Too Much Choice Makes Brand Loyalty an Endangered Species
Issue 77: Oct 13, 2022
There’s a sea change taking place in social media and streaming platforms which should be a red flag for organizations that offer memberships, subscriptions or use devices that seek to deliver continuous value via consumer consumption, leading to rich sources of recurring revenue.
Membership and subscription have become all the rage over the past five years across many businesses. The continual drips of monthly or yearly revenue over time resulting from memberships and subscriptions acts as a steady flow of income. This income is predictable and feeds into solid forecasts. Recurring revenue is the new white in winter. When organizations offer products that result in a one-off, single purchase, revenue is less predictable and comes with high expenses associated with repetitive customer acquisition.
In terms of devices, most are sold at an initial loss for the promise of future recurring revenue. Owners invest in devices knowing they can use them to seek out new content. Whether it’s membership, subscription or an individual’s investment in a device, the relationship between an individual and an organization stems from the individual’s loyalty to the partnership plus the need to justify the money they invested.
An individual’s loyalty to an organization’s membership or subscription offerings is being challenged. What was once a relationship based on dedicated loyalty is now considered a simple transactional relationship to purchase a commodity. We submit that loyalty is being replaced by intention. In an unforgiving cancel culture, organizations will need to engage with their stakeholders differently.
Loyalty vs Intention
First a word about loyalty. It is defined as a strong feeling of support or allegiance. On an emotional level, loyalty is a devotion and faithfulness to a nation, cause, philosophy, country, group, or person. (Wiki) “Loyalty helps build support, which is important for mental, emotional, and physical well-being,” according to VeyWellMind. “Knowing you have people who have your back and will be there for you when you need them can help you feel secure.” Organizations build and nurture loyalty among stakeholders, which has been a traditional relationship and engagement strategy.
Intentions, on the other hand, can be specific ideas, guiding principles or even wishes that we set for ourselves and our lives. They’re like general goals for living or being. Intentions ask the questions, “How do I want to be? How do I want this to be?” as reported by Community Forward. On a higher level, “Intentions allow us to align our hearts, minds, and spirits to form ways we want to live our lives. Daily intentions manifest a sense of focus and empower you to create the kind of day you want to have because you’re stating from the get-go how you want to feel.”
The difference is critical: loyalty is external, intentions are internal. And like most behavior in our marketplace today, the customer is in charge. So, for organizations to be successful they need to respond to the internal values and attitudes of customers, not mold their customers to their external business models.
This distinction is important. Consider your own behavior. Are you loyal to one or a few brands? Practicality wins out in a marketplace filled with an abundance of choice and an audience that seeks what it wants, when where and how it wants it to be delivered. It’s a challenge to not be viewed as a commodity. Yet, this is what has happened in our exponentially expanding universe of consumable content. In the past, the customer may have been considered the commodity as organizations amassed an audience via memberships and subscriptions. The tables have turned, and organizations are now viewed as commodities by consumers. The shift does not bode well for any organization’s bottom line as the promise of recurring loyalty-based revenue dries up.
Historically in a marketplace and across society, individuals have had a limited set of choices. Limited choice can be seen as a good thing; it provides individuals some semblance of control over a defined universe of options. It provides comfort, allows us to exercise some autonomic thinking, and feel assured that we committed to a good decision. Unless of course we are online surfers, looking for the next best deal while avoiding being decisive.
The only option for home-based entertainment in the recent past may have been a cable bundle offering hundreds of channels — but likely only a handful that were watched often. Likewise, historically there may have been only one or a few associations or societies to join based on one’s career focus. In both cases, a limited number of choices.
What we are now experiencing across our personal and professional lives is an abundance of choice with an abundance of organizations across a plethora of niche and mass brands enticing us to their specific offerings, channels or apps. All with the goal of achieving the crown jewel of recurring revenue and revenue without dependence on other organizations. Case in point, C+R Research reports that consumers spend on average $219 a month on subscriptions, including cable and satellite TV. Even traditional retailers like Walmart are in the subscription arena, and Prime has escalated its annual membership from $99 to $159.
But let’s face it, how many new styles of clothing, inventive hybrid foods, and an ever-expanding inventory of video, audio and ebook content can we consume in one lifetime? How many subscriptions, memberships or the like can we manage when the hours in the day are finite? Our marketplace has fueled our desire for more and more. That in turn has triggered intention as a survival skill.
Social Loyalty at Risk
With an explosion of media platforms and exponential growth in content, consumers are calling the shots in terms of what they watch, read, and listen to –where and when. Loyalty to one brand, particularly among next-gens, is becoming a thing of the past. Just think about the decline of Facebook, Snapchat and Instagram being usurped by TikTok. The numbers confirm the trend. Statista reports that of Facebook users, just 19% belong to the 18 to 24-year age group. Another 18% fall between 35 to 44 years old. While 14% of users are 45 to 54, another 11% are 55 to 64, and 11% are over 65 years old. That equates to 36% of users being over 45. But here’s what’s noteworthy: Facebook’s smallest audience is its teen users. Just 1 in every 20 users is between 13 and 17 years old. TikTok’s audience: 40% are between the ages of 18 and 24.
Trends analyst Jasmine Gleeshan adds that “Facebook isn’t just uncool these days, it’s untrustworthy (read: lacking loyalty potential). Next-gens grew up in a cancel culture, so they won’t quickly forgive and forget Facebook’s role in the Cambridge Analytica Scandal. Besides, their parents and grandparents are on Facebook. So, while they may use it to connect with elder family members, it’s not where they’re looking for their next cool hoodie or content. Both YouTube and Instagram have tried to monopolize on TikTok’s unique niche with next gens, creating YouTube Shorts and IG TV. But trend followers aren’t trendsetters…and the kids know this.” TikTok has tapped into its audience’s intentions to find information and entertainment. Are TikTok users loyal? We would argue that TikTok is a transitory platform, popular, wildly successful but not a brand that instills loyalty.
The elephant in the social media room is what’s the next TikTok? We can pretty much rest assured it is incubating quietly online and will eventually emerge to make TikTok obsolete. Possibly Elon Musk’s X vision of transforming Twitter into an American version of super app Chinese powerhouse WeChat. In any case, to our point of loyalty as endangered, the example of TikTok’s ascent in the social media world reflects the pragmatism and intentional-based behavior of today’s young consumers.
Too Much Choice
So, how does an organization grapple with this behavior shift? How does it become necessary (not just nice) and a repeat destination for intentional choice in a market of limitless choice? We know content, products, and services drive brand choices. We also know the content on Kindle is basically no different from that on iBooks. The functionality and experience of the device drives brand choice. So, if every platform is a meme of the others, the only differentiation is unique, exclusive content, product and services matched by a superior user interface.
Now think about today’s marketplace where so much business has become subscription based. It is unrealistic to assume a recurring revenue business model will be based on lifelong customers. Savvy consumers dip in and out of subscription brands as well as social media channels. For example, how many people do you know who would sign up for a trial on Hulu, for example, to binge on a season of The Handmaiden’s Tale? As soon as the 10 episodes are over, cancel the subscription and skip over to another streaming platform for its exclusive content and trial subscription. The whole concept of brand loyalty goes out the window. And that is true for any brand that is seen as a commodity or operating at parity with competing brands.
The real issue here again is a change in behavior from loyalty stemming from a few finite choices to intention facing limitless choices. And that cannot be measured solely by data and analytics based on prior consumption. Purchase intention is measured by likelihood to buy. But intentional choice can also be spontaneous, throwing purchase metrics out the window.
With over 800 cable networks, we are flooded with content, reinforcing the behavior of grazing without motivating significant brand loyalty. As reported by MNI Targeted Media, “By 2023, there will be 12.6MM new households cutting the cord with their pay-TV subscription. There will continue to be a rapid shift toward digital video and streaming service over the next few years, and all major syndicated networks are making sure they have their share in the game. Peacock, NBCs streaming platform, and Disney+, are just two streaming platforms from traditional brands to enter the game and get consumers hooked.” But the question is will customers get hooked. With so many options, they are in the driver’s seat to cruise through whatever platform they choose to find a piece of desired content.
But there’s a problem in streaming paradise, largely caused by content brands. The New York Post adds, “A new Nielsen study, titled “State of Play,” has found that watchers are bogged down and inundated with too many viewing choices. The survey discovered that 46% of streaming customers are stressed out over the number of titles available to watch. This makes it harder for viewers to find specific programs that they desire to view. According to the report, as of February 2022, there are 817,000 unique program titles (series, movies, documentaries, and specials) available on streaming services. This is an increase of about 171,000 titles (26.5%) since the end of 2019. About 93% of respondents in the Nielsen research still plan to pay for these streamers or even add more to their ever-growing subscription lists by 2023. The percentage of individuals who spend their hard-earned money on four or more streamers has more than doubled from 7% to 18% in the past three years.”
The staggering number of apps only makes content consumption more complex. According to Stastica, “During the second quarter of 2022, Android users were able to choose between 3.5 million apps, making Google Play the app store with the biggest number of available apps. The Apple App Store was the second-largest app store with roughly 2.2 million available apps for iOS.” And you can’t test drive an app, like you can a streaming entertainment platform. Apps insist on making an intentional brand choice.
What Is Intentional Choice?
Again, we submit that loyalty has been replaced by intention. There may have been blind loyalty to brands in the past, but pragmatic consumers today think about what they specifically want and use intent to choose a particular content brand, app or service. So, all of this leads to the perplexing issue for content creators of how to build a subscription business in the face of limited-to-no consumer loyalty. If customers can get the same content, news, or entertainment somewhere else, they will. If it is free, all the better. If it is curated, that’s ideal.
The once greats are in a fall from grace. Variety reports “Market leader Netflix has seen subscriber numbers turn negative in the first half of 2022, expecting a net loss of 2 million in Q2, after enjoying huge gains the two prior years. Netflix also is facing aggressive competitors like Disney+ and HBO Max, amid a broader economic backdrop of rising inflation. Netflix is no longer the single big-name player but is instead joined by a number of high-profile services, each with exclusive and desirable content,” a PwC report says.” Recent news headlines show that there is a renewed focus by organizations on bundling services. Think Discovery + and HBO Max as one bundled subscription. Also afoot are partnerships with the likes of Walmart, Amazon and others to bundle streaming services access with yearly membership fees with each company sharing a percentage of revenue.
Customer loyalty is at stake. As we have said, the streaming platforms are at parity, it’s the specific content that differentiates them. And it becomes almost impossible to rely on customer loyalty when your platform doesn’t matter, and streaming customers are brand agnostic.
Also, another thorny issue. Is it an acceptable audience performance metric for a streaming service when the majority of subscribers received the subscription free as part of their Walmart or Costco membership? High numbers are good, but if those numbers aren’t using the service, how can they become loyal paying subscribers when the free deal is over?
Light at the End of the Tunnel
Understanding new consumer behavioral changes in anticipation of fads or trends is helpful to unlock insights into building a business model that is sustainable. That combined with the mind-boggling volume of choice sets a challenge for every organization. Don’t expect loyalty; instead, be contextual and personal – and cultivate core customers who intentionally turn to your brand for information. You are competing with a zillion online searches; be trustworthy, honorable, and relevant. Don’t trade short-term audience gains for development of a long-term community that addresses intention as a prime behavior for searching out your products and services.
Here are a dozen tips to address the power of customer intention. Use the insights to create affinity with your audience, which can evolve into intentional brand choice.
- Think like a customer. Anticipate their needs. Research them. Don’t assume you know what they want and don’t assume you are the customer.
- Make your offering exclusive. If they can find your products and services elsewhere, they will.
- Feed content and information in installments, forcing customers to return for the full story.
- Make the user experience compelling and engaging; make it unique compared to your competitors.
- Don’t assume your audience is all the same age or in the same life stage; create customized content that is age appropriate with your customers.
- Curate your content. Audit “search, but not found” online searches to identify what content your audience wants (but can’t find on your platform).
- Offer personalized content based on individual past searches, just like Amazon.
- Be responsive to customers — quickly. Look at your model holistically. A 2021 Zendesk reportfound that 60% of customers value a quick response from businesses, and social media can help teams respond faster on channels that their customers are already using.
- Humanize your brand; don’t be a purely utilitarian source of information. Create a connection that makes your brand and what you represent as a business matter to customers.
- State your brand values. Young consumers choose a brand with a value system aligns with theirs. In fact, Zendesk reports that 83% of millennials want the businesses they support to share their political and cultural views, and 76 percent state that they want brand CEOs to speak out on social issues.
- Engage your audience. It’s important to know exactly what kinds of customers your business wants to reach. That will influence what platform you will find your audience on, how to make the most of paid advertising, and even the type of content you create.
- Keep customers in the loop. Take customers behind the scenes and showcase aspects of your business that appeal to them. It’s not frivolous, it makes your brand relevant.
Choice Is No Choice
Some could argue that brands have created a nightmare for themselves as well as their consumers. With 23 different varieties of one brand of toothpaste or over 10 versions of a laundry detergent, customers typically default to one choice. This is not loyalty. It is battle fatigue. If you can identify the predominant intention among your stakeholders, you can tap into it to make your organization matter in a fundamentally personal way. And by understanding that individuals may select your brand for completely different reasons, it makes understanding intention all the more important.
Brand loyalty is an endangered species. Evolve with the market and consumers to stay relevant and essential – for whatever reasons your customers choose you.
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