Feb. 10, 2014
The interaction of mobile and socially networked consumer empowerment, along with perpetual price promotions, have finally reached saturation levels, producing the highest levels of emotional consumer expectations for products and services in two decades. Those expectations have direct effect on consumer loyalty and brand profitability.
In the retail category expectations are up nearly 19 percent while the retail brands have only grown by 4 percent; that′s one of the critical findings in the 18th annual 2014 Brand Keys Customer Loyalty Engagement Index (CLEI), conducted by the New York-based brand and customer loyalty and engagement research consultancy, Brand Keys.
For all 45 brands tracked in the retail category (including online, apparel, department stores, home improvement, discounts, sporting goods, price clubs and natural food stores), emotional engagement expectations related to "brand buzz," "shopping experience" and "value-for-dollar" exerted the strongest influence on consumer decision-making and engagement with brands.
While emotional engagement levels vary by category, brands in the retail category that best met expectations consumers held for the category-specific ideal (100 percent) were:
• Victoria's Secret (apparel) (81 percent)
• Nike (athletic footwear) (91 percent)
• Macy's (department) (80 percent)
• Walmart (discount) (93 percent)
• Home Depot (home improvement) (87 percent)
• Whole Foods (natural foods) (90 percent)
• Amazon.com (online) (93 percent)
• Sam's (price clubs) (94 percent)
• Dick's (sporting goods) (83 percent)
"Congratulations to the companies that continue to create meaningful differentiation and engagement," said Dr. Robert Passikoff, President, Brand Keys. "Our validated and predictive metrics prove that brands able to better meet consumer expectations act as surrogates for added-value, engendering engagement and loyalty than those based on the primacy of product and a coupon."
Emotional loyalty and engagement rankings for the 2014 retail category are:
1. Victoria's Secret
3. Abercrombie & Fitch
4. Banana Republic/Old Navy (tie)
5. American Eagle Outfitters
7. J. Crew/H&M (tie)
9. L.L. Bean
11. American Apparel
2. New Balance
6. Skechers/Adidas (tie)
5. T.J. Maxx
1. Home Depot
4. True Value
Natural Food Stores
1. Whole Foods
2. The Fresh Market
3. Trader Joe's
4. Sprouts Farmers Market
4. Big 5 Sporting Goods
5. Sports Authority/Modell's (tie)
The complete listing of the 64 category rankings can be found at:
"Meeting expectations for the category ideal always correlate highly with brand engagement, purchase, loyalty, and sales," said Passikoff. "The difficult part, of course, is accurately measuring consumer expectations. Most brands don't do that very well."
Categories that are more emotionally-driven are likely to have higher expectations that grow faster. More rational categories have lower expectations and move more slowly.
For the Brand Keys 2014 survey, 32,000 consumers, 18 to 65 years of age, drawn from the nine US Census Regions, self-selected the categories in which they are consumers, and the brands for which they are customers (top-20 percent). Seventy percent (70 percent) were interviewed by phone, twenty-five percent (25 percent) via face-to-face interviews (to include cell phone-only households), and 5 percent participated online.
Assessments are based on an independently validated research technique that fuses rational and emotional aspects of the categories to identify the behavioral drivers for each category-specific ideal, and identifies the attributes, benefits, and values that form the components of each driver. The ideal describes a precise path-to-purchase, describing how the consumer will view the category, how they will compare brands and, ultimately how they will engage with the brand, buy, and remain loyal. Then the assessments measure how well brands meet expectations consumers hold for each driver that makes up the ideal for a specific category.
The proprietary research technique combines psychological inquiry with higher-order statistical analyses to deliver a verified test/re-test reliability of 0.93, with results generalizable at the 95 percent confidence level. It has been successfully used in B2B and B2C categories in 35 countries around the world.
"If you can do something that increases a brand's engagement level you'll always see more positive consumer behavior in the marketplace. Always," said Passikoff. "And brands that are assessed as better meeting expectations held for the ideal always have larger market shares and are always more profitable than those that cant. Always. Having consumers overtly 'Rate the ideal' via importance scales may make for an unobjectionable cable reality TV concept, but it also makes for a highly inaccurate brand engagement yardstick in today's marketplace."
Read more about consumer behavior. (Photo by Samantha Marx.)