ultimate customer loyalty

Passikoff: Winning at the Ultimate Measure of Loyalty

A couple months ago I wrote a column about how to get consumers to behave six times better toward your brand. It involved loyalty and expectations and emotional engagement. Oh, and value. Not, dollar value, but emotional value. The things that motivate people to choose your brand and remain loyal. You know, good stuff like that. But at a multiple of six. 

In that column I wrote brands that best meet the mostly-emotional expectations consumers hold in a category see behavior with a 6X multiplier. It’s called The Rule of Six, 8 brand corollaries including this one: loyal customers are six times more likely not to balk at price increases. No, no, you read that right. Customers going along with price increases. And it’s validated. Cool, huh?

At the time I wrote about Disney+ and their 38% price increase. In that instance, in the face of a monthly increase, 94% of Disney+ subscribers stayed with the brand. That’s what we in the trade call “real loyalty.” Disney+ could do that because they were seen by their customers as best meeting their expectations for streaming video. And, because, according to our Customer Loyalty Expectations Index, it was rated #1 this year in that category, so the Rule of Six kicked in when they needed it! (If it helps communicate the magic of all that, at this point you should imagine Tinkerbell flying down, tapping this paragraph with her wand and, while the paragraph shimmers and sparkles, a Disney happy-theme plays in the background!)

Over the next few weeks, more than a few readers reached out and wrote something along the lines of, “Well, sure. But Disney, right!? Who else could get away with that?” And, fair enough. So, here’s some other 6X beneficiaries.

But first, a question for you.

What do the following brands have in common. Besides being FMCGs, Fast Moving Consumer Goods? They’ve been listed alphabetically because, well, it’s an organizational encoding thing. Don’t read anything more into it than that.

  • Ben&Jerry’s
  • Bounty
  • Charmin
  • Crest
  • Doritos
  • Dove
  • Downy
  • Gillette
  • Old Spice
  • Pampers
  • Tide

So? What’s your answer?

The correct answer is, “They’re all FMCGs.” Nah, just kidding! They are, but the actual answer is all those brands were #1 or #2 when it came to customer loyalty in their various categories. That meant they were best or nearly-best at meeting consumers’ expectations. And, thus, could rely on the Rule of Six if and when they needed it. 

Seventy-three percent (73%) of that list are P&G brands. If your answer was, “Most were P&G brands,” you are a brand savant. The rest are Unilever and Pepsico brands. Just for the record. P&G raised their prices about 10% across most of their brands during the 1st Quarter. That’s their second straight quarter of YOY increases BTW, so, +20%. So, there you have loyal customers, behaving better towards brands that raised their prices. For the period ending March 31st, P&G reported a net income of $3.42 billion. Yowza!

And you can talk all you want to about how important price is to building a loyal customer base, but you’d be wrong! Unilever raised their brands’ prices too. More than 13%. I’m betting you didn’t know that was their 8th consecutive acceleration of prices. Or that Pepsico raised their prices 16%. So, for the Doubting Thomas-readers among you. I hope that answers your questions about “Who else?”  

If your approach to pricing is to ask, “Do you want to pay more for this?” that kind of research tends to lead marketers to believe “price” is a major factor when it comes to loyalty. And it is, but only if you’re talking about “commodities.” Not if you’re talking about “brands.” Another question might be, “Does this work for any brand?” And the answer would be, “Yes,” with the caveat “any brand better meeting those category expectations.”

Don’t misunderstand me, the rational stuff, the 4P’s (Product, Place, Price, Promotion) are alive and well. But they’re table stakes. You either have them or you don’t get to play. That the product does what it’s says it will, that you can actually find the product someplace at a cost that seems acceptable, and that its awareness level is high enough to put it in your consideration set, all that’s the rational stuff and ONLY MAKES UP ABOUT 25% OF THE CONSUMER DECISION-PROCESS. (Not yelling. Just emphasizing. Just saying.)

And price? On average it accounts for only 7% of the decision-process when it comes to brands. Which is why higher percent-contribution emotionally-based values are far more compelling and important than price. And why manufacturers with brands that engender high degrees of loyalty can raise prices – without worrying too much about consumers abandoning them or switching to a lower-priced brand. 

“Nowadays people know the price of everything and the value of nothing.” That was Oscar Wilde. But that was also back in 1890. And things have changed dramatically in past 133 years. Today, values matter to consumers more than ever before. And the thing is, people don’t just know that, they act on it! 

Even when it does cost a little more!

Photo by Mor Shani on Unsplash

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