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Brand loyalty Model

One of the difficulties we encounter when trying to measure brand performance is that the quality of the measurement depends on two main components: the market performance (sales, unit price, level of knowledge and adoption) and the emotional relationship that the brand generates in the customers / consumers. The relative importance of these axes depends on whether we are analyzing a brand in the B2B or B2C context.

For many years I used a relatively well known model for the analysis of brands in the B2C context. This model, called Consumer Disposition Funnel, breaks the brand adoption process (which in this context I will equal to loyalty) in several steps. It assumes that consumers go through different stages in the relationship with a brand, from no awareness to exclusive adoption. The relationship is dynamic as it is influenced by the change in consumer needs and pressure from competing brands. In this sense, although we consider that a consumer typically progresses through various stages as the brand meets his needs, he may go back to an earlier stage if new needs are unsatisfied or a competitive brand meets them better.

The model is well suited to various industries. It starts including all potential consumers and progressively filters them, analyzing at what stage they are in the loyalty process. In this article I show the model with 6 stages: Awareness, Consideration, Trial (no purchase), Repertoire (occasional or regular purchase but not as a main brand), Regularity and Loyalty (exclusive use).

The model requires certain information about the target audience (through transactional data or estimates based on representative sampling.The analysis is based on the calculation of the conversion rate from one stage to another. From this analysis it is possible to develop marketing tactics to unlock 'bottlenecks' (those stages in which the conversion rate is smaller than competitive brands) and concentrate communication efforts only on those steps really need to be improved. 

 

In this example, brand A has a conversion rate of 51% from Trial to Repertoire (i.e., 51% of consumers who try the brand use it as part of their repertoire), while Brand B has a 79% rate. This allows you to make two decisions: understand why does Brand B manage to convert consumers more than Brand A, and focus the efforts of brand A at this stage, and not in other less relevant ones.

Finally, it is important to understand the peculiarity of the industry of the brand, because in general, in the stages of Awareness, Consideration and Trial the consumer does not spend money on the brand, and only does so in the latter stages. Therefore, the conversion of consumers has a higher yield in the final stages than in the initial ones. The reverse of this is that the number of consumers in the early stages is much higher and conversion objetives are easier to achieve.