Engagement and Meeting Expectations Are Keys to Pandemic Survival, Brand Keys Finds
Customer brand loyalty survived COVID-19, which imposed a severe stress test on most companies, according to Brand Keys' 25th annual Customer Loyalty Engagement Index CLEI).
Retail companies that saw loyalty and sales surges in this environment included Amazon, Zara, Apple, Patagonia, Walmart, Nike, and CVS.
The 2021 national survey found that while the pandemic claimed many business and brand fatalities, customer loyalty was not among them.
"The new CLEI survey found 2020 marketplace rigors created two loyalty challenges for brands" noted Robert Passikoff, Brand Keys' founder and president. "First, how to enhance brand-to-consumer emotional engagement and, second, how to leverage brand values to best meet customers' expectations."
The 2021 survey examined 94 categories and 855 brands. It looked at two main values: emotional engagement and meeting customer expectations.
"Ideally, you want consumers to feel your brand engenders high emotional engagement and meets their expectations as completely as possible. Brands able to do that are six times more likely to create loyal customers, and loyal customers are six times more likely to give a brand the benefit of the doubt in tough circumstances," Passikoff said.
"Emotional engagement—the result of effective marketing communications that increases a brand's equity—results in customers behaving more positively toward the brand," Passikoff added. "Consumer expectations, a key dimension of customers' brand belief-systems, are unconstrained customer desires. Expectations increase on average 22 percent a year, yet brands typically manage to achieve only a 7 percent increase—a big gap between customer desires and brand promises to deliver."
Among the retailers and manufacturers that offered both high emotional engagement and high levels of meeting expectations were Zara, Dick's Sporting Goods, H&M, Mattel, Zappos, T.J. Maxx, REI, Whole Foods, Amazon, Trader Joe's, and Athleta. Online and digital companies meeting those criteria included Netflix, AT&T Wireless, Google, Instagram, WhatsApp, Facebook, TikTok, Uber, Disney+, and YouTube.
The retailers and manufacturers delivering high levels of meeting expectations but low emotional engagement were Best Buy, Home Depot, FedEx, Barbie, New Balance, Macy's, and Target. Online and digital companies meeting those criteria included Zoom, Facetime, Dropbox, StubHub, Amazon, Twitter, and Via.
Retailers and manufacturers delivering high emotional engagement but low levels of meeting expectations were Lego, Publix, Marshall's, eBay, Old Navy, and Brooks Brothers. Online and digital companies falling into this category included iHeartRadio, Soundcloud, and Lyft.
And finally, retailers and manufacturers failing to deliver on both metrics included Payless, UnderArmour, JC Penney, Kmart, Staples, J. Crew, the U.S. Post Office, DSW, and the Gap. Online and digital companies falling into this category included Bing, Kik, Slacker, Vivid Seats, LinkedIn, Hulu, and Skype.
In explaining the online and digital company results, Passikoff noted that lockdown measures brought about a surge in TV viewing, online streaming, and social outreach. He also pointed out that consumers, unable to leave their homes, spent an average of seven hours a day in front of screens. "Tired of the news, people watched streaming services, such as Netflix, Amazon Prime, and Disney+, and then they joined new services they hadn't used previously. Eventually the binging got old. If you didn't want to lose eyeballs and revenue, loyalty mattered more than ever," he said.
Companies in the retail sector were especially challenged during the pandemic, first with shut-downs, then limited re-openings, and then with health-and-safety regulations around mask wearing, the number of employees and customers in stores, and physical distancing, while also addressing the problems of contactless transactions and introducing self-service options. Some retailers needed to learn to deliver better e-commerce experiences. "Retailers that were first to recognize and meet these pandemically-fueled expectations secured customer loyalty," Passikoff said.
"During pandemics, consumers will compromise, but they still continue to demand that their expectations be met," Passikoff continued. "Lack of availability does not denote a decline of brand loyalty. Yes, being in-stock matters as regards sales, but loyal customers are more likely to stick with their favorite brands through difficult times and, in a more stable marketplace, will wait for them or will actively seek them out.
"The 2021 Customer Loyalty Engagement Index confirms brands that best meet consumers' expectations and are capable of sustaining emotional engagement relationships always see enhanced loyalty and the market share and profits that come with it," he added.