On Brand Loyalty

Earlier today I looked into booking a hotel for next year’s SXSW Interactive (Tip: don’t bother, they’re not offering the reduced rates yet), during which process I noticed that my preferred hotel offered its own Rewards program. This reminded me of a somewhat recent disaster of an online booking experience with airlines, which at the time made me realize just how frustrating it really is having to deal with airmiles and all these airlines teaming up and still having six or seven different rewards programs. Then there’s examples involving Starbucks, Shell and several other companies with whom I’ve had mostly-frustrating experiences trying to actually benefit from being a regular customer. This all prompted me to tweet a startup idea:

Startup idea: centralized rewards service that allows you to earn _and spend_ airmiles, rewards etc. from many companies, all in one place.

In hindsight this was too idealistic and naïve, as Peter Bierman pointed out to me in a reply on Twitter that businesses offer these rewards programs to build brand loyalty, and would thus be very unlikely to participate in a centralized program where their rewards points become commoditized.

Which brings up the question: what is brand loyalty, anyway?

There is a marked difference between what is typically perceived as brand loyalty, and what real brand loyalty actually is. The latter, by the way, is most often typecast as “fanboyism”—especially in the case of Apple, but more on that below.

As Peter pointed out, many companies both large and small offer certain benefits or awards to regular customers as a way to reward their “brand loyalty”, which effectively reduces brand loyalty to the equivalent of “repeat buyer.” The fundamental flaw in this system is that repeat buyer doesn’t always mean “loyal customer,” in fact, I would be surprised if it’s the case even half of the time.

For instance, airlines offer airmiles and frequent flyer benefits to people who 1) sign up for their program and 2) fly on their flights, or nowadays, on any of their or their alliance’s flights. The thing is, there are only three airlines I actively choose to fly with: Jetblue, Virgin (America and Atlantic), and KLM. And they don’t cover anywhere near all the destinations I go to, or sometimes when they do they’re too expensive or inconvenient to make them a viable choice for me, meaning I end up flying quite a bit on airlines I’m indifferent towards. But, since I signed up for their frequent flyers programs at some point, I still get to earn some miles here and there.

For example, I once signed up with United because they were Apple’s go-to airline for its employees’ business trips, and I was allowed to gain airmiles personally while on those business trips. I have zero allegiance to United nowadays, because I’ve since had more unpleasant flight experiences with them than pleasant ones. However, if they look at the airmiles on my account with them, they might well consider me a “brand loyal” customer.

Small companies offer rewards just as often as major corporations do. My favorite place in San Francisco, Thorough Bread & Pastry, has a Frequent Buyers rewards card which gives you up to $10 off of your next purchase when it’s full. It costs at least $120 to fill up a card, but given enough time it’s entirely likely that you’ll hit that mark. Their food is incredibly good, affordable, and the overall feel of the place is great. They’re a one-shop artisan bakery, and their brand loyalty program is virtually the same as that of the biggest airline in the world. But neither program, I argue, is actually relevant to brand loyalty at all.

What makes me return to Thorough Bread & Pastry is the excellence of the food, the atmosphere, and the prices. What makes me care about them, on the other hand, has more to do with their dedication and passion for their craft, food and for small, artisan businesses, than their actual products. I love the place because their interior decorating is beautiful, cozy and warm. The people who work there are always friendly, always helpful, and you get to see them make everything as the kitchen is right there in the middle of the shop. Want to know how they make that grilled chicken sandwich you ordered? Just watch them. Want to learn more about how they make their bread? Just ask them! It doesn’t really get better than that.

Similarly, the things that make me care about Jetblue, Virgin, and KLM is not that they fly me from A to B when I pay them to, but their concerns about impacting the environment. All three airlines upgrade their planes as often as possible to benefit from the better fuel efficiency of newer aircrafts. It’s also their quality of service; Jetblue and Virgin with their superior legroom, KLM with its food, et cetera. I really couldn’t care less about their frequent flyer programs; I’m only signed up for them in case it’ll save me money some day. My brand loyalty to them is based on what they do, how they do it and how they consider me as a customer. Not as another one out of many millions they serve each day, but as someone they are providing a service to, and they better do it damn well. That’s their perspective, mind you, not some sense of entitlement I exhibit.

Which brings me to my finest example: Apple. My brand loyalty to Apple is far greater than to any other company in the world. This started before I was bestowed the honor of working for them; back then, I liked them because they made products that showed they actually cared about their customers. Not about just selling something to you, but about selling you something you really enjoy using. Then, in 2006, I started working for them and I learned a great deal more about them. Now, no longer employed by them, I still consider them the most admirable company on the planet, but it may surprise you to learn why. It’s not because I think their sense of design is absolutely superior (but I do), or because so many of their products have put smiles on my face as I used them and discovered that things just worked exactly as I had expected them to work. Neither is it that their products are so lusted-after in the world that I feel “cool” or “hip” for having them.

It’s things like their Supplier Responsibility program. Their Environmental Responsibility. Or one-offs like Steve Jobs personally decrying Digital Rights Management.

Apple’s competitors stumble over one another to copy Apple’s products, but where are any of these competitors in copying their moral and ethical lead in the industry? Where’s Google’s Supplier Responsibility page? I’m sure they try to be responsible with such matters, but I’ll be damned if I can find out anything about their efforts in that area. Same for so many of companies in the hardware or mobile devices business.

And what about the environmental responsibility? Some have a corporate page about the environment—most of them have a department dedicated to this, it should be noted, if often living under the radar—but not a single one goes as in-depth into the company’s environmental impact or footprint as Apple’s does. Nor do any of them mention that the company takes into consideration (and calculates) the environmental impact of their products when used by customers, rather than just the manufacturing and distribution impact. Contrast this to Apple’s new Mac Mini page, which title reads “The most affordable, energy-efficient Mac.” Better still, one of its four feature pages is dedicated entirely to the environment.

There are also many examples of Apple staff meetings, which I can’t divulge any details about due to non-disclosure agreements, wherein I got to see Steve’s real position on things; no media present and (at the time) a belief that no employees would share details or transcripts with the press. Suffice it to say, those too have left me deeply impressed and inspired. I often think back to those moments and the real things that drive Steve & Co. to run the company the way they do, especially when debating Apple with people who base their opinions only on what they know of Apple from the outside (and, usually, partially from someone else who is more enraged with Apple than they themselves are). I often think, “oh, if only you actually knew what the reality of the situation is,” and sadly remind myself that I can’t tell them these things. And then, of course, I get accused of being a fanboy, for liking Apple despite their opinions of the company.

Of course, it is a company’s actions that ultimately matter most, and it’s undeniable that Apple has upset people from time to time. They’ve dropped the ball plenty, alienating customers and sometimes even downright upsetting long-time loyal fans and developers. But when it comes to the bigger picture, not only does Apple still make the best products in their respective categories, but they also continue to be a more honest and trustworthy company to take cues from. Sure, Steve has lied or twisted the truth from time to time in interviews or even keynotes, but those cases are typically marketing spin, meant to protect the existence of products (or plans) yet to be announced. On the things that really matter, though, the things that I would sum up as corporate ethics, you’ll rarely find a more straightforward, honest CEO. The recent D8 interview and WWDC keynote both had plenty of examples of that, too.

That’s not to say that all other companies are doing poorly in these regards, but based on my experiences with them they don’t quite match Apple’s lead or innovation. Sometimes they come close—Google, for instance, is really great about the environment as well—but I can’t think of a single example where any of them do things better than Apple. And that’s why, of all the brands I am loyal to, I am loyal to Apple’s the most.

Now obviously, no company is flawless, but for me Apple has come remarkably close given the large number of products they make (and that I’ve bought from them), their huge scale of operations and the responsible lead they exhibit while doing all that. And if their continued profits, popularity and customer satisfaction ratings are any indication at all, my personal case is equally applicable to a large majority of Apple’s other customers. That’s something very few companies get to say, and so very few companies will see me or others come to their defense so rigorously when being criticized indiscriminately.

That’s brand loyalty.

UPDATE: Several people have pointed me to the British site Nectar, which is effectively doing what I suggested. They’re already covering over 400 retailers, the only difference is that you have to shop through Nectar’s site, which isn’t what I suggested. Still, it’s good to see there’s something like this going on.

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