I read something recently about beer drinkers where the author said that Brand X customers were so loyal to the company that it didn’t have to worry about its core customers switching brands.
Whoa. There’s a difference between loyal customers and habitual customers. In my experience, loyal customers are actively engaged in choosing a brand whereas habitual customers are no longer actively engaged. If another brand captures a habitual consumer’s interest, they could switch – a costly loss. Is the beer company that confident in their customers’ loyalty?
Quite a number of years ago, I was doing research in the high-end, white tablecloth chain restaurant segment. As I was moderating group after group, I was met with silence when asking about their decision-making process. After the first group I thought “maybe it’s me.” During the second group, when I met with the same silence, I probed even more. By the third group, I’d figured out what was going on. Most of the target consumers were older and had been dining out 2-4 times a month at these high-end chain restaurants. They’d been doing this for so long they could no longer explain why they were doing it. “That’s just what we do.”
The key consumer insight for the client was one they didn’t really want to hear: this restaurant segment was dying. I believed it was going to take some time, but two things were at play. First, the segment customers were older and in many cases were (literally) dying. Second, target consumers – both younger and older – had more options than ever before (Cheesecake Factory, PF Chang’s, Macaroni Grill, etc.) and these options met their needs and were places friends and family liked to visit.
While a few chain restaurants of this type still exist today, the segment is almost completely gone.
Irrespective of segment or category, how can you engage your more profitable customers to ensure their repeat business? Is there a way to make them brand advocates vs. passive purchasers?