Nine for ’09: Loyalty & Engagement Trends

It’s been said that predictions are hard to make, especially about the future. Fortunately, loyalty and engagement metrics are leading indicators of what consumers think and, more importantly, how they are going to behave—in categories, toward brands, and in the real-world marketplace. If it helps, think of these insights as a loyalty and engagement version of a crystal ball – or a brand’s marketing early-warning system. Fortunately, when properly configured, these metrics can measure the direction, velocity, and intensity of future consumer values, often 12 or 18 months in advance of major market shifts and well ahead of any consumer articulation in focus groups or traditional market research.

Here are nine major trends that will have a direct impact on the success—or failure—of brand marketing efforts in 2009:

1. Price Matters if you’re a commodity.

With financial pressures and a lack of confidence in the economy, consumers are going to continue to be very, very conservativein their spending. But no matter how much consumers earn and no matter how much discretionary income they have available, they still want to be perceived as “wise shoppers.” In 2009 that title is bound to be more of an economic imperative than one having to do with fiscal self-image. This will be especially true given current economic indicators, all exacerbated by a decreased lack of trust in—and increased suspicions about—the old established financial and retail establishments. The precipitous decline in the economy will feed the ongoing trend of brands being unable to provide meaningful differentiation or resonating values, except, of course, those of low, lower, lowest prices.

2. Differentiation, meaning and added-values matter more.

Marketers will need to be sure their brands actually stand for something significant in the mind of the consumer. Awareness as a meaningful market force has long been obsolete, and differentiation will be critical for success, i.e., sales and profitability. Those who primarily rely on “flavor of the month” promotional tactics will quickly find that they are creating a lasting perception among their consumer base that only price (or price cuts) differentiates their products from the competition. Do that often enough and your product and service will move away from being a “brand” and will come to be regarded as a “category placeholder” and nothing more.

3. Engagement is not a fad. It is the brand objective.

It has already been proved that real engagement correlates with positive consumer behavior. Engagement should be defined by consumer response: it is the outcome of any marketing or media initiative that substantively improves a brand’s equity (the degree to which a brand is seen to meet—or even exceed—consumers’ expectations for the category in which it competes). Marketers will realize that attaining real brand engagement is impossible if they continue to try to measure it using out-dated attitudinal models. Marketers will come to accept that there are four engagement methods including platform (TV, online); context (program, Web page); message (ad or communication), and experience (store/event). But there’s only one objective: brand engagement.

4. Media planning will be more innovative, touch-point focused and two-way.

Planners will still classify media touch points as “above-the-line,” “below-the-line” and “new,” but planning will be based on some critical considerations: Which touch point will best reinforce brand values? Where will the brand + media equation yield real engagement?

Effectiveness will result only where the plan is seamless, believable, personalized, and authentic. Media planning innovation and technological innovation will become one and the same.

Mobile devices are becoming an increasingly important touch point for consumers and in 2009 will be a starting point for migration from desktop to laptop to blacktop. Location-aware software for phones should inspire the mobile medium, so expect promotional coupons to show up along with IMs and look for greater granularity in measuring marketing ROI. Marketing dollars transitioning to online isn’t new, but social networks will also become more engaged in engagement to help marketers more effectively deliver messages and determine return on their efforts.

5. How green is my brand?

Simply playing in the environmental awareness arena will not be an option in 2009, and brands will have to find ways of positioning their offerings in ways that meaningfully support a sustainable future. But as the number of companies trying to co-opt the environmental movement for their products and services grows, so too will the number of skeptical consumers. Most consumers have heard these promises before and will begin to demand evidence and authenticity. Measuring that authenticity and the degree to which the brand is perceived by the consumer to really be green will become more necessary than in the past. Possessing such measures will provide insights and strategic direction that will aid in brand differentiation, the creation of added value, increased consumer engagement, and, the ultimate bottom line, profitability.

6. Brands will need to identify – and leverage – new values.

Happily, loyalty and engagement metrics identify trends and values that will be more important to consumers many months before they are blips on traditional research radar screens. Looking at the 60 categories and nearly 500 brands we measure in our Brand Keys Customer Loyalty Engagement Index, we found, for example, that the average percent-of-contribution that “customization” makes to product and service engagement, adoption, and loyalty is currently 18%. That’s nearly 5 times what the value was when it was first measured it in 1997. Watch for “customization”—the newest of the loyalty values to insert itself into virtually every product and service category—to be something marketers will be paying great attention.

7. Behavior will finally beat attitude.

More marketers will come to realize that “to know you” is not necessarily “to buy you” (or, for that matter, even to like you). Brands will need to recognize—and address—real behavioral metrics. Corporations will use the identification of behavioral consumer segments to synergistically reinforce brand values, brand and corporate positioning efforts, communications, and media planning to make the marketing function much more effective and efficient.

8. Consumer expectations will continue to grow.

Brands are barely keeping up with consumer expectations now. Every day consumers adopt and devour the latest technologies and innovations, and only hunger for more. In 2009, expect smarter marketers to identify and capitalize on unmet expectations via newly identified values (like customization), using more and more high-tech systems. This approach will help them differentiate brands from competitors, and brand-consonant touch points (like mobile marketing) will play a major role in meeting and managing consumer expectations.

9. Make life simple for your brand and your customer.

The poet-marketer H. D. Thoreau foretold the coming of 2009’s ninth and final trend: “Simplify. Simplify.” Consumers are searching for, demanding, in fact, simplification. In some categories this is showing up strong, such as cell-phone plans, search engines, and laundry detergent. Who has not looked at switching cellular carriers and bemoaned the task of comparing one complicated plan to another? Simplification is also showing up as a driver in online travel sites for itinerary planning. Yet as the competition has heated up brands still continue to compete on price, and not what will engender positive consumer behavior – simplification.

The future may not be what it used to be, but brands can be pretty sure that it will pose a more difficult time for marketers. But marketers and planners that have loyalty metrics in place will have a handle on the trends that are bound to show up in their offices. And doing that will make them both prophets and profits in 2009.

Robert Passikoff, Ph.D, is founder and president of Brand Keys Inc.