John Shannon’s article on loyalty (MW October 4) concludes that the way in which brand performance and customer satisfaction are evaluated must be reappraised; and he recommends that advertisers must create “advertising specifically to enhance loyalty”.
I suggest that this is simplistic and probably unachievable. The primary objective of advertising must be to sell incremental goods and services cost-effectively, and at an adequate return on the marketing investment required.
In order to achieve this goal, advertisers must segment their markets and develop appropriate communications designed to achieve relevant objectives based upon customer value and purchase lifestage. The message to a prospect will, for example, be very different to that aimed at an established high-value customer.
The problem arises when the word “loyalty” is thrown into the ring because consumer and advertiser perceptions of loyalty so frequently differ. An infrequent but regular buyer may perceive himself as highly satisfied and brand loyal, albeit simultaneously purchasing from a broad portfolio of similar products.
Equally, a high value customer may also be buying competitors’ brands frequently and, therefore, can be labelled as promiscuous. The goal must be to maximise the “share of wallet”, which is not the same as share of market, because the latter is an aggregate measure that takes no account of individual consumer behaviour.
The challenge is, therefore, complex and concerns four issues. Firstly, how should markets and customers be meaningfully segmented? Secondly, which media provide a cost-effective reach of the defined segments? Thirdly, what messages are appropriate for each of the chosen segments? And lastly, how should the return on advertising investment be measured for its cost-effectiveness? All four require the product or service in question to have a distinct and valued competitive advantage.
If the hard work required to resolve such issues is completed, cost-effective incremental sales should result, and consumers may become more loyal. Advertising certainly has a role to play, but only as one part of a complex marketing equation.