Loyalty

Is social media changing millennials’ views of brands as followers and as customers?

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Dogs – “man’s best friend” – epitomize loyalty.

 

This is the question I have been working on answering all year long with Professor Akinc.  What started off as a research paper for Professor Gallaugher’s TechTrek turned into a year long independent study in the marketing department.

And now, as the second semester winds to a close, I find myself in the midst of notes from interviews with retailers and marketers, journal articles, and data from a survey I launched.

The results aren’t in—yet.  But I have learned about a few new trends that are affecting our generation.  We (Millennials) will spend $200 billion annually by 2017 and over our lifetime we’ll drop a casual $10 trillion into the economy.  So to say that brands are interested in gaining a share of our wallet is an understatement.

Share of Wallet  is a metric that argues that instead of measuring customer loyalty by satisfaction or Net Promoter Score,  companies should measure what proportion of consumers’ dollars they have (“share of wallet”).

In fact, loyalty as a whole is under increased scrutiny.

When you think of brand loyalty, you may think of the traditional image.  The high spending consumers who shop exclusively at certain stores.  They own the brand’s credit card.  They get special treatment at the stores and exclusive offers and discounts. Such view is considered transactional based loyalty.

What about the consumers who “like” your brand on Facebook, excitedly pin your products to their Pinterest boards, and comment on your Instagram photos?  They might not be spending any money, or as much money as your highest spenders.  But are they not still loyal?  Social media has allowed for the growth of relationship based loyalty.

Maybe you’re loyal to a brand now in terms of following their profiles and perusing their website.  But you haven’t bought an item yet because the products are slightly out of your price range or you don’t have a need for them yet. But when the time comes, you know that you’re going to buy that chic coat that’s more suited for a 28 year old on her way to work in the big city than a walk to Mary Ann’s.  So shouldn’t a brand pay attention to you now even if you’re not a current customer?  I think so.  But how do they know that you’re going to become that valuable customer in the future?  That’s the million dollar question.

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Want to help share your feedback on brand loyalty in my study?  You can participate in the survey here.  It should only take five or so minutes, but it will help me get a few steps closer to answering these questions.  I’d truly appreciate your time and I’ll be sure to report back my findings in my next blog post.

Are there any brands that you follow now on Instagram that you’re not a current customer of, but plan to make a purchase from in the future?  How far away in the future are we talking about?  I find this subject fascinating, so if you have answers or want to chat about it, let me know!

 

 

 

10 comments

  1. Awesome post! Super impressed by your research and think it’s a really interesting topic to explore. I really like the “million dollar question” you raise about how a brand should know whether or not to pay attention to a non-customer with the hopes of converting them in the future. I definitely see myself as having relationship based loyalty towards several brands-maybe brands I associate with but because of their mission or values but don’t necessarily wear every day. I also think that social media has made brands into more than just products. They now stand for something more than the logo on an article of clothing, almost as though they have a voice. I think this may be part of the reason for having a sense of loyalty without being a purchaser. I will definitely take your survey. Good luck!

  2. To me the main problem seems to be not if they are changing views, but how much. I think that it is without a doubt that social media can make fans more loyal by way of interaction with them. Companies need to decide how much money they are willing to spend on their brands so they can get the biggest chunk of that $10 trillion going into the future. Loyalty is huge and I think will be even more important going into the future. While the survey you posted focuses on Instagram (which I agree is very important), I think it is also worth looking at all the other sites in conjunction with each other. Cool post!

  3. I think there is huge value in brand loyalty even for customers that haven’t purchased yet, or in a while. I think before social media, there is no way to track it. Nowadays you can track your online loyalty and even incentivize people who follow online to actually purchase by offering deals, so there are ways to convert those people.

  4. Nice post. Look forward to seeing how the survey results work out!

  5. Your research seems very cool and very relevant to any brand in today’s world! The Share of Wallet concept is very interesting, but also agree with Sahil that there is definitely a huge value in brand loyalty. Social media definitely plays a huge role in my loyalty to a company these days. Even if I like a brand’s products, I wont follow them on any social media sites unless they post interesting and relevant content. I also agree with Sahil that the data that brands can track on consumer’s online activity is imperative in converting those consumers to purchase. I will also definitely take your survey and wish you luck with your research!

  6. Interesting how you bring up brand loyalty. My friends and I were recently discussing loyalty to different fashion brands. We all agreed that we have our preferences, but committing too heavily to a brand is close minded. Cant wait to see your results.

  7. I think targeting customers for future purchase is a great strategy. Therefore when the time comes to purchase a product in that field a companies product that has been targeting you will be the first to come to mind if they have built a loyal customer-business relationship. I follow brands that I can get benefits from, like discounts and what not, but i dont think I follow anything that I wouldnt buy right now.

  8. Great post! Brand loyalty is everything and the rewards can bring major value to companies . It keeps consumers coming back time and time again, and I think having a strong loyal consumer base makes it difficult for competitors to swoop in and steal your customers.While brand loyalty is not the easiest thing to build, social media really opens the doors in building brand loyalty by allowing companies to communicate directly with their customers through being transparent.

  9. Fantastic post! From the start you had me hooked when you talked about your project with Akinc and how this was originally from TechTrek. I enjoyed how you talked about how much money we are going to spend by 2017 and describing share of the wallet. That’s a really interesting concept that sheds a lot of light on how companies should be seeing people. You brought up an amazing dichotomy between transactional and relationship loyalty. I keep thinking in my head about firms I follow and I am loyal too. When I graduate college and start making a steady income I know I am going to go to those brands I am loyal too. I wonder if there is any correlation between transactional and relationship loyalty. You did a great job in this post and I learned a lot! I wish you the best of luck in your research, keep us posted!

  10. This is such a cool topic, and certainly in an area that’s (at least for now) far too dynamic and complex for marketers to really have a grasp on what the true value of a loyal consumer is. You did an excellent job of describing the difference between transaction- and relationship-based loyalty, which I think probably existed prior to social media, but is much more prominent, pronounced, and important now. I’m really interested to see what you find!

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