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Consumers Are No Longer Brand Loyal

Why the 80 : 20 ration no longer exists

5May

Whilst 20% of customers used to account for 80% of a company’s turnover, this has gradually shifted to a ratio closer to 50:50.

It’s estimated that minority groups in the USA will account for 54% of the population by 2050, making them a minority-majority. What this has done is create a cultural shift, one where brands are expected to adhere to many differing cultures.

Consumer loyalty has been declining and there have been numerous examples demonstrating this. Nokia, once the leading mobile phone manufacturer, lost the majority of its customer base after Apple and Samsung brought out superior products. There has been a trend however for consumers to attach themselves with lifestyle brands - seen with companies like Starbucks, Apple and Nike.

What this has done is create an odd paradox whereby certain brands demand more loyalty whilst the majority infuse less trust. It’s now all about ‘best-in-class’ comparison where customers don’t care about a company’s journey, but how they compare to the brand which is deemed the market leader. If Apple started doing free four year warranties on their mobile phones for example, consumers would expect Sony, Microsoft and Samsung to match this.

There’s also a lot to be said for loyalty cards, most of the research points to the fact that they’ve started to lose companies money instead of rewarding them with increased customer loyalty. Add digital into the mix, where there’s almost total transparency, and the loyalty game is clearly one fraught with danger.

It’s certainly true that certain companies demand loyalty, but these mega-brands can be counted on two hands. For the rest, consumer loyalty is at its lowest ever ebb, and there’s not an awful lot that companies can do about it. Personalisation, like it always seems to be, is the key - bringing all those different demographics together and making them feel special.

Unfortunately for most brands, the road towards customer loyalty is a tough one.

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