Loyalty Engagement Index Finds Massive Gaps Between Expectations & What Brands Deliver

Amazon, Costco, Nordstrom, Trader Joe’s, and Zara Dominate Category
NEW YORK, NY JANUARY 16, 2017 – Soaring customer expectations are creating an increasingly challenging environment for retailers seeking brand engagement, according to Brand Keys, Inc. 22nd annual 2017 Customer Loyalty Engagement Index® (CLEI), conducted by the New York-based brand engagement and customer loyalty research consultancy (brandkeys.com).

Brand Engagement = Category Leadership

“’Brand engagement’ is how well a brand is able to meet expectations consumers hold for the path-to-purchase drivers in a category,” said Robert Passikoff, president of Brand Keys. “Those drivers and expectations come in the form of a Category Ideal. Brands best able to meet consumers’ expectations for that Ideal generate greater loyalty and are profitable market leaders. Brands that can’t meet expectations lose customers and market share.

Retail Brands That Sold Engagement Best

This year the CLEI examined 83 categories and 740 brands, where brand engagement leadership shifted dramatically in 49 of those categories. In the retail category expectations have increased 24% over 2016. Retail sector brands have only kept up with that by 9%, leaving an enormous gap between what consumers want and what brands are seen to deliver. 

The retail brand ratings that follow represent the highest levels of brand engagement generated for the categories in which they compete and were compared to consumer-generated, category-specific Ideals, computed to be 100%, which permits category-to-category comparisons to be made.

Why Consumers Expect More

“The concept of brand engagement is pretty straightforward,” said Passikoff. “Consumers have an Ideal for everything; it’s the yardstick they use to measure brands. Defining your category’s Ideal is where it gets very tricky. The process is more emotionally-based than rational, so defining the Ideal and identifying what consumers expect from their Ideal has to be more penetrating and subtle than a 10-point scale,” noted Passikoff.

“It needs below-the-radar, psychological metrics,” said Passikoff, “Because today’s consumer does not behave as he says, he does not say what he really thinks, and he does not think what he really feels. Consumers talk to themselves before they talk to brands, hot-wired to social networking, which super-charges expectations. The result? Massive gaps between what people really want and what brands deliver,” noted Passikoff. “And confusion among marketers about what actually drives engagement.”

The Ideal describes the precise path-to-purchase drivers, describing how the consumer will view the category, compare brands and how they will engage with the brand, buy, and remain loyal. “Most marketers look at the world through a brand-lens,” noted Passikoff. “It’s their brand, after all. The consumer, on the other hand, looks through a category-lens and that dichotomy can create problems when marketers try to engage consumers with their brands.” Drivers are category-specific since consumers don’t buy Smartphones in the same way they buy Cosmetics or Pizza.

The four path-to-purchase drivers for the Smartphone category look like this:

1) Brand Design, 2) Platform For All My Needs, 3) Personal Connectivity, and 4) Brand Support. 

The Pizza category, on the other hand, looks like this:

1) Made-to-Order Taste, 2) Customizable Extras, 3) Brand Image/Value, & 4) Connected Delivery
Values That Fueled Expectation Growth in the Retail Category

Values that fueled expectations most in the Retail Category included the following:

Athletic Footwear: Expectations grew most (+35%) for Personal Performance Optimization, expressing the consumers’ desire for equipment to help meet accomplishment goals.
Natural Food Markets: Expectation growth (+25%) was largest for brands being Socially Responsible. 
Sporting Goods: Successful brands are going to have to fight for better brand reputations when it comes to Specialization (+30%).
Online Retail: Brands will have to recognize what consumers really expect (+35%) is Immediate Delivery on Impulse Buying.
Price Clubs: Consumers come for the bulk pricing, but stay (and expect, +30%) Reasonable Fees.
Apparel Retailers: More than anything else (+40%) consumers are looking for Buzz around their apparel brands.
Department Stores: Both Reputation and Connected Shopping Experience (+37%) fueled expectations for this category.
Discount RetailLow, Lower, Lowest Prices and Online Order-In-Store Pickup are both up 22%.
Home ImprovementKnowledgeable-Service-to-Guide-Me is up again. This year, by 28%.
“Brands that can best fill that expectation gap win,” said Passikoff, “Brands that can’t meet expectations have little to recommend them. That paradigm resulted in a leadership shift in 58% of the categories we tracked this year. And, as these are predictive of consumer behavior, will show up in market share and profits in the new year.”
For the 2017 survey, 49,168 consumers, 16 to 65 years of age from the nine US Census Regions, self-selected the categories in which they are consumers, and the brands for which they are customers. Seventy (70%) percent were interviewed by phone, twenty-five (25%) percent via face-to-face interviews (to identify and include cell phone-only households), and 5% online.
Brand Keys uses an independently validated research approach that fuses emotional and rational aspects of the categories, identifies the four behavioral drivers for the category-specific ‘Ideal,’ and identifies the values that form the components of each driver. This year Brand Keys added 11 new categories including Energy Drinks, Snack Brands, Toys, and Yoghurt resulting in engagement evaluations of 740 brands.
The assessments measure how well brands meet expectations that consumers hold for each path-to-purchase driver that makes up the Ideal for a specific category. The research technique is a combination of psychological inquiry and statistical analyses, has a test/re-test reliability of 0.93, and results generalizable at the 95% confidence level. It has been successfully used in B2B and B2C categories in 35 countries.

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