The elusiveness of customer loyalty: Winning the new battleground for marketing-led growth
The digital world has given consumers near-endless choices, and that has made many of them fickle. Easily tempted away to try new products or services, consumers aren’t as likely to be loyal to brands as they once were. In fact, McKinsey research from more than 125,000 consumers shows that 87% of them exhibit a strong propensity to shop around and incumbent brands hold their own just 42% of the time.
Further, our data suggests that most categories are “shopping” categories. In this world, marketers need to place more emphasis on the moments when consumers are initially considering which products or services to buy. They need a fine-tuned understanding of who those consumers are, what triggers them to shop, and how best to enter what’s known as the initial consideration set – since the brands in the initial consideration set are more than twice as likely to be purchased as brands considered only later in the decision journey.
McKinsey research has shown that successful brands have a tradition of building buzz with brand news as part of an integrated plan
Earning initial consideration goes well beyond getting shoppers to be aware of your brand name. They also need to have a clear enough sense of its unique benefits and value to include it among the products they plan to evaluate as they begin their journey towards a purchase. While traditionally, this would have prompted companies to increase spending on advertising, today many additional avenues are open to drive shoppers to brands.
Here are three proactive moves marketers can make to boost initial consideration.
Find creative and relevant reasons to communicate new products, features and experiences
Creating a regular pipeline of news and innovations can help raise the profile of brands with customers and potential customers. News about a brand often is a powerful trigger for new consumers to add it to their initial consideration set and keeps current customers engaged. This can include announcing new products or offers. Marketers should be clear that this doesn’t mean “blasting away” with TV ads. Combining deep awareness of customer motivations, targeted communications, and multichannel delivery (e.g. word of mouth or email vouchers), marketers can provide useful information to customers and potential customers.
McKinsey research has shown that successful brands have a tradition of building buzz with brand news as part of an integrated plan. Consider Apple, which has outgrown competitors by offering product innovation and a differentiated consumer experience. It has long used product news on innovations to stoke the interest of shoppers who then place the brand in their initial consideration set.
Understand what matters to your potential customers
To build initial consideration, marketers should take a wider lens to look at all potential customers including both lapsed customers and potential newcomers, many with limited or perhaps even no experience with the brand. This requires getting beyond the data to understand perceptions, motivations and behaviours at a level of detail that’s meaningful.
‘Lapsed’ consumers who have had a positive experience with the brand in the past but have stopped buying hold high potential: McKinsey research shows the most important touchpoint for driving initial consideration is previous interaction with a brand, even if the interaction happened several years before. So, marketers need to look hard at the reasons behind consumers’ “no repurchase” decisions. In some cases, a better offer may have stolen away a lapsed customer; in others, lifestyles or habits have changed. Some consumers may never have connected emotionally to your brand.
Similarly, marketers need to dig deep to understand negative associations or “barriers to consideration” of a brand among non-purchasers, which can include not understanding what the brand delivers or harbouring feelings that the entire category just isn’t for them. With this baseline of insight, marketers can then develop programmes that directly address these issues targeted at those most likely to convert.
Rebalance marketing budgets, giving more weight to what counts most
The shift to building initial consideration begins with a shift in marketing investments. Marketers should assess the ROI of various programmes, especially loyalty programmes that focus on existing customers, and shift resources from poor performing programmes to those that have a high propensity of increasing a consumer’s understanding and appreciation of your value proposition.
Dynamically re-allocating spend is a key capability of top growing companies – effectively doing so requires developing a detailed understanding of what actually drives consideration for your target customers
From other analysis, we know dynamically re-allocating spend is a key capability of top growing companies. Effectively doing so requires developing a detailed understanding of what actually drives consideration for your target customers.
With funding freed up, you need to begin expanding initial consideration across two horizons of marketing engagement. First, you’ll need new ways of boosting broad awareness of your products, services, and brand—likely using major media or social channels—that give consumers a reason for learning more about your brand. Second, you’ll need an innovative approach for translating traffic beyond simple awareness to real brand consideration, often on your website, where there’s an opportunity to convey a fuller picture of the brand’s value through creative interactions.
Let’s be clear: it’s crucial for companies to pay attention to all phases of the consumer decision journey. Getting into the ICS (initial consideration set) represents potential growth only if you can avoid being displaced by others during active evaluation and close the deal at the moment of purchase. In addition, strong performance in the loyalty loop means that you won’t create a leaky bucket where your growth prospects dwindle. This means it’s critical to run both a strong loyalty programme and to allocate pounds across the Consumer Decision Journey relative to the growth opportunity. Still, in a world where consumers shop around, initial consideration has emerged as marketing’s most critical battleground. Companies that hope to move the growth needle need to focus more on innovative programmes for the 87 percent of consumers who are likely to look beyond their current brand.
- » Trends, tribes and tolerance: The factors governing audience digital behaviour in 2020
- » Consumers to brands: Be informative and funny on social to woo us – oh, and respond to our every whim
- » Key areas of focus for retail advertisers in 2020: Cross-channel strategies and delivery models
- » Consumers are seeking out eco-friendly beauty brands: Exploring the rise of ‘conscious capitalism’
- » Staying competitive in tomorrow’s retail space: Seven technologies for 2020 and beyond