch and often fees are incurred. On the other hand, the retail grocery industry often builds loyalty through specific loyalty programs. At the same time, consumers become accustomed to the location, store layout, and product selection at their preferred grocery stores. Again, switching to a new store is a hassle.

On the other hand, highly competitive industries see lower levels of brand loyalty. For example, despite having many loyalty programs, the travel industry has only 36% brand loyalty. Both the retail clothing  industry and the consumer packaged goods industry are highly competitive with many options for consumers to choose substitutes. Switching is easy and the rewards often outweigh the negatives.

Consider your consumers’ loyalty to your brand. Is it as strong as you think it is?

Image: Jesse Victor

LEGO Becomes the Biggest Toy Maker in the World

legosOn September 4, LEGO announced its revenue increased by 11% and net profits increased by 14% during the first six months of 2014, which means it surpassed the former leader, Mattel (the maker of Barbie).

How did a company that sells primarily one type of product—plastic bricks in a variety of colors, shapes, and sizes—topple Mattel? The short answer is the success of The LEGO Movie, which achieved box office sales over $469 million. Add the sales of The LEGO Movie merchandise, and you’ve got the making of a very good year for the company.

However, there is more to LEGO’s recent success than a single movie (although that movie’s role in the company’s success is huge).

A focused brand is a strong brand, and LEGO has never lost focus. It’s actually surprising that the company waited so long to expand the brand into movies and related merchandise at this scale. It’s also surprising that the company waited so long to develop toy lines for girls. Although its initial release of the LEGO Friends for Girls line wasn’t perfect, at least it gave options to girls whose parents dragged them into the LEGO Store so their brothers could buy something (my daughter was one of those girls).

LEGO’s focus enables it to operate with comfortable profit margins. According to Mark J. Miller at BrandChannel, “LEGO’s profit margin has been more than 20% in the last four years and 24% earlier this year, while Hasbro’s is down to 4% and Mattel’s is barely breaking even.”

At the same time, LEGO has been making very good licensing decisions. From Star Wars and Lord of the Rings to Marvel and DC Universe Super Heroes, there are LEGO sets that consumers of all ages enjoy. However, LEGO has finally struck gold with its LEGO Movie line. The popularity of the movie has attracted a broader audience than any of its previous attempts at home-grown characters and universes.

Of course, home grown means no licensing fees to be paid, so the success of The LEGO Movie has pumped new life into the LEGO brand. Already, a movie sequel and additional products are in the works. At the same time, LEGO may have found a niche to attract girls to the LEGO brand. The release of its LEGO Research Institute collection that promoted women in science, technology, engineering, and math (STEM) careers was another success. The limited edition sets sold out quickly and consumers wanted more.

Bottom-line, LEGO appears to be finding ways to meet consumer demand while creating new forms of demand at the same time. That is a recipe for long-term success. Now, we just have to wait and see if the company can maintain its momentum.

Image: Benjamin Esham licensed CC BY-SA 2.0

Is Google Reaching Change Overload?

confusion arrowsGoogle changes. We all know this. What Google releases today might not be here tomorrow. One thing is certain when it comes to Google, if the company isn’t getting the results it needs from a product or service, it shows no mercy. That product or service is eliminated—and quickly.

But when does change become too much for consumers? At what point do consumers reach change overload and turn away from a brand in search of another that consistently meets their expectations for it, which happens to be the very definition of branding. Is Google reaching change overload?

In recent years, the number of Google products and services that have gotten the axe is high—the Feedburner API, Orkut, Google Reader, the list goes on and on. Most recently, Google announced that it’s pulling the plug on Google Authorship—the very service it aggressively pushed on content publishers since it launched in 2011. First, Google announced two months ago that it was killing author images from search results that included Google Authorship information. Last week, Google took the demise of Google Authorship the rest of the way when it announced that Google Authorship was officially over.

In a Google+ update, Google’s John Mueller explains, “Information [provided through Google Authorship in search results] isn’t as useful to our users as we’d hoped, and can even distract from those results. With this in mind, we’ve made the difficult decision to stop showing authorship in search results.”

Defending the decision (undoubtedly in response to people who claimed Google Authorship photos were being removed from search results to appease advertisers who were losing clicks), Mueller writes, “In our tests, removing authorship generally does not seem to reduce traffic to sites. Nor does it increase clicks on ads. We make these kinds of changes to improve our users’ experience.”

On Search Engine Land, Eric Enge and Mark Traphagen provide some reasons why Google killed Authorship just three years after it debuted. Based on their research and analysis as well as discussions with Google’s John Mueller, they found two reasons. First, adoption rates by both authors and webmasters was low because implementing the code necessary to claim authorship was challenging. Second, Authorship offered low value to searchers based on Google’s research which showed no change in click-through rates for search results with and without Authorship photos and details.

Ultimately, Google claims Authorship cluttered search results and the user experience is better without it. We can assume that this is particularly true in mobile search results. As with all things Google, if a product or service isn’t adding value, it’s gone.

For most people, the demise of Google Authorship will be meaningless (remember that low adoption rate), but when combined with all of the other products and services that Google lured people into using and relying on before killing them, Google just might be getting close to change overload in consumers’ minds. If you can’t depend on a brand, you can’t trust it and you can’t believe in it. In other words, too much change leads to brand confusion, which is the number one brand killer.

How close to change overload do you think the Google brand is?

Image: Sergio Roberto Bichara

12 Principles to Win People to Your Brand

handshake persuadeHow do you win consumers to your brand?

Winning people to your brand is based significantly on emotion and persuasion. With that in mind, let’s see how Dale Carnegie’s famous 12 principles to win people to your way of thinking apply to branding.

1. The only way to get the best of an argument is to avoid it.

Brand consistency is critical to brand success. All brand communications and experiences must be consistent with the brand promise or consumers will become confused and potentially push back against the brand. Avoid the push back by exercising brand restraint!

2. Show respect for the other person’s opinions. Never say “you’re wrong.”

The customer is always right. What do consumers want from your brand? That is what you need to deliver—even if it’s not the same thing that you want.

3. If you are wrong, admit it quickly and emphatically.

This principle is particularly relevant in today’s world of social media and online brand reputation.

4. Begin in a friendly way.

This principle reminds me of something a colleague used to always tell me when she entered into negotiations with vendors. She would say, “I always start from a good place.” Never put your audience on the defensive from the start.

5. Get the other person saying “yes, yes” immediately.

Your brand communications must affirm and support your audience’s wants, needs, and emotions. Try to promote a brand to an audience with irrelevant messages, and your ROI will be nonexistent.

6. Let the other person do a great deal of the talking.

Consumers build brands, not companies. Let your target audience experience your brand in the ways they choose and make it their own. That’s how you build brand loyalty and brand advocacy.

7. Let the other person feel the idea is his or hers.

Create marketing messages that tap into consumers’ emotions and allow them to feel like they’re in control of their purchase decisions. Give them something of value, and they’ll choose to purchase your brand without you demanding that they do so.

8. Try honestly to see things from the other person’s point of you.

It’s not about you. All that matters is what consumers want and need from your brand.

9. Be sympathetic with the other person’s ideas and desires.

Research your consumers and develop buyer personas so you understand what matters to the customers within each market segment. Create messages that are relevant to each segment’s ideas and desires, and your brand marketing results will improve.

10. Appeal to the nobler motives.

Building brand trust is essential to brand growth. Determine your brand’s core values and consistently live them and communicate them in all interactions that consumers could have with your brand.

11. Dramatize your ideas.

Brand storytelling is extremely effective in building emotional connections between consumers and your brand. Leverage social media and content marketing to spread your brand stories.

12. Throw down a challenge.

Use marketing campaigns to engage consumers with your brand. Social media and crowdsourcing open the doors to creative ways to challenge your customers. From challenging consumers to upload pictures using your brand to your Facebook Page to challenging consumers to design their own product packaging for your brand, there are a myriad of ways you can engage consumers in an emotionally challenging way.

Image: Laura Glover

Nearly 2 out of 3 Consumers Have Unfollowed Brands on Social Media

brand unlike thumbs downConsumers follow brands on social media. However, consumers also unfollow brands on social media. In other words, getting social media followers is often the result of short-term, tactical efforts rather than long-term, sustainable, and strategic initiatives to build consumer brand loyalty.

This data comes from a recent survey by 140 Proof of U.S. mobile users between the ages of 18 and 59. Specifically, 61% of respondents reported that they had unliked or unfollowed a brand that they had previously followed on a social media site while another 29% reported that they had liked a brand but never unfollowed a brand. The final 10% of respondents had never followed a brand on social media at all.

The study also found that consumers use specific social media platforms to engage more frequently about different topics. Here is an overview of the top three social networks for the ten topic areas that were researched:

  • Food and Dining: Facebook, Pinterest, and Twitter
  • Celebrities and Gossip: Twitter, Facebook, and Instagram
  • Business and Industry: LinkedIn, Facebook, and Twitter
  • Home Decor: Pinterest (by a wide margin), Facebook, and Instagram
  • Family and Parenting: Facebook, Pinterest, and Twitter
  • Brands and Companies: Facebook, Twitter, and Pinterest
  • Fashion, Style, and Beauty: Pinterest (by a wide margin), Facebook, and Twitter
  • Personal Finance: LinkedIn, Twitter, and Facebook
  • Technology: Facebook, Twitter, and LinkedIn
  • Hobbies: Facebook, Pinterest, and Twitter

Consumers were least engaged on social media about personal finance and technology. Furthermore, LinkedIn ranked last for engagement for all but three topics (business and industry, personal finance, and hobbies). On the other hand, Facebook ranked in the top two for engagement for all but one topic (personal finance) where it ranked in a close third place. Twitter ranked in the top three for engagement for all but one topic (home decor) where it ranked fourth. Instagram ranked in the bottom half in all topics while Pinterest ranked very well in some topics (food and dining, home decore, family and parenting, brands and companies, fashion, style, and beauty, and hobbies) but very low in others (celebrities and gossip, business and industry, personal finance, and technology).

For brands, the survey results show where target consumers are more likely to spend time and be willing to consume and engage with branded content, but for direct brand and company engagement, consumers are willing to interact on social media platforms in this order: Facebook, Twitter, Pinterest, Instagram, and LinkedIn. Consider these research results as you develop your social media marketing plans for the future. Location matters as much on the social web as it does in person.

Image: J. Henning Buchholz

Twitter Ranks #1 for Best Company Culture and Values in the U.S.

glassdoor top 25 companies for culture and values previewTwitter has been ranked as the top U.S. company for culture and values according to the 2014 ranking of the top 25 companies for culture and values by Glassdoor. The ranking is based on insights from company employees. Twitter employees calle the company, “the best place I have ever worked,” and described it as having an “amazing culture.”

What makes the culture so amazing at Twitter? According to one employee, “I love how the 10 core values drive the company to always be better,” while another explained, “Collaboration – everyone here is pushing towards a common goal, we all want to see the company grow and become more successful.” And yet another employee shared that Twitter has, “Great people, great food, great compensation, great learning opportunities, great opportunities. You get to do what matters to the world. Great work/life balance as well.”

The full list is dominated by tech companies with 12 of the 25 companies on the list coming from the tech industry. Twitter, Google, and Facebook all ranked in the top 5 (#1, #3, and #5, respectively). Employee insights about these companies explain exactly why these companies attract and retain the best talent. They truly live their values and create a company culture that makes people want to work for them and deliver their best efforts.

About Facebook, an employee explained, “The amount of power entrusted to employees is huge. You are empowered to go explore and find data, build things, and generally chose the course of action you think will have the most impact.” Another Facebook employee praised the company saying, “Managers force you to go home if you’re not feeling well. Miss your kid’s all star game to stay at work and you’ll get weird looks. Perform your core function well and you have so much leeway in how you spend your time – (how it should be, right?)”

For Google employees, praise is a bit different. While employees report working longer hours than other companies, they tout the company’s focus on customers as top-notch. An employee described Google as a company that, “Embraces innovation. Singularly focused on the end user. Go big or go home.”

Coming in at #2 on the list of the top 25 companies for culture and values is Edelman, a global public relations agency. In a field where work/life balance is typically nonexistent and high stress is the norm, Edelman stands out as the exception to the rule. An employee elaborates, “Unlike other agencies that say they support work-life balance and value their employees as their top asset, Edelman actually does both of these things in practice. Through the actions of middle to senior management, you are truly made to feel valued and appreciated. Opportunities are everywhere and the culture is laid back and fun.” This stands to prove that companies can survive and thrive by going against the expected company culture (particularly when the expected culture has a reputation for being toxic).

Follow the link above to view the full list on the Glassdoor website where you can read insights from employees at each company. There is much to learn from these companies! Today, culture is critical to every company. From recruiting and employee productivity to minimizing costs and building your brand, company culture plays a part in pushing your company toward success or failure.

Image: Glassdoor