Loyalty Tests
Let the economy turn a little yellow at the edges — okay, a deep, rich shade of burnt umber — and everyone starts worrying about their brand marketing.
More specifically, they’ve started worrying about the other guy’s brand marketing and how well positioned it might be to eat away at their customers’ loyalty. That’s because it’s always cheaper to keep a customer than to find a new one.
And if you haven’t already put in the work to give your customers a reason to stick with you, you may be in for a rough time.
In a down economy, shoppers are barraged with price plays to get them to switch brands. You can join in that game to try to break off a piece of the market share’s competition, if you wish. But if you’re forced to compete solely on price in order to retain the customers you already have, that’s a recipe for compulsory margin erosion.
That’s the strait the big U.S. carmakers find themselves in. The 2008 Customer Loyalty Engagement Index from consulting firm BrandKeys found that of 14 major automakers, General Motors ranked dead last, while Ford finished out of the top 10 and Chrysler only barely made the No. 10 spot in a tie with Volvo. Only Chevrolet broke into the higher ranks, coming in at No. 5 after a tie by BMW and Mercedes for first place.
Of course, customer loyalty is not U.S. automakers’ only problem — something that they are trying to stress on Capitol Hill at press time. But with such a low fund of goodwill among the American public, getting the financial bailout they want could actually work against the carmakers in terms of winning back their former fans in America.
If the automakers had made an attempt to ask consumers what they wanted in a car and then done their best to retool for those products, instead of stamping out behemoth SUVs and underpowered compacts, they might be better positioned now to weather the consumer credit crunch. Some kind of a social community site — www.TellUsWhyWeSuck.com, or some URL to that effect — might have helped if launched in time.
Switching from cars to coffee, Dunkin’ Donuts and McDonald’s are poaching java customers from Starbucks. They’ve got the value messages firmly in place, of course, and are ramping up the quality and convenience appeals. Most recently, Dunkin’ rolled out a TV campaign built on a blind taste test that found Americans preferred its coffee to that of Big Green.
Starbucks’ response so far — the launch a Gold loyalty program with an annual fee — has gotten mixed reviews, since the card doesn’t carry all the values of its free Starbucks card program. But what may prove more valuable to the company in the end is the MyStarbucksIdea community Web site, where brand advocates are able to post their suggestions and praise or boo company policies.
It remains to be seen whether Starbucks will react effectively to the input it gets from the site on the Gold card. I hope it does, because forging that kind of customer connection is a long-term strategy for winning friends — one that will still pay out when economic indicators head north again.
