Brand loyalty – how to give new product development a fighting chance

Research shows that, on average, families in the US repeatedly buy the same 150 items, which constitute as much as 85% of their household needs. And it’s not just Americans who display brand loyalty and are creatures of habit; the picture is similar across the globe.

As much as we might like to think that we’re early adopters, trail-blazers and willing to try anything new, we tend to be intrinsically brand loyal. It’s in our make-up. For example, how many people stopped using eBay after they suffered one of the biggest data leaks ever? Answer: very few – pundits estimated that it was less than one per cent of the 233 million customers who were affected. How many people in the UK changed their banking provider as a result of a huge Government-backed campaign costing a staggering £750 million to encourage switching? Answer: (according to an article in The Daily Telegraph) 100,000 people less than those who swapped banks prior to the switching scheme!

Brand loyalty . . . or brand apathy?

Brand loyalty is perhaps a misnomer and should be called brand apathy. It’s much easier to stick with what we know than having to make a choice – from high ticket purchases such as a car, through to the simplest decisions like a toothpaste brand when pushing round your shopping trolley in the supermarket. While discounting and offers have made us the most brand disloyal we’ve ever been, when it comes to new product development it’s still hard for organisations to get something new on to the radar. Less than three per cent of new consumer packaged goods exceed first-year sales of $50 million – considered the benchmark of a highly successful launch. In fact, 75% of consumer packaged goods and retail products fail to earn $7.5 million during their first year. And products that start out strong still may have trouble sustaining success. Examples include Pepsi Edge and Dr Pepper Berries and Cream (sparking a bring it back’ Facebook campaign), which launched to great fanfare, but two years later were nowhere to be seen, having been quietly withdrawn.

There are myriad reasons as to why new product development fails – maybe the product is targeted to an inappropriate audience, its quality is inferior or the price point is wrong. However, research shows that often (up to ten per cent) product launches flounder because they are not backed up by strong lead generation processes. For new products and services to stand a chance of flourishing they need to reach as many of the target audience as possible, which is where lead generation comes in.

At its simplest level, it is a way of warming up potential customers to the business and propelling them into the sales funnel and on the path to eventually buying. As McKinsey’s Consumer Decision Journey shows, generating leads is a fundamental point in an individual’s journey to becoming a new customer and subsequently becoming a loyal customer.

An online lead is generated through the collection of consumer data via the internet. That information could come as the result of a shopper sharing contact information in exchange for a coupon, a person filling out a form to win a new iPhone or a consumer providing their personal data in exchange for an educational guide, such as technological handbooks. Whatever the mechanic, a successful lead generation engine must tap into the value exchange. This means that consumers receive something that is valuable to them (a chance to win, money off opportunities, etc) in return for their data.

Consumers are more savvy than ever before and know the value of their personal information – while this might be considered a bad thing, it is actually a very positive shift. It means that consumers are consciously choosing to hear from brands that might be of interest to them, meaning that the leads the internet provides are more targeted and relevant to ones that have been provided in the past.

Traditionally, online lead generation has been viewed with suspicion given the reputation for shady techniques that hoodwink consumers into unwittingly providing their data. But this has changed. Today, online lead generation is one of the most cost-efficient and effective ways to reach potential customers. It has become a much more transparent process and this has resulted in providing better value to both clients and consumers alike.

It should be viewed as a match-making service – connecting brands with a receptive, opted-in audience. Consequently, organisations that are looking to launch new products and services in the new year should not disregard online lead generation, but actively embrace it – after all, can you afford to risk missing out on substantial incremental revenue?