NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Does your customer love you?

Does your customer love you?

January 10, 2006 11:53 IST

Imagine someone who bonds totally with you. Someone who trusts you implicitly and is completely involved with you and everything you stand for. Someone who wouldn't dream of walking off into the sunset with anybody else. True love. Sigh!

Real life is different. Temptations lurk around every corner and once money matters cloud the issue... ah well, we're all only too human, aren't we?

Marketers understand that only too well. Sure, they all dream of the customer who's so loyal that rivals don't even try to make him switch loyalties. But they recognise that the situation on the ground is usually vastly different.

Buyers veer off towards other brands that offer more incentives or a lower price. And they don't forgive transgressions too easily: mess with a customer's trust and you can kiss him good-bye forever.

It would probably help if marketers knew just how committed their customers are to the brand. That way, they could protect them from hostile takeover threats from competitors, bind them more tightly to the brand by personalised offers, and boost the bottomline by better retention and acquisition of customers.

"Conventionally, brands send both rational and emotional messages to consumers and hope they receive them. But the real loyalty happens due to the interaction between the brand and the customer at various touch points," says Kinjal Medh, chief operating officer, Cogito Consulting (part of the FCB group).

The strategic consultancy has created just such a tool: the Brand Relationship Style Monitor (BRSM), which helps measure the nature and intensity of customer-brand relationships.

The basic premise of the BRSM is that brand building needs to be grounded in more than just rational and emotional components. While products and offers, and end benefits and image are no doubt critical, the customer-brand relationship -- which can be a source of brand differentiation and sustainability -- is often ignored.

Accordingly, Cogito spoke with a variety of relationship experts -- including psychologists, sociologists and marriage counsellors! -- before undertaking a broadbased consumer survey across the world.

The two-year project was conducted over 342 brands in 45 categories and involved more than 163,000 customer-brand relationships. The takeaway? "Brand relationships are like human relationships. They take time to develop trust and bonding," says Medh.

And as with people-people relationships, customer-brand relationships are progressive, building up over time -- and with effort -- from transactive to secure and bonded. In fact, the BRSM study breaks the relationship ladder into four large steps (transacting, attraction, connection and bonding) that further divide into 13 smaller dimensions.

Based on the relative importance of these 13 steps, customer-brand relationships can be of seven types. Understanding where your customer fits in this matrix may be the key to maximising your relationships -- and hence, revenues.

What are the seven relationship styles? The lowest rung belongs to the 'non-committal,' defined by customers who are ambivalent about the brand. Slightly above them are 'price-based' relationships, where customers are extremely price-sensitive.

Both categories are highly vulnerable to switching brands; and although customers in price-based relationships can be easily acquired, their loyalties are usually suspect.

Higher up is 'follow the leader.' The Cogito study reveals that customers in such relationships are influenced by brand stature and image; they don't know too much about the category, so play it safe by sticking with the leading brand in the category.

While there are, understandably, more follow-the-leader relationships in consumer durables, internationally, they're surprisingly common in another category -- beer.

But as the connection between the customer and the brand intensifies, the relationship veers towards becoming 'reliant.' Trust is a cornerstone of this relationship, although emotions are still not involved. That comes in the three upper relationships. 'Caring' relationships are defined by comfort, brand recognition and satisfaction.

'Delights me' relationships are all about trust, chemistry and brand stature. The highest rung of the relationship ladder belongs to the 'perfect fit' -- the five bonding dimensions match this almost completely and, not surprisingly, brand loyalty is strongest in this relationship.

How does the BRSM actually work? Take a look at the case studies -- international and Indian -- below.

Make it 'to go'

The BRSM study found that the 13 relational steps that connect customers to brands (from ambivalence to devotion) are consistent across the world. And there is uniformity in the seven types of relationships between customers and brands.

However, cultural factors determine the relative proportions of the relationship styles -- for instance, the UK has the most 'reliant' relationships, while Germany has the maximum 'non-committal' customer-brand interactions. Brazil and Hong Kong have more 'price-based' relationships than other countries, while China has more engaged customers who share 'perfect fit' relationships with brands.

So much for cross-country comparisons. Even with product categories, variation in style proportions is fairly common. For instance, given the sensory appeal and indulgence factor involved, food and related products account for a high proportion of 'delights me' relationships (where the customer-brand association stands for a degree of fun and physical and emotional involvement).

Fast food restaurants, though, proved exceptions to this rule. The Cogito study surveyed McDonald's, Burger King, KFC and Taco Bell -- all popular quick service chains in the US -- and came up with some unexpected results.

Fast food restaurants in the United States have been playing the ambiance and service cards for a while now, but for all four chains, the greatest proportion of relationships was price-based, while a disconcertingly high proportion are non-committal.

Those are danger signals: low involvement levels translate into poor loyalty, which means those customers are vulnerable. "Within this category, McDonald's, despite its communication message of building family bonds, fails in its attempt to build a strong bond with its customers," states the Cogito report.

Banking on customer loyalty

Cogito faced a somewhat awkward position when compiling results for India. Indian customers tend to operate within five relationship styles (perfect fit, caring, reliant, follow the leader and price-based), rather than seven.

So, for the brand-level analysis, the consultancy merged the 'perfect fit' and 'delights me' results as well as the 'non-committal' and 'price-based' results as perfect fit and price-based, respectively.

The five styles were then applied to analysing customer-brand relationships for saving account holders at IDBI Bank, HDFC Bank and ICICI Bank. Interestingly, customers were also quizzed on their perceptions of competitive brands.

ICICI Bank clearly has the most engaged relationship with its customers; even HDFC Bank customers rate it higher than their own bank on the caring, reliant and follow-the-leader styles. And the bank's own customers give lower scores to the other banks on almost all parameters.

But the bank does have its weakness: Its customers rate it lower on the cost parameter than IDBI and HDFC Banks. Not surprisingly, therefore, it has the lowest score on price-based relationships, which are critical for acquiring new customers.

Internationally, service brands have the best scores on 'caring' and 'reliant,' says the Cogito report. IDBI Bank scores well on 'caring' and 'price-based,' which should help it retain and acquire customers. On the other hand, while HDFC Bank has better leadership credentials than its rivals, its performance on 'caring' and 'reliant' is poor, which is a cause of concern in a services brand.

The complete picture

Brand leadership in consumer durables can come in handy. A herd mentality among less knowledgeable customers is fairly common, and the brand leader can't help but benefit. And India has more follow-the-leader brand relationships than the other countries in the Cogito study, making it even more imperative for brands in India to project themselves as winners.

Consider colour TVs, for instance. The Cogito report points out that this category had the weakest relationship styles of all the categories covered in the study, with the greatest proportion of price-based customer relationships. That's quite a change from some years earlier, when image was key. Of course, at the time, the TV was part of the living room furniture, while now it is fast becoming a personal durable.

The Cogito study in India compared three brands: LG, Samsung and Onida. LG and Onida displayed fairly similar relationship profiles, with Onida customers mainly of the price-based variety. While LG scored highest on perfect fit and caring, it needs to improve its reliant scores.

Samsung, on the other hand, was more differentiated in the lower dimensions. It has the highest scores for reliant and is clearly the leader, but takes a beating on the caring dimension. The prime attributes in a 'caring' relationship are comfort, recognition and satisfaction, so one way of reading this result is that Samsung perhaps needs to pay more attention to its customers.

The conclusion: brands will benefit if they pay attention to their customers. The best love stories all have the same, sappy ending.

Quickbite: The Indian story

How do Indian brands fit in the BRSM matrix? Cogito conducted a pilot study in Mumbai and Delhi, with more than 1,100 respondents and over 2,400 brand mappings, before introducing the BRSM tool in the country.

The findings are in line with the stage of evolution of the branded market in the country: customer-brand relationships are stronger at the top and bottom of the ladder (see chart), as they are in other countries (like Brazil and China) that are new to branded products.

Of the 32 brands covered in the pilot study, 20 are less than 10 years old. The late entry of big brands, combined with fewer "brand sceptics", makes for more "perfect fit" relationships in India, compared with developed markets like the US and the UK.

For instance, Indian customers are likely to be twice as loyal to their brands (perfect fit + delights me = 30) compared to customers in the UK (perfect fit + delights me = 15).

At the same time, Indians are value-seekers, which is reflected in the chart: India has the largest "price-based" relationship style base among all the countries in the study. The challenge for brands in the country is clear: build up customer relationships so that they climb the ladder to more retention-led styles like "reliant" and "caring".

That will still take some doing: India's scores on those relationship styles is way below its western counterparts, where customers have settled down with their brands and aren't aggressively seeking change.

But to hold customers at this stage, warns Cogito, brands need to evolve significantly -- product attributes, distribution, service and comfort level with the brand play a major role in determining customer loyalty at these stages.

Instead, India has proportionally more "follow-the leader" relationships, indicating that customers are fairly risk averse. They would rather buy the brand that is perceived as "winning" than experiment and be disappointed. Interestingly, Cogito points out the the risk avoidance is on two levels: customers worry not just about product attributes, but also about buying socially unacceptable or unpopular brands.

The lesson for brand managers is clear: leader brands need to ensure they retain their peak, while challengers need to create winning spaces for themselves.

Meenakshi Radhakrishnan-Swami & Govindkrishna Seshan in New Delhi/ Mumbai