What Have You Done
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FOR ME LATELY?</A>
Business Source Elite
WHAT HAVE YOU DONE FOR ME LATELY?
A weakened U.S. economy and shaky confidence have left consumers looking more
warily at brands. Miss the factors motivating their buying habits and you may miss
out on profits.
Economists and consumers alike won't soon forget 2002. Yet, despite a stock
market that has been more terrifying than most roller coaster rides and some of the
worst corporate scandals this country has ever witnessed, consumers have
remained loyal to their favorite brands.
That's not to say that current trends have had little effect on popular brands. In
fact, consumer expectations for many brands have changed radically since last year.
This means companies that have enjoyed strong loyalty in the past might easily
lose their grip if they don't focus on what consumers are looking for today
According to the Brand Keys Customer Loyalty Index, a twice-yearly study of
consumer behavior, all of the top 10 brands from 2001 ranked among the top 13
brands in 2002. "There has been considerable stability among the leaders over the
past year despite a tanking economy and terrorist attacks, which is a testament to
the resiliency of brands," said Robert Passikoff, president of the New York-based
brand and customer loyalty research consultancy
The Index was derived from telephone interviews concluding in July with 16,000
men and women ages 21-59 regarding 158 brands in 28 categories. Respondents,
all regular users of the products and services, were asked to assess the brands in
four categories (a.k.a. drivers) with 40 attributes per category. Each attribute was
rated on a scale of 1 (lowest) to 7 (highest) based on two criteria: what consumers
want (their ideal) versus their actual experience with the brand.
While there wasn't significant movement at the top of list, there was a great deal of
shifting within the rest of the study. The genesis of these changes was the fact that
of the 28 categories, nine experienced shifts in the order of category drivers. "If
you're doing what you did a year ago, you're not going to be addressing customer
values and meeting expectations today," warned Passikoff.
Not surprisingly, one attribute that has been greatly impacting changes in customer
loyalty is "maintains responsible business ethics and corporate management." The
percent of contribution it brings to the loyalty equation has increased 300% since
the attribute was first measured in 1997.
"This is a clear indication that companies need to look more carefully at their
activities and how [they are] affecting their perception in the marketplace," said
Passikoff.
On a category-by-category basis, the shift had the greatest affect on service and
financial categories such as airlines, banks, credit cards, insurance companies, long
distance providers, mutual funds, online brokerages, parcel delivery, rental cars,
retail stores and wireless providers, "all places where consumers basically had to
take people at their word," said Passikoff.
But industries like beer, fast food, pizza and soft drinks saw less change on this
score. "In categories where consumers feel they have more control, they're less
concerned," said Passikoff. "For example, if they walk into a pizza place and the line
is long, they can just walk out. But as they start to get further and further away
from control of their destiny, the more they begin to become concerned."
Due to the terrorist attacks of Sept. 11, 2001, travel companies suffered greatly in
terms of consumer loyalty. Not surprisingly, airlines were most directly hit as
American Airlines dropped from the No. 2 airline to No. 6, giving it an overall
ranking of 118 out of 158 brands. "Booking and boarding", which was the least
important of the four category drivers in previous years, now ranked as the second
most important brand driver.
Although hotels in general also slipped in the rankings, Ritz-Carlton retained its spot
as the No. 6 brand. In the car rental sector, Avis laid claim to the overall loyalty
title, as rival Hertz moved to No. 2 (and No. 65 overall) from No. 4.
In finance, consumers seemed to forgive mutual fund companies--at least
temporarily--as they moved up from their previous spot at the bottom of the list. T.
Rowe Price surged from 144 to 64, Fidelity from 103 to 68, Vanguard from 124 to
94, Putnam from 142 to 101. Janus saw little rebound from 143 to 140, likely
because it is a heavily growth-oriented fund--an area that lagged considerably last
year.
Once second in category importance, breadth of services is now the least important
driver in banking, indicating how generic the sector has become, even as customer
service jumped higher. Among banks, Citibank ranked No. 1, followed by Chase,
First Union, Fleet and Bank of New York--the same rankings as 2001.
In credit cards, Capital One made its first appearance on the list and immediately
locked up the No. 2 slot behind Discover thanks in part to its incessant advertising.
Despite Enron's meltdown, the utilities category was one of the biggest gainers,
with KeySpan jumping from 27th place to 10th, PSE&G moving from 39 to 11 and
ConEd from 74 to 25. "This could be because gas and oil prices are down for 2002
and the fact that these companies are largely viewed as reliable in uncertain times,"
said Passikoff.
The embattled telecom sector saw a fair amount of change and most of the drivers
within long distance shifted. Offering the latest technology moved from the thirdranked driver to second; convenience options was second and is now third; clear
uninterrupted connections stayed at No. 1 but billing accuracy fell (was second, now
fourth), indicating the generic nature of the service. "Companies used to
differentiate by delighting their consumers via airline miles, car rebates, etc. Now
delight has turned to expectation," said Passikoff. Sprint ranked as the No. 1 brand
in the category and No. 2 on the overall loyalty leaders list.
With wireless phone service providers introduced in the 2002 survey, Verizon was
No. 1 despite ranking seventh as a long-distance provider.
Among fast feeders, one of the most impressive jumps was seen by KFC, which
took over the No. 2 spot from No. 6. "This is all due to Jason Alexander's role as the
spokesperson. People believe him," explained Passikoff. Wendy's ranked first in the
category and McDonald's, Burger King and Taco Bell, respectively, all followed KFC.
In take-out pizza, Papa John's, Domino's and Pizza Hut held the top three spots.
Retail stores' rankings remained unchanged despite the economy except for Kmart,
which spiraled down from No. 51 to No. 148.
On the entertainment front, loyalty levels for major sports stayed the same.
Baseball scored the highest in loyalty, followed by the National Football League,
National Basketball Association and National Hockey League. However, the drivers
showed that a Major League Baseball strike would be detrimental to fan loyalty.
Funny, the owners and players didn't even need a survey to figure out that one.
Ethics, once a negligible indicator in terms of customer loyalty, has shot up
considerably.
1997
6%
1998
6%
1999
7%
2000
9%
2001
12%
2002
18%
~~~~~~~~
By Kenneth Hein
href="http://search.ebscohost.com/login.aspx?
direct=true&db=bsh&AN=7379118&site=ehost-live">WHAT HAVE YOU DONE
FOR ME LATELY?</A>
Business Source Elite
WHAT HAVE YOU DONE FOR ME LATELY?
A weakened U.S. economy and shaky confidence have left consumers looking more
warily at brands. Miss the factors motivating their buying habits and you may miss
out on profits.
Economists and consumers alike won't soon forget 2002. Yet, despite a stock
market that has been more terrifying than most roller coaster rides and some of the
worst corporate scandals this country has ever witnessed, consumers have
remained loyal to their favorite brands.
That's not to say that current trends have had little effect on popular brands. In
fact, consumer expectations for many brands have changed radically since last year.
This means companies that have enjoyed strong loyalty in the past might easily
lose their grip if they don't focus on what consumers are looking for today
According to the Brand Keys Customer Loyalty Index, a twice-yearly study of
consumer behavior, all of the top 10 brands from 2001 ranked among the top 13
brands in 2002. "There has been considerable stability among the leaders over the
past year despite a tanking economy and terrorist attacks, which is a testament to
the resiliency of brands," said Robert Passikoff, president of the New York-based
brand and customer loyalty research consultancy
The Index was derived from telephone interviews concluding in July with 16,000
men and women ages 21-59 regarding 158 brands in 28 categories. Respondents,
all regular users of the products and services, were asked to assess the brands in
four categories (a.k.a. drivers) with 40 attributes per category. Each attribute was
rated on a scale of 1 (lowest) to 7 (highest) based on two criteria: what consumers
want (their ideal) versus their actual experience with the brand.
While there wasn't significant movement at the top of list, there was a great deal of
shifting within the rest of the study. The genesis of these changes was the fact that
of the 28 categories, nine experienced shifts in the order of category drivers. "If
you're doing what you did a year ago, you're not going to be addressing customer
values and meeting expectations today," warned Passikoff.
Not surprisingly, one attribute that has been greatly impacting changes in customer
loyalty is "maintains responsible business ethics and corporate management." The
percent of contribution it brings to the loyalty equation has increased 300% since
the attribute was first measured in 1997.
"This is a clear indication that companies need to look more carefully at their
activities and how [they are] affecting their perception in the marketplace," said
Passikoff.
On a category-by-category basis, the shift had the greatest affect on service and
financial categories such as airlines, banks, credit cards, insurance companies, long
distance providers, mutual funds, online brokerages, parcel delivery, rental cars,
retail stores and wireless providers, "all places where consumers basically had to
take people at their word," said Passikoff.
But industries like beer, fast food, pizza and soft drinks saw less change on this
score. "In categories where consumers feel they have more control, they're less
concerned," said Passikoff. "For example, if they walk into a pizza place and the line
is long, they can just walk out. But as they start to get further and further away
from control of their destiny, the more they begin to become concerned."
Due to the terrorist attacks of Sept. 11, 2001, travel companies suffered greatly in
terms of consumer loyalty. Not surprisingly, airlines were most directly hit as
American Airlines dropped from the No. 2 airline to No. 6, giving it an overall
ranking of 118 out of 158 brands. "Booking and boarding", which was the least
important of the four category drivers in previous years, now ranked as the second
most important brand driver.
Although hotels in general also slipped in the rankings, Ritz-Carlton retained its spot
as the No. 6 brand. In the car rental sector, Avis laid claim to the overall loyalty
title, as rival Hertz moved to No. 2 (and No. 65 overall) from No. 4.
In finance, consumers seemed to forgive mutual fund companies--at least
temporarily--as they moved up from their previous spot at the bottom of the list. T.
Rowe Price surged from 144 to 64, Fidelity from 103 to 68, Vanguard from 124 to
94, Putnam from 142 to 101. Janus saw little rebound from 143 to 140, likely
because it is a heavily growth-oriented fund--an area that lagged considerably last
year.
Once second in category importance, breadth of services is now the least important
driver in banking, indicating how generic the sector has become, even as customer
service jumped higher. Among banks, Citibank ranked No. 1, followed by Chase,
First Union, Fleet and Bank of New York--the same rankings as 2001.
In credit cards, Capital One made its first appearance on the list and immediately
locked up the No. 2 slot behind Discover thanks in part to its incessant advertising.
Despite Enron's meltdown, the utilities category was one of the biggest gainers,
with KeySpan jumping from 27th place to 10th, PSE&G moving from 39 to 11 and
ConEd from 74 to 25. "This could be because gas and oil prices are down for 2002
and the fact that these companies are largely viewed as reliable in uncertain times,"
said Passikoff.
The embattled telecom sector saw a fair amount of change and most of the drivers
within long distance shifted. Offering the latest technology moved from the thirdranked driver to second; convenience options was second and is now third; clear
uninterrupted connections stayed at No. 1 but billing accuracy fell (was second, now
fourth), indicating the generic nature of the service. "Companies used to
differentiate by delighting their consumers via airline miles, car rebates, etc. Now
delight has turned to expectation," said Passikoff. Sprint ranked as the No. 1 brand
in the category and No. 2 on the overall loyalty leaders list.
With wireless phone service providers introduced in the 2002 survey, Verizon was
No. 1 despite ranking seventh as a long-distance provider.
Among fast feeders, one of the most impressive jumps was seen by KFC, which
took over the No. 2 spot from No. 6. "This is all due to Jason Alexander's role as the
spokesperson. People believe him," explained Passikoff. Wendy's ranked first in the
category and McDonald's, Burger King and Taco Bell, respectively, all followed KFC.
In take-out pizza, Papa John's, Domino's and Pizza Hut held the top three spots.
Retail stores' rankings remained unchanged despite the economy except for Kmart,
which spiraled down from No. 51 to No. 148.
On the entertainment front, loyalty levels for major sports stayed the same.
Baseball scored the highest in loyalty, followed by the National Football League,
National Basketball Association and National Hockey League. However, the drivers
showed that a Major League Baseball strike would be detrimental to fan loyalty.
Funny, the owners and players didn't even need a survey to figure out that one.
Ethics, once a negligible indicator in terms of customer loyalty, has shot up
considerably.
1997
6%
1998
6%
1999
7%
2000
9%
2001
12%
2002
18%
~~~~~~~~
By Kenneth Hein
