What is "identity loyalty"? Not long ago, I had the honor of speaking with Dr. Americus Reed II, author, loyalty expert and professor of marketing at the Wharton School, who also recently joined GBK Collective as a brand strategist. As the Wharton Marketing Department’s pre-eminent identity theorist, Reed has worked with leading brands such as Disney, Estee Lauder, Starbucks, Nike, Google and Microsoft to define a successful brand strategy that builds identity loyalty.
So what exactly does identity loyalty mean? Traditionally people define loyalty as a customer buying the same thing over and over again. But as Reed noted,
“That customer is only loyal to a certain extent. In fact, they may not be loyal at all, they may be buying because of ‘consumer inertia’ or a desire to get the same thing because there’s no need to think about a decent product that meets one’s needs. What’s more interesting, from a marketing perspective, is how do you get that person loyal to the point where they see your brand, your product, your organization as part of who they are? If a customer chooses your brand or product because it aligns with their own identity and values that creates a much more powerful connection than any feature or functional benefit could.”
Reed shared the steps marketers can take to build identity loyalty for their brand and how to apply research and insights to create a deeper connection with target customers, where they not only identify with your brand but advocate for it. Last but not least, he shared how to effectively measure ROI for your identity loyalty marketing efforts over time and common mistakes to avoid.
Steve Olenski: Can the concept of identity loyalty be applied to ANY brand in ANY industry?
Americus Reed: Absolutely. Identity loyalty can be applied to any brand in any industry. It’s about creating a deeper connection with your target customers where they choose your brand not only because of the features of your products or services, or how much it costs, but also in part because they believe in what your brand stands for, your values and unique story. When customers internalize a brand as part of who they are, then there’s the potential to become loyal to that brand.
Take Nike for example. You will never see a Nike commercial that talks about the features of the shoes, a particular type of lace or what the sole is made of. They talk about how sports transcend your life. They talk about sports as a mechanism whereby you can become greater than what you are.
They’ve built a sense of connection that’s deeply based on self-expression and values. They are now in a 'tribe.' When you make this kind of connection with a customer, price becomes a less significant factor in the purchase decision. If a competitor comes in with a cheaper product, it doesn’t work, because the entire connection is not only based around a financial argument.
And it may be tempting to think that identity loyalty can only work for brands in product categories that are high self-expression based (e.g., clothing apparel). That’s not true. Any brand that can tell a story that links to a psychological aspiration (e.g., Red Bull connecting with the 'risk taking adventure seeker' identity) has the opportunity to connect in a way that moves beyond its mere feature make-up (carbonated water and lots of caffeine).
Olenski: What about a startup vs. an established brand? Is there any difference in identifying, no pun intended, identity loyalty in a newer brand vs. a more established brand that already has a loyal customer base, such Apple, Nike or The Philadelphia Eagles? And if so, what are these differences?
Reed: Great question. I know you're a huge Eagles fan and so am I, as a long time Philly resident. This is also a question I’ve explored with my students at Wharton many times. And the answer is any brand can build identity loyalty — whether you're a startup or an established brand like the Philadelphia Eagles.
As Simon Sinek famously said: 'People do not buy what you do, they buy why you do it.' When we look at well established brands such as Apple that have built identity loyalty, we see a strong values alignment that underlie the brand. A startup can create that same powerful connection and values alignment with their customers, albeit on a smaller scale.
There are also some differences. A smaller company will likely have more upfront work to do to establish their brand in the market and less marketing budget to work with. But regardless of size, any brand can harness the power of social influence to build identity loyalty with their customers. They just have to be mindful of building it into their strategy on day zero, and to stay focused on the idea that the brand itself is an asset to be created and nurtured.
Olenski: What are some of the core steps companies need to take to build identity loyalty?
Reed: The first thing a brand needs to do is to create a demographic and psychographic profile to clearly define their target customers or segmentation. What are the values of those target customers? What issues, topics do they care about? What are they looking for? Why do they watch Eagles games, or use your product or service?
The core of my work is helping companies build that into their DNA. This begins with a positioning statement and identifies four crucial elements: the brand's purpose (its 'why'), the ideals and values it represents, the psychographic and behavioral attributes of its target customer and the value proposition offered by the brand to those who become identity loyalists.
Once you have defined your brand strategy and identity loyalty framework, the next step is to make sure you stay true to those brand values with consistent marketing that reinforces those messages, cementing them in the minds of customers. You also need to constantly measure brand perceptions to understand the effectiveness of your marketing. How do customers perceive your brand and products versus competitors?
Olenski: Moreover, once established, how do brands foster and maintain identity loyalty?
Reed: Your brand's identity and persona need to be authentic for long-term identity loyalty to be sustainable. Once you have created identity loyalty for your brand, the next step is to continue to foster your identity connection with customers via social media and other channels where you can communicate your brand values and story in an authentic way.
For example, in its short time in business, Warby Parker has successfully used Facebook and Twitter to brand itself as a socially responsible company. Its efforts have spurred interest in and admiration of its ideals among consumers.
Another key to success is continual measurement. In my role as brand strategist with GBK Collective, we apply analytics to help brands quantify and predict the specific attributes and factors that are most likely to create identity loyalty. If a customer chooses your brand or product because it aligns with their own identity and values, that creates a much more powerful connection than any feature or functional benefit could. And that value in terms of CLV is very real and measurable because it literally means that the customer is going to be onboard and buying for a very long time, in addition to being one of your strongest brand advocates.
Olenski: What are some mistakes brands commit while trying to establish identity loyalty?
Reed: Sometimes as mentioned before, brands confuse loyalty with repeat purchase. You have to go deeper than that. The other thing to be very aware of is that identity loyalty is a double-edged sword. Once you have established a 'tribe,' becoming something else becomes quite difficult. When Blackberry tried to rebrand its dominant position as 'a device for business professionals' into something more fun and contemporary relative to new incoming competition (Apple iPhone and Motorola Droid), consumers weren’t willing to see them in a different way.
Olenski: You mentioned when brands build a sense of connection that’s deeply based on self-expression and values with a consumer, price becomes a less significant factor in the purchase decision. However, what about availability? According to a recent study from Oracle, 80% of consumers say delays and shortages due to supply chain issues could cause them to cut ties with favorite brands. How does the subject of availability factor in when it comes to identity loyalty?
Reed: I would be willing to bet that if you broke those data into brands you love vs. brands you don’t, you would find numbers much smaller than 80% in the former category. The beautiful thing about identity loyalty is that it creates a fusion of who I am, with the brand. That means I will be viewing the world in ways that are meant to rationalize staying in the tribe. If I’m identity loyal, that means I’m willing to wait for the product, maybe even wait in a line at 3am in the morning in the cold, just to be able to commemorate with other members of my tribe, and to get our hands on that shiny little beautiful thing inside the box.
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Nicknamed “The CMO Whisperer” by the former CMO of Walmart, Steve Olenski is truly in rarified air for he has achieved an unrivaled respect and trust among those in the c-suite. Steve is also among the world’s most influential journalists and writers having written for many leading publications for over 10 years including Advertising Age, Adweek, Business Insider and Forbes.