Challenger Brands Are Winning at Instilling Loyalty Among Consumers

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It’s time for big brands to start taking notice of what the little guys are doing differently. Established brands once enjoyed being a cornerstone in consumers’ lives and now they find themselves losing share to a growing collection of challenger brands that are finding new ways to compete. According to reports from Catalina, major brands across 14 product categories lost market share and 90 of the top 100 CPG brands have experienced declines. It’s clear that large brands must re-evaluate how to maintain their edge.

The essential elements of creating loyalty have not changed: providing a quality product or service at a fair price, delivering on the brand’s promise, top-notch customer service, exhibiting ethics and reliability. But be sure that they are no longer the driving force of loyalty and will they won’t be in the future. Smaller brands understand this.

Small brands understand that marketers must replace the word “retention” with “relationship.” Emotional connectedness is at the center of creating meaningful relationships with consumers and thus ensures loyalty. Harvard Business Review found that on a lifetime value basis, emotionally connected customers are more than twice as valuable as highly satisfied customers.

Consumer relationships stand on the same principles as any personal or professional relationship: trust, authenticity, reliability, personality, empathy and openness to feedback. Marketers must apply these same qualities to their relationship with consumers.

Emotional connectedness is at the center of creating meaningful relationships with consumers and thus ensures loyalty.

How can you create emotional connections with consumers and why are smaller brands better at it? Look at a brand like Halo Top Ice Cream that has quickly taken over the freezers of millennials across the country and has industry giants scrambling to adapt. The brand does minimal advertising and relies primarily on word-of-mouth influence to grow its now cult-like following. The brand made the conscious decision to abandon corporate speak and channel a relatable, care-free “eat the whole pint” vibe. It embraced authenticity to build a relationship with its audience, a quality that millennials gravitate toward—almost as much as they do to guilt-free ice cream.

Smaller brands have a natural advantage to start with a relationship-first strategy while larger brands are often racing to catch up. Here are three things big brands can learn from the little guys.

Create personalized experiences, not personalized advertisements

No one wants to be in a relationship where they constantly give with nothing in return. Marketers must use the data they collect from consumers to offer something relevant back to them. Did you discover a consumer is a fitness buff? Deliver a piece of content tailored to healthy living. Do you know your consumers’ geographic location? Invite them to a local event or ask if they’d be open to participating in one in the future. Find some consumers with graphic design talents? Ask them to give input on some new packaging concepts.

Don’t be afraid to ask questions of your consumers that go beyond traditional marketing targeting segments like age, gender, HHI. Figure out who consumers are as people and you will be far more powerful and effective at getting their attention. Data can be collected via surveys, polls or profile capture. Just don’t sit on the data once you receive it. Personalized experiences make the consumer feel invested in the brand and as if they’re a part of its mission.

Say goodbye to traditional loyalty programs

Traditional loyalty programs rely almost exclusively on a transactional relationship with consumers. It is no wonder that 78 percent of Americans abandon loyalty programs they signed up for. Loyalty programs become a cumbersome exercise of analyzing points, scoreboards, tiers and rewards. It’s not working. Small brands know that customer loyalty is much simpler (note that simple does not mean easy).

When thinking about a loyalty program, the value proposition should not be led by the transactional nature of the relationship. The main benefit should not be about getting rewards. Rewards should be supplemental to the brand’s overall message about what the organization stands for and why someone should care.

Build a community to foster consumer relationships

Creating a community around a brand, for many marketers, stops at an email subscriber list or social media following. Unfortunately, these channels are limited and often leave marketers stuck in one-way paid communication tactics. A brand community must be an owned, living destination seeded with the brand’s core values that provide personalized engagement before, during and after the sale.

Winning at customer loyalty means winning at shared values, creating a sense of belonging and collective identity. Take a look at the Kind brand. While its founder correctly says product quality comes first, its mission helps it stand out and compete against industry giants. These small innovations led Kind to take over 10 percent of the market share by 2016, chipping away from large brands like Kellogg’s.

Loyalty is not lost, but it is changing and demands a shift from marketers. In a time of unprecedented choice, brand loyalty is a central part of our decision-making as consumers. For marketers, this means prioritizing values over points and showing customers they know what matters most to them. While product quality and customer service are the foundation of repeat purchases, emotional connections and brand relationships now power loyal customers.