Arry Tanusondjaja, a research associate at the Ehrenberg-Bass Institute, uncovers a common myth about loyalty and discusses the Double Jeopardy law.
When it comes to brands possessing an amazing power to elicit ‘love’ and über-loyalty from their buyers, Apple is often used as an example. From its early day as a small computer company in the late 1970s, Apple has been mentioned as having strong followers that help the brand to grow. This leads many marketing “experts” to conclude that cultivating brand love and loyalty towards the brand is the way to go.
The latest news on Apple’s declining market share for tablet devices shows that Apple may not necessarily possess that magical power compared to other similar brands. Apple still retains the crown for the biggest brand for smart phones in the U.S.; however, its market share for tablet devices has steadily declined. IDC reports that Apple’s share of tablet devices dropped from 58 per cent in Q1-12 to 40% in Q1-13, whilst Samsung managed to grow its market share from 11 per cent to 18 per cent in the same period. In an expanding market with a year-on-year growth of 142 per cent, although Apple is still growing their business, Samsung has continued to outpace Apple. Samsung’s recent announcement of their 8-inch Galaxy Note also ensures that the battle is as fierce as ever.
Brand growth is often likened to a leaky bucket: all brands lose customers, even growing brands – through the holes in the bucket. The issue is not to retain the water in the bucket by plugging the leak, but the important thing is to continue to top up this leaky bucket with new customers at a greater rate and grow the brand. This cannot be obtained by holding on to the so-called brand-loyalists and hoping that they will spread their love and loyalty to others. Although customers who are devoted to particular brands exist, these only represent a tiny portion of the total customers.
In a book by Byron Sharp, he explains that brand loyalty is an after-effect of brand size. This is known as the law of 'Double Jeopardy'. Bigger brands are rewarded twice: they not only have more customers, but these customers also buy more often (thus with greater loyalty). On the other hand, smaller brands are also punished twice: they have fewer customers who buy less often. This principle has been observed across different product categories from shampoo, soft-drinks and chocolate, even to cars and other durables as well – and across different countries.
Brands can only grow by acquiring non-buyers and lapsed buyers, rather than holding on to their existing ones. So companies should in fact aim to grow their brands by attracting new customers rather than cultivating loyalty. They should also ensure that the brand stays prominent in the consumer’s mind as well as available physically.
Many often forget that Apple did this to grow their brand; Apple ensured that more buyers have access to their products through their online ordering system, own retail shops and by establishing partnerships with major stores all over the world. Apple also makes sure that the brand stays salient in the consumers’ mind through their advertising. All of these factors, along with Apple’s well-designed products and functionality, help the brand to grow.
Samsung adopted Apple’s strategy of product design, accessibility and advertising; this has actually made them a worthy contender in recent times.
So before you go to the boardroom and present your marketing plan to cultivate your customers’ love and attachment to your brand, just stop. Brand love and emotional attachment won’t grow your business. Ensuring that your products are widely distributed and stay fresh in your consumer’s mind will certainly do.