Saturday, December 24, 2005

Brand shifting - a new loyalty distinction

We tend to think of brand switching as a binary activity. Either we buy from brand A or from brand B, but not from both. However, real customer behavior doesn't support that binary pre-conception. In fact, most customers often multisource. This is true for both consumer and business purchases. For example, I shop at both Albertson's, Safeway, Trader Joe's, Target and Costco for items I would traditionally find in a supermarket. The same is true for business travel. I use multiple airline carriers and rental car companies - depending on pricing, availability and location.

The true customer behavior is neither black nor white, rather it is gray. The real issue is the weighting of spending customers apply across the various vendors. We call this BRAND SHIFTING. Customer don't eliminate your brand - they merely shift the volume away from your brand to another. So, let me ask a question. What mechanisms do you have in place to identify BRAND SHIFTS? Can you declare with any confidence that your business is suffering from BRAND SHIFTS?

For example, for companies that sell into a multi-supplier environment, what % of the business are you getting? How has that changed over time? If you don't know the answers to these questions, you have no ability to know the true impact of customer attrition on your business.

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