Service, Convenience Create Loyalty Leaders Like Google

by Karl Greenberg, Nov 19, 2007, 5:00 AM

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Rising gasoline prices, the need for speed, and convenience are cited as driving consumers' loyalty to Internet companies and online catalogues. Google is, in fact, the No. 1 brand in the 10th annual Brand Keys Loyalty Leaders List, compiled by the New York-based marketing consultancy.

About half of the Top 10 brands in the study are search engines or clothing catalogues. In this year's clothing catalogue category, J. Crew jumped 100 spots to the No. 6 position.

Robert Passikoff, founder and president of the firm, which polled 26,000 people 18 to 60 years of age nationwide, says service and convenience carries the day. The cost of traveling has especially helped the Web-based companies and traditional companies marketing online.

"You don't have to leave your home to be able to utilize their services, and they have been doing the same price reductions as brick-and-mortar stores," he says. "And it's been confounded further by the gasoline crisis."

Passikoff says that loyalty transcends practical considerations. "We estimate that 70% of loyalty is emotionally based, which is why Internet companies like Amazon.com are doing so well: either serendipitously or by strategic plan, they decided that they wouldn't be merely an electronic cash register, but that they would form a kind of community, and that's where the emotional bond comes in."

And the power of strong customer service transcends distribution models; consumers are loyal to companies that treat them right, regardless of whether they do so over the counter or through the Web. "Nordstrom, which was founded on strong customer service, ranks very high," he says. "Ultimately, it's the service and convenience factors and how well a brand meets and exceeds expectations."

No. 2 on the Loyalty Leader list is Yahoo, moving up from No. 5. "The gap between them has been getting smaller and smaller every year," notes Passikoff. L.L. Bean is No. 4, Sears is No. 14, Eddie Bauer is No. 22 and Lands' End is 24.

In addition to J. Crew, the study gave the biggest loyalty leaps to Verizon, which is at 10 and up from 54, Dunkin' Donuts, which jumped from 159 to 83 and Kohl's, which went from 134 to 84 this year.

Passikoff says packaged goods companies have a more difficult issue with loyalty because of price, variety and the perception that many such products are commodities hamper loyalty. And that, he says, is why that 70% solution of emotionality becomes critical for things like detergent and toothpaste.

"It's not that they are doing something wrong, it's that it's so easy to switch from Tide to Whisk. It is one of the reasons these companies are so anxious to support their brands and create emotional bonds, because if you don't, you become a category placeholder."

The bottom five brands in the study are Taco Bell, Diet Dr Pepper, The Gap, Con Edison and the NHL. At least one of these could be a poster child for the power of the Internet to disassemble branding: Passikoff suggests that the bottom brands have, in some way or other, "disappointed people in an extraordinarily emotional fashion."

Taco Bell is still suffering from the infamous rodent-cam fiasco of last year. "Nothing travels faster than the speed of light except bad news on the Internet," he says. "The NHL has not been able to create the interest, and some of that is rational in nature: They don't have TV infrastructure."

He says the big surprise was that so many catalogue houses were among top brands for loyalty. He says it's obvious why when one "takes a step back and sees that they are delivering at a good price, and their consumers don't have to get in their cars."

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