1 Evidence that Loyalty is a Natural Behaviour Marianthi ... - ANZMAC

Evidence that Loyalty is a Natural Behaviour
Marianthi Livaditis*, Byron Sharp and Anne Sharp, Ehrenberg-Bass Institute, UniSA
Abstract
Traditionally ‘loyal’ behaviour is viewed as something that must be earned (or bought) by
marketers, i.e. a consequence of marketing actions (e.g. differentiation, service quality) and
consumers’ subsequent attitudinal preferences for particular brands. Yet loyalty is one of the
most prevalent, marked characteristics of consumer behaviour. Instead of buying randomly,
consumers show biased behavioural preferences, repeat-purchasing some brands over others.
An alternative view is that loyalty is a natural human tendency in choice situations. In support
of this view, this paper reviews a broad range of empirical evidence and the accompanying
psychological explanations.
Introduction
The !Kung San of the Kalahari Desert in southern Africa believe that babies must be taught to
sit, that it does not come naturally. They prop piles of dirt around babies to push them into a
sitting position. Other cultures find this amusing; similarly many cultures find it equally
amusing when Westerners talk to babies, often in ‘baby talk’, in the belief that babies can
somehow understand such sentences and must be spoken to in order to stimulate their own
speaking. Pinker (1994) points out that learning language, like learning to sit, comes naturally
- we have a natural disposition (presumably underpinned by genetics). This paper proposes
that the bias in behavioural preferences, or ‘loyalty’, shown to brands is also a natural
disposition for consumers, rather than the result of marketing efforts building attitudes.
Brand loyalty has traditionally been portrayed as an outcome of marketing strategy, that it is
something that must be earned (or bought) and will erode if a brand slips in its differentiation,
value, and/or service quality. It is still common for marketers to think loyalty requires
substantial encouragement. Consumers are portrayed as jealously guarding their loyalty as a
prize they give away rarely. In complete contrast loyalty has recently been referred to as
‘innate’ (Sharp and Newstead 2010); as an ‘intrinsic’ behaviour, inherent to consumers and
not to the brand or product itself (Keaveney, 2011; Sharp, 2010); that advertising may not be
needed to develop brand loyalty (Ehrenberg and Charlton 1973); that preferences develop
despite product and brand homogeneity (e.g. Chapman et al. 2006; Charlton and Ehrenberg
1973; McConnell 1968; Tucker 1964); and that loyal behaviour is most likely a habitual
response to reduce decision-making effort (e.g. Quester and Lim 2003; Uncles et al. 2003).
Despite this growing trend, the literature is scattered, largely suggestive and relatively ignored
or contrasted by other widely read literature (e.g. Clarke 2001; McAlister 1982). In this paper
we carry this new thinking forward towards conceptualizing brand loyalty as consequence of
a strong natural behavioural tendency, i.e. that it comes naturally.
Despite knowledge of consumer loyalty having evolved over time, current literature still fails
to describe loyal behaviour as a natural tendency. The past few years have seen a burgeoning
interest in consumers’ love for brands (e.g. Albert, Merunka, and Valette-Florence 2008).
Batra et al. (2011) describe brand loyalty as a consequence of ‘brand love’. Others claim that
arousal and pleasure, i.e. truly ‘delighting’ consumers, will lead to brand loyalty (Bowden et
al., 2009; Oliver, Rust and Varki, 1997). This signifies a problematic juxtaposition in the
literature. Given this, it is essential to put a spotlight on the potential inherency of brand loyal
behaviour.
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In this paper we outline generalisable laws and empirical findings in marketing illustrating
that loyalty is regular and predictable and everywhere. We then explore a broad range of
specific examples where loyalty has been found to occur, even in the absence of marketing
efforts, including observational findings that reinforce and exemplify the ubiquitous nature of
loyalty. Finally, this paper briefly offers supporting psychological explanations for the
observed biased consumer behaviour, which centre on the notion that it is employed to reduce
efforts and risks associated with making decisions, even high involvement decisions.
Loyalty in all Markets
Loyalty has customarily been thought of as something that must be won or earned, that it
needs special conditions for it to occur, e.g. that the consumer has to perceive a meaningful
difference between the brand and rivals (e.g. see Aaker, 2001). The concept of a loyalty
ladder - to progress a customer along a continuum from prospective client to advocate of a
brand - is evidence of this line of thinking (Uncles, Dowling, Hammond, 2003).
Yet, brand loyalty appears to be a characteristic of every market (Sharp, 2010). Consumers
exhibit loyal/biased behaviour to brands, services, stores, product categories and activities
(Uncles, Dowling, Hammond, 2003). They tend towards polygamous loyalty. Consumers
could switch more than they do, but as Ehrenberg, Uncles and Goodhardt (2004) clarify
‘having small habitual brand repertoires requires less mental effort than continually switching
brands, yet enables consumers to exercise choice without having to re-evaluate all the
available criteria’. An example of this is car buying. When considering the large number of
car brands to choose from - there are over 60 - one might expect car-buyers, who typically
buy years apart might be prone to less loyalty and more brand switching. However, almost
half the time new car buyers buy the same brand as they bought last time (Lapersonne,
Laurent, Le Goff, 1995) and consider only two brands on average (Dawes, Mundt, Sharp,
2009; Sharp, 2010).
Marketing science has shown that loyalty metrics do not vary idiosyncratically between rival
brands, but are instead regular and predictable. Certainly loyalty is very prevalent, consumers
seldom buy randomly, but instead show biased behaviour preferences, favouring some brands
over others. Patterns of individual loyalty underpin regularities in aggregate brand loyalty
metrics in many, if not all, markets; from soap to soup to soap operas (Ehrenberg, Uncles,
Goodhardt, 2004; Sharp, 2010). This is evidenced by the empirical law, Double Jeopardy,
which shows large and small (rival) brands differ substantially in how many people buy them,
but often hardly differ in terms of how loyal their buyers are to them (Ehrenberg, Goodhardt
and Barwise, 1990). Ultimately then, every brand gets its share of loyal customers, seldom
much more or less. This logically suggests that individual consumers have a tendency for
loyalty, rather than needing special conditions brought about by marketing efforts.
If loyalty has to be earned then new brands should have very low loyalty. Yet a landmark
study of 20 new brands and brand extensions of frequently bought consumer goods (e.g.
coffee, toothpaste and anti-depressants) found that normal loyalty measures developed almost
instantly (Ehrenberg and Goodhardt, 2000). A successful new brand’s average purchase rate
(how often buyers bought it in the analysis period) was at or near subsequent “normal” level
and also equal to the rates for established brands, virtually from the start (Ehrenberg and
Goodhardt, 2000). Furthermore, a near simultaneous discovery of ‘near-instant loyalty’ was
found for an unsuccessful new brand launch (Wright and Sharp, 2001). This further suggests
that bias consumer behaviour is not earned, but rather a characteristic of all brands, even
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unsuccessful ones; it happens naturally and in the absence of any specific marketing effort.
If loyalty depended on conditions brought about by appropriate marketing it should be
expected that loyalty strategies in particular would substantially drive up loyalty. In line with
this thinking, Reichheld and Sasser (1990) said that it was perfectly possible for a brand to
double its loyalty for very low cost simply by concentrating on loyalty marketing (an
argument disputed by Sharp 2010). Yet evidence has since shown loyalty programs have an
underwhelming effect on increasing repeat-purchase (i.e. loyalty) behaviour (Meyer-Waarden,
2006; Leenheer, 2007; Sharp and Sharp, 1997).
If loyalty depends so heavily on marketing creating the right conditions then some brands
should be loyalty superstars and some completely bereft of loyalty. Despite novel stories of
brands succeeding due to the exceptional and ‘unreasonable' loyalty of their customers (e.g.
Harley Davidson, Apple, ‘Lovemarks’ (Roberts, 2004)), the empirical evidence does not
support these claims (see Sharp, 2010). For example, Nike is said to have a strong brand
personality and according to Roberts (2004) earns the tile of ‘Lovemark’ - a brand inspiring
‘loyalty beyond all reason’ (cited in Dawes, 2009). Hence Nike should be a sports label
superstar but as Dawes (2009) demonstrated sportswear also conforms to empirical
regularities of brand loyalty; namely that sportswear brands - such as Nike, Adidas, Fila,
Umbro, Puma - differ in the loyalty of their customers but only in relation to their size
(market share) and Nike does not dramatically outperform these other brands.
Loyalty in Largely Marketing Free Environments
As discussed previously the traditional marketing theory is that loyalty depends on consumers
perceiving meaningful differences between brands such that they form attitudinal preferences,
which shape their buying behaviour, making them loyal. Thus there can be no loyalty in
‘commodity markets’ where all products are much the same or identical. Marketing then,
often takes credit for loyalty. Yet loyal behaviour emerges, and quickly, in environments
where there is no differences between the brands, no advertising, no physical availability
differences, and no brand image.
Tucker (1964), and subsequently McConnell (1968) both discovered consumers quickly
developed loyalties even when products were identical and brand names effectively
meaningless (e.g. letter labels L, M, P) for both bread and beer respectively. Throughout each
experiment participants gave statements (sometimes quite passionate) reasoning why one
brand was better or worse than another. Even in the absence of distinguishing features or taste
people were inclined to select only one brand to habitually buy or at the very least reduce
their options by eliminating one from consideration, or choosing between only two. With the
exception of Charlton and Ehrenberg (1973, 1976) and Ehrenberg and Charlton (1973), these
experiments appear to have been lost in the literature, having received virtually no mention or
empirical follow-up in over 30 years.
With a continued interest in extending Tucker (1964) and McConnell’s (1968) findings,
Ehrenberg and Charlton (1973) conducted a study selling identical washing powder, using
letter codes as ‘brands’. It was found brand loyalty developed despite a lack of advertising
proving such activity might not be needed to develop it. A follow-up study (Charlton and
Ehrenberg, 1976) again using identical product, detergent and leaf tea labelled with a letter or
number, again revealed the development of normal patterns of brand loyalty. Even marketing
inputs (a promotion, advertising, an out-of-stock condition, and the introduction of a new
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and) produced a distinct lack of after-effects.
When physically identical stimuli were presented to respondents over separate studies
spanning samples of milk, colour, potato chips and cottage cheese, the proportion that felt
they had a preference was consistently 70% (Chapman, Grace-Martin and Lawless, 2006;
Chapman and Lawless, 2005; Marchisano et al., 2003). Attempts to manipulate the other 30%
of ‘no preference’ responses have had little effect and the tendency of subjects to respond
with what has been called ‘false-alarm’ remains remarkably consistent and stable. Although
plausible explanations have been offered, such as perception of momentary differences and
failure to notice or believe in the indistinguishable quality of the samples, none can fully
explain this 70% bias to choose one identical sample over another (Chapman, Grace-Martin
and Lawless, 2006).
Other behaviours suggest loyalty is a mechanism used to shortcut decision-making,
particularly when faced with selecting between many near-identical alternatives. A study
(Sundar, 2004) observing students using campus computer terminals revealed users were
loyal to one or more favoured computer terminals despite there being over 62 available
computers. Biased behaviour even appears in our everyday and seemingly thoughtless
actions. Places where it has been observed (mostly anecdotal) and suggested to occur are;
communal gym lockers, lecture theatre and classroom seating, the route chosen to walk to
work, websites visited and even the types of meals consumed. These biased behaviours
emerge in the face of other perfectly interchangeable alternatives, and often in spite of
wanting change or variety. There appears to be much evidence to support the notion that
many things are done primarily out of habit often based on automatic biases, although we are
rarely conscious of these habits.
Psychological Explanations for Loyal Behaviour
In a recent article for Admap, John Keaveney (2011) made the point that there are people who
are predisposed to be loyal; that brand loyalty originates from a person’s heart and is
‘natural’. Empirical data shows that those who claim to be more disloyal to brands are more
experimental by nature. Those who prefer casual relationships are 76% more likely to not
stick with any one brand. Nice people tend to be more loyal to brands and those who don’t try
to be nice to other people are 40% less likely to be brand loyal. Keaveney (2011) deduces that
the ‘core source of true brand loyalty comes from the inside of a person, rather than external
marketing factors’, that it is our emotional core that dictates our relationships and brand
connections.
A possible explanation for brand loyalty is a natural tendency toward habitual behaviour.
Habit has been considered as a possible driver of buying behaviour (Engel, Blackwell and
Miniard, 1993; Kaas, 1982). Whilst our habits often go unnoticed, consumer behaviour
reveals intentional split-loyalty. In many survey elicited responses, respondents over-defend
their (largely unconscious) decisions and create ‘back-stories’ and justifications. Often, the
simple act of asking makes the consumer assume the decision was made consciously (Nisbett
and Wilson, 1977). Habits make us cognitively efficient and are said to control 95% of our
behaviour (Lakoff and Johnson, 1999). Social psychologist Wendy Wood conducted an
experiment prompting participants to record where they were and what they were doing at
random intervals and found rather profoundly ‘almost half the time most of what we do is
what we do most of the time’ (Townsend and Bever, 2001; Wood, Quinn and Kashy, 2002).
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Some research has suggested different psychological explanations for different types of
purchases i.e., inertia and habit explain low involvement purchases whereas more cognitive
effort applies to high-involvement purchases (Jensen and Hansen, 2006). However, as
illustrated thus far, loyalty is a behaviour represented across a plethora of category and
purchase types, and regardless of purchase involvement consumers time and time again
reduce their selection to a mere few and often select repetitively and consistently from small
consideration sets. These findings suggest a universal characteristic of bias behaviour that
implies we desire less cognitive involvement and are potentially “lazy” when it comes to
purchase decisions. Alternatively, habits allow us to make routine decisions more efficiently
leaving us more time for important things like family, work and social activities.
Confirmation bias theory offers another possible psychological explanation for why people
form loyalties; based on the idea that we see what we are looking for and collect evidence to
help us see ‘signs’ that we have, or are about to, make the right decision. The overall picture
from among this literature is that there is a general tendency for people to believe too much in
their favoured hypothesis (Jones and Sugden, 2001; Klayman, 1995; Nickerson, 1998). This
may explain why participants in McConnell’s experiment swore that one beer tasted better
despite their sameness.
A likely and favourable explanation for the tendency to bias behaviour is to assist in the
reduction of thinking, searching time and effort. Naturally, thinking time is reduced when
consumers are able to make decisions more quickly owing to “knowing” which brand they are
going to choose. Brand image and awareness have been shown as heuristics used by
consumers to reduce risk and decision-making time (Sheth and Venkatesan, 1968). Simple
heuristics (e.g. price, packaging) are used by consumers to make efficient and reliable
decisions (e.g. MacDonald and Sharp, 2000). This suggests consumers desire easier, simpler
decision making with loyal behaviour a measurable expression of this desire. People do not
want to expend more effort than necessary (Wright, 1975).
Conclusion
There is much evidence to show loyalty is natural. Loyal behaviour is exhibited in all
markets, occurs almost instantaneously, and strongly tends to be polygamous. We have
illustrated these characteristics with empirical evidence of biased behaviour forming in
specific and diverse scenarios. Key psychological explanations are offered that suggest
consumers ultimately exhibit loyal behaviour in order to reduce effort associated with
decision-making.
The current literature that suggests loyalty is a natural, inherent tendency is scattered and
unsystematic - so little is known about this tendency. This opens up a research agenda to
describe and understand loyalty as a natural behaviour. While in hindsight, the idea that
loyalty is natural may seem obvious; there is a whole loyalty industry and mythology that
obviously doesn't find this obvious. In the book "Everything is Obvious, Once You Know the
Answer", Watts (2011) identifies the dubious nature of explaining events with common sense.
This paper contributes to the field of consumer loyalty by seeking to describe and understand
loyalty as a natural behaviour. By re-engaging with this neglected discussion, we encourage
more thorough and scientific research to be carried out, as it is this sort of study, not common
sense, that will shed light on this apparently very human behaviour.
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