*Managing Brand Loyalty Powers ProfitabilityNEW YORK -- Larry Light kicked off the 34th Annual Direct Marketing Days Conference here by urging marketers to radically shift their brand building practices.
Creating and reinforcing brand loyalty is the basis for enduring profitable growth but it will take a revolution to make the companies reward rather than exploit brand loyalty, said Light, president/CEO of Arcature, LLC. Marketers need to fundamentally change a value proposition that now forces magazine subscribers, for example, to cancel their subscription and re-apply to get a good deal.
As with any discussion of loyalty, Light emphasized the huge difference between frequent customers and loyal ones and advised marketers to drop customer retention programs for loyalty programs. Creating a satisfied customer is an opportunity to move them up the ladder to a customer who stays with you because of their commitment to the brand. The payoff: brand enthusiasts are 8 to 10 times as profitable as customers considered category buyers.
While he bore the tone of a doomsayer at times, Light pointed out that the market segmentation techniques practiced by direct marketers are essential to what he calls brand loyalty management. The premise of BLM is that to ensure quality revenue growth companies must simultaneously grow the quality as well as the quantity of market share, i.e., attract more loyal customers.
The sin of marketing, Light said, is that loyalty is so taken for granted that loyal brands have become commodity items. The auto industry may claim high percentages of satisfied customers yet those same customers are the first ones to jump ship for a better price. Identifying that small percentage of customers that truly are loyal and servicing their needs is the approach Light recommends.
There is no such thing as a mass brand and companies cannot grow or retain market share by relying on brand recognition, he said. Even Coca Cola, one of the most recognized brands in the United States, if not the world, can count only 2.1 percent of U.S. households as brand enthusiasts.
"There are no mass brands. Get into the business of database marketing or sell your business to someone in database marketing,'' Light said in closing.