Brand Loyalty: Cell Phones trump Search Engines and Cosmetics

Posted on | October 20, 2009 |

By Robert Passikoff

Wireless handset brands iPhone (#1), Samsung (#2), and Blackberry (#4) accounted for a third of 2009’s top 10 Loyalty Leaders, in the 13th annual Brand Keys survey by Brand Keys. This year’s findings indicate that customer values intrinsic to technology brands were seen to best meet, and even exceed, customer expectations for their categories.

This year’s Loyalty Leaders List includes 440 brands in 63 categories.
Their brands in the top-10 included: Google (#3), Wal-Mart, Grey Goose, Mary Kay, Avis, Apple, and Amazon.com (#’s 5 through 10, respectively).

It’s worth noting that of the top-25 Loyalty Leaders, nearly a third represented cosmetic brands like Mary Kay, Maybelline, Estee Lauder, Clinique, and Lancôme. The ‘emotional engagement’ that women share with their favorite beauty brands is very powerful. At a time when many brands are becoming commodities and turning into category placeholders, creating strong emotional bonds is the only way they can guarantee continued loyalty.

Retailers Post Strong Showing
Sixteen percent (16%) of the top-25 Loyalty Leaders represented retailers (bricks, clicks, and catalog). Wal-Mart was rated #5 and J. Crew took two places, one for clothing catalogues (#11), the other for retail apparel stores (#23). “They’ve done all the right things in terms of the store experience. And the Obama-factor only helped add value to the brand.

Of the top-25 brands, 28% included technology brands, which, in addition to the wireless handsets leading the list, included Google, Apple, and Sanyo, as well as Verizon for top-rated Wireless Carriers.

Car Brands Out of Gas- except Hyundai
Only two car brands made the top-25: Toyota, a perennial category loyalty leader, and Hyundai, which moved up from #295 on the 2008 Loyalty leaders List to #24 this year. This increase in loyalty is largely due to significant increases in product quality, the success of its new higher-end models, and it’s innovative and resonating ‘Assurance’ campaign, their one-year promise to buy back Hyundais for many customers who became unemployed. Brands that can communicate they truly understand customer values always engender higher levels of loyalty.

McD’s Perks Up with McCafe.
In addition to Hyundai’s significant increase in loyalty, McDonald’s perked up loyalty and profits with an enormous increase in the Coffee category. Moving from #156 last year to #16. McDonald’s move into premium coffee, mochas, and lattes helped the fast-food chain increase their number of loyal customers. McDonalds expansion under the McCafé brand, has been both a successful product and strategy that has captured more customers has won customers from other coffee chains.

McDonald’s success is predominantly to Starbucks detriment. Ranked #191 on the 2008 Loyalty Leaders List, it now ranks #428, in the bottom dozen brands. This fall has forced them to defend a weakened brand with fewer loyal customers, and after introducing new brews, a coupon campaign, an instant coffee, and a defensive ad campaign, Starbucks had announced it expects to report negative comparable-store sales for fiscal 2009.

Laggards - GM, NHL, Taco Bell General Motors, the National Hockey League, and Taco Bell were the national brands ranked last (#’s 439 to 437, respectively).

Some segments have suffered because of the economy. But brands that understand that the old ‘price-value’ equation has been transformed to one that’s a customer-driven ‘value-for-dollar’ assessment of brands, will have also realized that the brand can be a surrogate for value. Smart brand marketers will leverage those values for all they’re worth.

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Robert Passikoff is founder of Brand Keys Inc. (New York), a brand and customer loyalty consultancy. He can be reached at 212-532-6028, x12, or robertp@brandkeys.com.