How to Handle a Declining Brand Loyalty

Here’s how CPG marketers can combat diminished brand loyalty in favor of convenience

Brand loyalty, as we know it, is dying.

According to a report by Criteo sent to Business Insider Intelligence, over 80% of customers reported being “likely” or “very likely” to try a new grocery brand, with another 16% noting that they’re “somewhat likely” to do so. That makes grocery the category in which shoppers are most interested in switching brands, although nearly all categories are seeing this effect. In a Forbes article titled, “The Death of Brand Loyalty: Cultural Shifts Mean It’s Gone Forever,” the author cites a 2015 Catalina study demonstrating that among the top 100 consumer packaged goods (CPG) brands, 90 experienced share declines due to consumer loyalty erosion.

What Drives Brand Loyalty?

Brand loyalty implies a decisive choice to buy one brand among a range of choices. For example, among a sea of options for peanut butter (Jif, Skippy, Peter Pan, Smart Balance, private label, etc.), a shopper exclusively buys Jif because they’re brand loyal.

How did that happen? Because the CPG recipe for building brand loyalty was tried and true: Build a quality product, then invest in marketing at each stage of the traditional marketing funnel. Drive broad-based awareness and consideration through TV and print; retail conversion through merchandising, in-store promotions and eye-catching packaging; and loyalty through reward programs, couponing and trade activity. 

Why the Decline?

In addition to changing cultural and generational factors, there is also a fundamental shift happening in the way people shop: convenience is trumping all other factors.

If brand loyalty implies a consumer making a conscious decision to buy one brand among many, the variety of brands they see is quickly narrowing as they adopt more convenient ways to shop. As the choices narrow, the selection of one particular brand is less important to them. Before, our Jif-loyal shopper saw all brands on the shelf at the store and decided to pick it because of their brand loyalty. Now the consumer only focuses on the top two or three rows of the retailer’s search results in their weekly click-and-collect order.

Eighty percent of searches on Kroger’s website (the largest grocer in the United States) are unbranded. This means that households increasingly are not shopping for specific brands, but rather convenience, price and availability.

Soon, the consumer will simply ask Alexa or another voice assistant to reorder peanut butter when they run out—without consideration for a particular brand prior to purchase. In some ways, this already exists today with programs such as Amazon’s “Subscribe & Save,” in which customers can set regularly scheduled deliveries of products. If Jif doesn’t make it into the recurring purchase cycle, typically based on prior purchase behavior, it will miss out on its previously loyal consumer’s purchase.

How to Combat Waning Brand Loyalty

What do you do as a CPG company in this new world, in which your consumer’s loyalty is dwindling?

You need to be in the narrowing set of options the convenience-driven consumer is seeing. In fact, you need to be the brand they see.

Awareness-driving media is still important to preserve the strength of your brand and keep it in the consideration set, but it’s now more important than ever to link brand-building media campaigns seamlessly to e-commerce conversion. You must be front and center in the split-second e-commerce purchase. Investing in paid search on retailer websites is one way to accomplish that, ensuring that your brand is in the advertised spots at the top of the search results, where most clicks happen.

Retail website display ads are another way to keep your brand top of mind while shoppers are building carts. Retailer advertisement offerings differ, but placing your ads on frequented areas of retailer websites or targeting them based on basket data or shopper search behavior allows you to get your brand in front of the consumer and provide a direct link to shop your product. Targeted digital messaging via retailer emails or other digital retailer channels is also an important part of your overall marketing strategy to win today’s evolving grocery shopper.

As brand loyalty gets replaced by convenience, CPG companies need to adjust their marketing investments accordingly. And they need to do it quickly, before their brands fall forever out of their previously brand-loyal consumers’ digital carts, in favor of the competitive brands that are more easily shopped in a digital world.

Photo by Chris Lawton on Unsplash.