The Key to Brand Growth Isn't Loyalty, It's Instinctive Brand Preference
Since the dawn of marketing, business leaders have been taught that when consumers reach for the same brand every time they shop, that’s a sign of loyalty. As the theory goes, once that bond is achieved, it’s powerful and nearly impossible to break.
But loyalty means faithfulness or allegiance. And this doesn’t really describe what’s happening. After all, how much conscious thought goes into that grab? For example, if consumers choose Tide, is that based on them thinking about their passionate devotion to the brand? No. They just grab that big orange bottle and toss it in their cart without a second thought.
That’s not loyalty. It’s instinctive brand preference. Loyalty theory is based on a consumer decision model that is mostly conscious in nature. Instinctive preference, meanwhile, is a positive bias toward a brand on an unconscious level. This is where marketers should be focused.
As a Harvard researcher found, 95% of purchase decisions take place in the subconscious mind. Which means that “customer loyalty” is a distraction at best and, at worst, a misleading practice that can actually inhibit sustainable growth.
The fact is, competition does not really take place on supermarket shelves or on the e-commerce pages of Amazon. It takes place in the fluid, dynamic, ever-changing pathways of prospects’ minds.
For 25 years, my company has been focused on helping brands win people over from their competitors on an instinctive level to drive billions of dollars in growth. Doing this requires an understanding of the brain’s built-in neuroplasticity. The unconscious mind is malleable and much easier to change than people think.
In Knowledge@Wharton, I disclosed some of my company’s findings on this, together with Wharton Marketing Professor Michael Platt, whose studies mirrored what we see in our work with Fortune 500 clients.
The Brand Connectome
Inside consumers’ minds, every brand has a network of memories and associations that have accumulated over time. These cumulative memories, both positive and negative, form what we call the “Brand Connectome,” named after the human connectome, a mapping of neural connections in the brain.
Because consumers are not consciously aware of these associations, brand leaders generally aren’t either. Most surveys that ask people about brand choices yield conscious, surface-level answers. They track attributes, not associations. So, business leaders often don’t know the real underlying issues affecting their brand.
The key to success is having a larger share of mind -- a more robust, well developed network of associations and memories -- than your competitors. When a Brand Connectome is physically larger and filled with more positive associations, the brand becomes people’s instinctive choice.
The new rules of marketing
Once you understand this, other staples of traditional marketing collapse like dominos. You come to see that new consumers can be wooed much more easily than previously thought. Legacy brands that are stagnating can be injected with new life and experience new waves of growth.
And companies that believe they have an edge based on some unswerving sense of “customer loyalty” can be decimated overnight. That’s why disruptor brands the Dollar Shave Club, Casper and Robinhood can arise out of nowhere and make tremendous inroads instantly.
Perhaps the biggest and most important shift of all lies in understanding the true cause of brand growth. Companies are putting most of their focus into maintaining their existing customers because loyalty theory has taught them that attracting new ones is so much more difficult and expensive. This creates a Core Customer Trap, in which companies are overly dependent on their current customers for growth, so they keep trying to upsell and offer more and more loyalty rewards.
But customers leave brands all the time. If a brand doesn’t continuously replenish them, it will decline. It’s simple math.
When companies revolutionize their focus on attracting new customers using the drivers of instinctive choice, they find that it’s nowhere near as daunting a challenge as they’d thought. And they see growth far beyond anything they’ve experienced.
Implications for investors
How can an investor know which companies get it and which ones don’t? In the next earnings report, take a close look at whether companies are heavily focused on core customers while giving relatively short shrift to new customers.
In calls with executives, ask why they’re putting more resources into financial incentives like discounts and coupons, and less into advertising to evolve the “memory structure” of the brand. To really challenge them, ask why they’re spending 100% of their marketing focus on only 5% of purchase decisions -- the ones that are conscious.
Let’s face it. If executives don’t know what’s inside their Brand Connectome in their growth target’s mind, they don’t know the recipe for sustainable business growth. Consumers don’t buy brands on loyalty; they buy on instinct. And the financial health of brands depends on making the transition.
This is the first of three columns about why instinctive brand behavior should replace loyalty to achieve long-term growth.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.