Guide to SP Techniques: Encouraging loyalty - Keep the faith

Consumer loyalty is a tough nut to crack, but there are two routes that can halt brand switching, says Bhavna Mistry.

"Most consumers today haven't got the time or the inclination to make new choices every day. Whether we're working or not, we rely on habit when it comes to purchasing decisions." Iris founder Ian Millner makes a valid point - let's face it, how often do you actually stop and look at different brands in the bread, loo roll or rice aisle for anything more than professional reasons?

But for the majority of marketers, encouraging consumers to switch from the competition to their brand is an everyday mission, especially in a world where product differentiation is minimal. Once that switch has been achieved, keeping consumers loyal is one of the most difficult of marketing objectives to achieve, but an ever-present challenge for all brands. If you have a loyal following already, the onus is to keep it and encourage new consumers to feel the same affinity; if you don't, the pressure is on to get it in the bid to keep your brand's buyers from switching.

So how do you generate loyalty? How do you go about instilling a consistent feel-good factor about your brand that will keep consumers choosing you time and again over your competitors?

The ISP diploma pinpoints two effective routes: discounting, and cause-related promotions.

Discounting

Offering money off products has been covered in the guide already (see generating trial, page 6).

The drawbacks of discounting are as valid when it comes to inspiring loyalty as they are for generating trial: you need a hefty budget because you have to deliver heavy discounts for the mechanic to register on consumer radars. Plus, relying on a money-off positioning devalues brand equity in the long term because buyers become accustomed to the cut in prices.

As a short-term solution however, it is viable.

Cause-related promotions

For promoters seeking a longer-term, and arguably more cost-effective, solution, cause-related marketing (CRM) is perceived by many to be the way forward. It's certainly growing in popularity: according to Business in the Community's CRM Tracker, 67 UK businesses raised £58.2 million for good causes last year, showing an increase of 15 per cent on 2002.

It's in response to this that Iris launched a CRM division called I-Care last month. "Brands that align themselves to hot issues today can change preferences and subsequently change behaviour," claims Millner. "CRM can be so powerful in creating lasting bonds because it overrides rational and emotional bonds."

What CRM boils down to is creating a halo effect for brands. A tie-in with a good cause (a charity or organisation such as schools) usually delivers a call to action that requires consumers to respond in a manner that benefits the cause in some way. The Walkers' Books for Schools campaign is a good example: it did what it said on the packet, but as with all CRM activity, the fundamental premise was to raise funds for the cause.

Ditto for Tesco's various Charities of the Year activities. Past Tesco partners have included Macmillan Cancer Relief (the retailer raised more than £3.2 million to fund Macmillan nurses in local communities), the Cystic Fibrosis Trust and Barnardo's. Tesco's stated core purpose for these links is to "create value for customers to earn their lifetime loyalty".

Avon is another brand that has found its CRM push delivers. The Avon Breast Cancer Crusade has been running for 13 years, and according to Avon's cause-related marketing manager, Faye Mingo, the link offers a significant boost for both consumers and staff. She says 84 per cent of employees who took part in a recent survey had raised money for the crusade - in total, £30,000 last year. Additionally, NOP research from 1,000 people surveyed found that 25 per cent said it had a positive impact on their purchasing decision.

"CRM has also had a positive impact on Avon's brand equity," says Mingo. "Results from the NOP survey found that regular customers who are aware of the Avon Breast Cancer Crusade feel more comfortable with the brand, perceive the company to be more innovative, have a higher trust for the company, and are more likely to recommend it to a friend than those who are unaware of the association."

So, cause-related activity can be an immensely strong motivator in certain situations, resulting in considerable participation both with staff and consumers.

But CRM pushes are unlikely to encourage switching across variants - anyone who buys bar soap won't purchase liquid gel because of a CRM link, but it is more likely to entice consumers to switch from one gel brand to another.

To succeed, the key principles of cause-related relationships are integrity, transparency, sincerity, mutual respect and partnership. Business in the Community's website (www,bitc.org.uk/crm) goes through these principles in more detail. Suffice it to say that thorough groundwork - intense planning and preparation via negotiation with the cause involved - is essential for the relationship to achieve the desired win-win balance for brand, cause and consumer.

If you can achieve that balance, "CRM partnerships have significant potential for shaking people's habits up," concludes Millner.

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