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Engagement or Loyalty: why settle for one?

Posted on: 08 December '11

A colleague of mine and I recently had a lively debate over the primary goals of a solution we are working on, called mKonnect. We often look at a problem from very different sides (he’s much more of a Star Wars guy and I think Star Trek can mop the floor with Chewbacca), so I was a little surprised as I slowly came around to his view.

I’ll frame the debate this way. Is brand loyalty an outcome of brand engagement or are they two distinct goals that need to be pursued separately? While ostensibly the debate was about mKonnect, we were really talking about the primary goals of brand marketers.

My initial thoughts were that these are not different goals – that engagement led to loyalty, while my colleague’s view was that they were indeed two completely different marketing goals that needed to be backed by separate strategies and tactics. I’ll lay down both our arguments. Let’s hear from you on what you think.

Where I stood: The Star Trek view

Brand engagement is the fundamental goal of a brand manager, I argued initially. I mean, don’t brand managers try to ensure that consumers are seeing, feeling, experiencing, associating and indeed fantasizing about their brands? If a brand can evoke these feelings, then logically, will loyalty not follow? I used my example from my teenage years following Star Trek. Star Trek appealed to me because at a very base level I was able to insert myself into the Star Trek narrative and wanted to boldly go where no man has gone before. Warp speed became a part of my language as in: “<fill in name of the waitress>, could I get my sandwich at warp speed please”.

Engagement clearly led to loyalty – didn’t it?

While true, let’s hear out the flip side of this argument.

Where I stand today: the Star Wars view

Using engagement as the sole mechanism to garner loyalty is to idealize the issue. The argument misses at least one important factor in the environment – Competition. For example, while growing up – Star Trek was about the only staple science fiction show that we got to see on Indian television. Would I have been an equally big fan, if alternatives existed? I don’t think so. Therefore (had alternatives existed), my affinity to Star Trek would have to be enhanced with certain switching barriers – maybe in the form of Star Trek prize entry competitions, which would have enhanced my loyalty.

Let’s take the example of Apple, the current darling of brand gurus worldwide. Is Apple’s appeal (no pun intended) only a result of the engaging brand and fantastic products they bring to the market? Is the closed environment, the strict user experience guidelines for development, the fact that you can only make Apple brokered in-app purchases, etc., not raising your switching barriers to non-Apple products and services?

Let me take a more direct example to illustrate the point further. You’ve probably got an Airline Frequent Flyer account, which the airline uses to drive loyalty. With every incremental purchase, the airline is effectively increasing your switching barrier. But are you truly flying the airline because you are caught up in their engaging brand narrative? How many times have you flown recently on your preferred airline and come away feeling that it was one of the worst service experiences you’ve had? And yet you have gone back and flown that once more just because it was taking you closer to your free Hawaii trip?

Now, it could be argued that Airlines are least likely to evoke the word “engagement”, but does that make the formalized loyalty program any less potent? The dysfunctionality of airline brand engagement aside, aren’t loyalty and engagement two distinctly different goals, pursued with distinctly different tactics? If airlines were able to back-up their “hold the customer hostage with miles” programs with an engaging service experience, would that not make them some of the greatest brands in the world?

I believe it would. I’m starting a research to explore all three models now. Let’s hear from you – which kind of brands have the most brand appeal – those that follow the pure engagement model (think Star-bucks), those that follow the mixed model – engaging brand backed up by a formalized loyalty program (think American Express) or those that rely primarily on a formalized loyalty program to retain consumers (any airline program of your choice)?

So in summary, Chewbacca you hairy mono-syllablelous (that’s not a word – something I just made up) monster, this round goes to you. Kirk out.

  • Sonal Grover

    Hey Samya,

    Personally I prefer to go for brands with mixed model but at times one gets stuck with loyalty program model.

    Let me give you example – here in India there is a chain called 98.4 (chemist). I don’t like there services as they are very slow in processing but their loyalty program is quite attractive so I landup there.

    Although as you said engagement do lead to loyalty but not always. I am actually of the view brand engagement and loyalty are two different things and firms should have separate targets for both of them.

    When ever you finish your research do send me your papers.

    Best,
    Sonal
    (your old Pal)

    • Sonal,
      Great to hear from you.
      I think you just made my point with excellent examples to boot.

      Will share the research as I get to some conclusions

      Thanks

  • Sanjeev Rawat

    I would also like to vote for a mixed model. Gone are the days when brand engagement automatically translated into brand loyalty also, I have my doubts if pure play loyalty program without excellent core service can result in long term customer sustenance (It might be a differentiator initially, but in an open economic era wouldn’t the competition realize it sooner than later??)

    Case in point is Doordarshan (which had excellent content in the 80’s and 90’s appealing to everyone and enjoying a monopolistic position), however as soon as the media sector was deregulated, it lost out to competition by not timely innovating against the rapidly changing socio-economic Indian demographics. Star Trek in my opinion had no competition. Not to oversimplify, but if Ramayana and Mahabharata were aired at the same time would them have enjoyed the same success???

    Coming back to the mixed model (I like Tesco ClubCard and Jet privilege loyalty programs). Tesco clubcard sign up is really easy and there is tremendous value as they do reward you periodically through redemption vouchers, special offers.

    Jet Privilege- The Jet airways loyalty program provides access to lounges (for Paltinum Card members you have a lounge after the security check in), in case you have a companion travelling with you – the access, refreshments, etc. is provided to him/her as well! If you forget to show your JP card while checking in, all you need to do is to send across your boarding card details and have the miles logged in!
    The Jet Privilege call centre provides excellent service in terms of their response time and follow up action!

    There is a third model as well and that is the Walmart Model where “Best Prices” is the sole driver, which also raises a question if we need a loyalty program at all?

  • Sanjeev Rawat

    I would also like to vote for a mixed model. Gone are the days when brand engagement automatically translated into brand loyalty also, I have my doubts if pure play loyalty program without excellent core service can result in long term customer sustenance (It might be a differentiator initially, but in an open economic era wouldn’t the competition realize it sooner than later??)

    Case in point is Doordarshan (which had excellent content in the 80’s and 90’s appealing to everyone and enjoying a monopolistic position), however as soon as the media sector was deregulated, it lost out to competition by not timely innovating against the rapidly changing socio-economic Indian demographic needs. Star Trek in my opinion had no competition. Not to oversimplify, but if Ramayana and Mahabharata were aired at the same time would they have enjoyed the same success???

    Coming back to the mixed model (I like Tesco ClubCard and Jet privilege loyalty programs). Tesco clubcard sign up is really easy and there is tremendous value as they do reward you periodically through redemption vouchers, special offers and additional discounts for a club card holder.

    Jet Privilege- The Jet airways loyalty program provides access to lounges (for Paltinum Card members you have a lounge after the security check in), in case you have a companion travelling with you – the access, refreshments, etc. is provided to him/her as well! If you forget to show your JP card while checking in, all you need to do is to send across your boarding card details and have the miles logged in!
    The Jet Privilege call centre provides excellent service in terms of their response time and follow up action!

    There is a third model as well and that is the Walmart Model where “Best Prices” is the sole driver, which also raises a question if we need a loyalty program at all?

  • Sanjeev,

    Thanks for the comment. I think your point about Walmart is particularly insightful. I think Walmart delivers without using a formal loyalty program, but they do have engagement – it’s true that engagement is oriented towards price and convenience, but isin’t that what the brand itself is about. While not quite a luxury brand, Walmart now provides such a range of service. So, for many consumers – it’s a bank, restaurant, grocery, departmental store all rolled into one and all at an unbeatable price… I would say they are extremely high on engagement, just not in the conventional marketing sense