Brand Loyalty – Does it still exist in an online dominated world?

By: Garry Lee | December 7th, 2009

I was sitting on a panel recently for a MRS Seminar about multi channel marketing when someone asked a very interesting question – “Do you think the concept of brand loyalty is dead in an online dominated world?”

All the panel was very quick to jump in and defend brand loyalty, but I think this was partly not to upset our marketing dominated audience! When we actually spent a little longer talking it through, the general consensus seemed to be that although there is a still a place for brand loyalty, it’s earned and lost in very new ways.

Firstly, let’s make the most obvious point; in the online world the ability to destroy your brand is so much easier because it happens so quickly. Just think of Habitat (and the twitter hashtag row) or more recently the outcry on facebook and twitter against the Daily Mail (and it’s journalist Jan Moir) for its Stephen Gately article. With online it’s not just journalists who have the power to spread incriminating information about your brand (or anything else for that matter). Anyone can do it. And once the info is out there and on the World Wide Web, it doesn’t take long for it to spread.

Secondly the online world makes it a lot easier for the consumer to research and compare brands than before digital times. This means the consumer no longer has to rely on past loyalty and past reputation to make a decision. Take insurance comparison sites for example. 90% of the population find their insurance through sites like MoneySupermarket or Confused. It could be argued these sites are specifically designed to avoid brand loyalty and instead push as many different brands (based on price) in front of the consumer, prompting the question – in an online world, is low price replacing loyalty?

During a recession it wouldn’t be a great surprise if the answer to this was yes. However I doubt this is true. If it was people would only ever click on the top link of aggregators and this is not the case. Many people still like to click through to the sites they know and trust.

It seems to me one of the key differences in building brand loyalty between online and offline is the ability for customers to be more savvy and only be loyal to brands that deserve it. Part of this is down to price, but the rest is down to quality and reputation.

Retention used to be much easier in the old days. Customers were less likely to be exposed to competitors, so brands could be less concerned with proving their worth. Nowadays it’s so easy to change (just think of utilities and how easily we can change our gas or electricity). So in order to avoid being beaten by price it is even more important for brands to build loyalty. Let’s not forget, essentially building brand loyalty is about building reputation; giving consumers a reason to pay more for you brand, because they can be assured it is good. And this will always be relevant – online or offline.

So, in conclusion – does brand loyalty still exist in an online world? Yes it does. Brand loyalty will always exist and the basics of good customer experience and high product quality are still critical. However the kind of non-emotional loyalty seen online has become much more important, purely because it’s easier to be fickle. And when it comes down to it who can blame consumers for that? Everyone wants the best product, for the best price.

The best advice I can give to brands both online and offline is never underestimate the power of brand reputation. Digital can create or destroy a brand in minutes, but if you look after the quality of what you produce, loyalty and credibility will follow and so will sales.

In the meantime, if you want help or advice to analyse your site and understand your customers please drop me an email at blog@redeye.com and please do follow my random musings on twitter.