The web has passed another milestone. For the first time it's possible to measure web brand loyalty as against, say, loyalty to a soft drink or type of car. That's because Robert Passikoff, president of Brand Keys Inc. in New York, is on the case. His customer loyalty index, created through twice-yearly telephone interviews with 13,000 consumers, can now measure loyalty to six online brands with 95 percent accuracy.
The web has passed another milestone. For the first time it’s possible to measure web brand loyalty as against, say, loyalty to a soft drink or type of car.
That’s because Robert Passikoff, president of Brand Keys Inc. in New York, is on the case. His customer loyalty index, created through twice-yearly telephone interviews with 13,000 consumers, can now measure loyalty to six online brands with 95 percent accuracy.
“We overlay those evaluations with factor analysis and regression analysis that allows us to build a causal path model that shows how people compare a category and how they’ll buy,” he says. In English, that means he can tell if an Amazon buyer is likely to switch to, say, Barnes & Noble for a better price, or whether Amazon can charge more, the way Coca-Cola can charge more for soda than supermarket store brands.
The gross numbers shouldn’t surprise anyone. America Online is the leader. But the crown doesn’t rest easily in Reston. “They seemed to do better, but they were not significantly better,” he said, than the other most-recognized cyberspace brands like Yahoo and Amazon.
Another important point in his late 1999 survey is what people mean when they say they’re loyal to an online brand.
For one thing, they’re not expecting much. “Expectations aren’t high for the Internet brands. People are more forgiving than we thought,” he said.
What consumers want most right now is a feeling of security; expectations in this area are “very high,” he says.
Finally: “Expectations on the user experience are rising at a tremendous rate.” What this means to Passikoff is that customer values are changing. The current market leaders, especially AOL, have to meet rising customer expectations for user experience right now or suffer potentially irreversible consequences.
“Right now they seem to be doing everything right,” Passikoff said of AOL. “Come April (when the survey is done again), we’ll see where values have shifted and if they’ve been able to meet those values. It’s also fair to say that given the industry’s youth, it’s not certain what values will be important.”
An AOL optimist can look at Passikoff’s numbers and note the company has more loyalty than any other Internet brand, and thus conclude that little is wrong. An AOL pessimist, on the other hand, will note that the next few months are critical.
I’m going to add some fuel to the pessimists’ fire here. AOL’s market share on consumer Internet access has been falling for years (it’s now around 42 percent), and while its claim that $2.5 billion was spent in Christmas shopping there sounds great, the total for 1999’s online Christmas was estimated at $10-13 billion, so that’s one-quarter or less of the total.
But let’s get back to Mr. Passikoff. The Advertising Research Foundation found in 1990 that his method for evaluating brand loyalty correlates better to sales than any other. His survey is able to reliably track a total of just 115 brands in 20 categories. Views on the Internet were added just last year.
What makes this kind of research valuable is that it’s not a single number, but an evaluation of what drives people to brands – and away from them. The key finding in loyalty is now being formed, and those brands that disappoint now may not get a second chance. Sure, these are still early days, but report cards are coming.
