Guest blogger Judy Wang is a researcher at the Customer Contact Council, a sister program of the Market Research Executive Board. 

I moved to DC a little more than a month ago, and I can’t even tell you how many different bars, restaurants, and salons I’ve tried. And who’s to blame me? With dozens of Groupon-like deals flooding my inbox every morning, my attention and loyalty are at an all-time low. But what happened to the idea of being a “regular” at an establishment? Has that gone out the door in this era of large data and choice, or am I alone in my unfaithfulness to stores and brands?

Interestingly, research conducted on customer loyalty shows that my behavior is a part of a larger trend: loyalty varies widely by demographic, and a person’s age and occupation can be a strong predictor of their purchasing behavior. Knowing this relationship—and more importantly, understanding its causes—can have important implications on how you engage with customers.

So here’s what the research said:

More mature age groups are significantly more loyal than younger counterparts. When behavioral loyalty (as measured by the number of other like-service providers the customer visited in the past two years) and repurchase intention are considered among a diverse age group, those who are more mature (ages 35-54 and 55+) exhibit significantly more loyal behavior than those who are younger (18-24 and 25-34). This finding can be attributed to three age-dependent reasons.

• Mature consumers have different social constructs and social needs. Whereas younger cohorts have large social circles, mature consumers tend to have fewer, but deeper, more meaningful social relationships. As a result, this “older” cohort relies more on social support—the recognition, familiarity, and sense of belonging that being a “regular” service customer offers.

• Older consumers experiment less with new brands. Of those in the older age brackets (65+), 65% maintain loyalty to familiar brands. Meanwhile, only 47% of the younger brackets (20-24) do so. This is due to differing levels of confidence in service and quality. With age, people become more skeptical of providers, and therefore older customers tend to stick with tried and true brands.

• Customers differ in their optimum stimulation level (OSL). This concept explains an individual’s level of affinity for environmental stimuli. High OSL individuals engage in exploratory and switching behavior, while low OSL individuals seek constancy and familiarity. Here’s where it gets cool: OSL has been shown to negatively correlate with age, and as a result, the younger customer is more likely to seek new brand experiences and sample new service providers.

Customer loyalty differs according to occupations. The same metrics of loyalty were analyzed along occupation, and retirees and home makers were found to be significantly more loyal than students. While occupations don’t perfectly capture income and situation, they have strong implications for the two.

• Low-income groups are less loyal than high-income groups. Perhaps not surprisingly, customers who have low income (and, thereby, high price-consciousness) tend to seek the next big deal. As my colleague noted, daily deals draw bargain-hunters, and bargain-hunters are disloyal customers. In fact, one study found that only about one in five daily-deal-buyers returns to the business as a full-price customer. It makes sense, then, that students (who typically have the least income and highest price-sensitivity) would be significantly less loyal than retirees (who tend to have larger budgets).

• Occupations affect socialization. Similar to age, occupation is a strong determinant of social context. Those who are exposed to larger social circles, like students and professionals, require less additional social support than those who have relatively smaller circles, like retirees and home makers. Therefore, students and professionals are likely to be less loyal than retirees and home makers.

What are your thoughts? Have you noticed a relationship between customer loyalty and demographic? Has your company changed its strategy in response to this relationship?

Related Resources:

• Driving Action with NPS® and Other Loyalty Metrics: Focusing on Key Success Factors
• Conducting Customer Loyalty, Satisfaction, and Profitability Research
• Six Myths of Customer Loyalty
• Maybe Your Customers Don’t Want to Talk to You
• Stop Trying to Delight Your Customers?

Summer, for most of us, is a time to recharge our batteries, to relax, to enjoy some calm before the demands of life pick up again.  Unfortunately, investors have made that a good deal harder recently as they collectively removed over a trillion dollars in value from financial markets over the course of a few days.

Why the sudden volatility?  Consumers haven’t suddenly changed spending behaviors, nor have business customers. And suppliers look healthier than in some time, beating earnings estimates and sitting on plenty of cash. Credit availability has drastically improved. Inflation is hardly threatening.

The answer seems to lie in the health of developed economies. While many appeared to be on the mend for the past year (albeit slowly), it’s become clear the recovery is far more fragile than was thought, especially in the US.  We’re not in a recession, but we’re also not in a recovery that is self-sustaining.

In such an unstable place, most signals (economic data) are too weak or confusing for investors to proceed with confidence.  Even small pieces of information have outsized impact and prices gyrate.  Markets, after all, are just groups of people trying to discern future value and in this case they are struggling.

So, what are executives doing in the face of this volatility?  Some are being tougher on discretionary spending.  Many are revisiting assumptions for 2012 planning.  But the executives we’ve spoken with are not deviating from the strategies and tactics they put in place following the recession.

There is one thing all executives should be doing right now – getting used to operating in an uncertain environment.  Fortunately, that doesn’t require telling the future.  It does require, however, a structured exploration of what could be, and flexibility to respond regardless what becomes.

Most companies can stand to improve in this area.  Want to learn more?  Join your peers in our upcoming webinar, Taming Uncertainty, on 25 August at 11:00 am EDT.  We’ll clarify why volatility has become “normal” and how the best companies are working around it.

This post was written by guest blogger Hans Eisenbeis, Iconoculture’s senior Financial Services editor

For a decade now — since the rise of the global economy — political pundits from Mumbai to Madrid, Hamburg to Honolulu have argued about “American exceptionalism”: the idea that the US is unique and can hold itself to different standards than all other nations. When it comes to love and war, you can argue both sides. But when it comes to the hard facts of economics, not so much. Last week Standard & Poor’s downgraded US creditworthiness from a top rating of AAA to a less-than-top AA+. That’s the first downgrade in America’s credit rating since credit rating began, early in the last century (WashingtonPost.com, 8 August 2011). It also puts the US behind many of its European allies, not to mention Canada. (Canada!)

What does it mean? First, we should recognize that credit-rating agencies themselves have been in hot water. There’s evidence that folks like Standard & Poor’s, Moody’s and other credit raters contributed to the Great Recession (and the Not-So-Great Recovery) by rubber-stamping financial instruments and portraying risky investments (mortgage-backed securities, credit default swaps) as safe, easy money. The raters are in a fight for their lives, a fight that depends on reestablishing their credibility as objective, neutral evaluators of creditworthiness. And, as uncomfortable as it may be to admit, signs point to the fact that the US simply is not what it used to be in terms of macroeconomics. We’re $14 trillion in debt, and the people in charge of the federal checkbook can only agree on making a $2 trillion minimum payment. As NPR financial correspondent Heidi Moore succinctly commented, “The US government is like a kid who turns in his homework late and incomplete” (Minnesota Public Radio, 8 August 2011). Lucky the teacher didn’t flunk us.

It’s true that carrying the level of debt that we’ve been carrying is a financial disaster waiting to happen, but we’ve actually carried debt for 60 of the past 71 years. One might easily agree with vice president Dick Cheney, who, seven years ago, famously said, “Reagan proved that deficits don’t matter.” And one might ask: Well, do they matter or not? If they do, then why has the US credit rating never before been downgraded? The answer, at least if you listen to S&P, is straightforward enough. The US government is not acting in a unified, responsible way. Simply put, it’s not acting like a triple-A credit risk, so it doesn’t deserve that rating. Time to play catch-up to the rest of the class: Australia, Austria, Canada, Denmark, Finland, France, Germany, the Netherlands, Norway, Singapore, Sweden, Switzerland and the United Kingdom all still enjoy AAA ratings. So much for American exceptionalism.

A double-dip recession is bound to have political repercussions stateside in the next 18 months. But for consumers in affected markets across the globe, rating-agency jockeying and stock market woes mostly translate to more of what they’ve already been living through for the past few years. While the Great Recession that started in 2007 forced a seismic shift in consumer attitudes — from a world of ample credit to one of credit scarcity, this economic news won’t immediately make consumers change their minds any more than they already have. Because while nations in North America and Europe are now coming to terms with getting their economic houses in order, regular consumers in homes across the globe have been doing that for some time.

Did your company plan for this week’s trip to the World Markets’ Amusement Park?  With the environment more volatile than the craziest new roller coasters, Research needs to stay ahead of business needs and make sure that the decisions being made are based on sound knowledge. 

To help you help them, I have compiled the best tools and tactics we have found—processes and techniques that some of the best Research teams in the world use to drive quick action in their own organizations.  How do they allocate their resources to ensure the greatest impact?  It’s all about harnessing existing knowledge and communicating it in a way that makes it easy for business partners to use in their decision-making process.

With no time to initiate new projects, companies like FedEx, Sabre Holdings, Motorola, and Nokia rely on their wealth of existing knowledge to create relevant new insights:

• To make sure Research has the full information context, FedEx combines disparate data assets based on customer touchpoints, while Sabre and Texas Instruments use social media technologies to identify and collect tacit corporate knowledge.  
• To create high-quality synthesis of existing information, Motorola staffs its team with folks responsible for synthesis activities, and Nokia runs time-efficient synthesis workshops to get a cross-functional view.

But we all know that even the best knowledge foundation means nothing if business partners don’t use it. 

• A pharmaceutical company uses wiki-style sites to turn its collected wisdom into an interactive foundational knowledge platform.
• Alticor transforms product-specific research into compelling answers for broad, strategic concerns by focusing communications on pre-identified core business drivers.

In addition to these resources, we will be sharing our new work on injecting insight into your partners’ natural learning patterns over the next quarter—so stay tuned!

China is the world’s most populous country and the fastest-growing economy.  With 1.3 Billion people, it’s a giant piece of future market potential for global brands.  As marketers try to tap into the growth offered by the Chinese market, many are watching Chinese brands beat them to the punch, making rapid inroads into established, western markets.   Haier is a noteworthy example: an established home appliance brand in China, this brand has carved out a prominent space in the highly competitive US appliance market.  Watching Haier we can learn a few lessons that might inform our own strategies for entering growth markets outside of our current footprint:

• Finding White Space: Haier Group made initial inroads in the U.S. market by focusing on novel product categories such as refrigerated wine cellars; Haier has since captured 50% of the market for these devices, gaining a foothold that they can use to migrate from niche to big ticket purchases.
• Leveraging The Halo Effect: After establishing itself in compact refrigerators and wine coolers, the company has entered other categories—it now sells 2% of all full-size refrigerators in the U.S., 16% of window air conditioners, and recently introduced a line of flat-screen TVs and DVD players.
• Playing to Local Perceptions: The name Haier was adapted from German to deliberately obscure the company’s Chinese origins and play to North American perceptions of German quality and reliability.

So what about western brands entering the Chinese market?  Join Iconoculture’s lead Consumer Strategist covering East Asia, Jeff Yang on May 3^rd, for an overview of recent trends, developments, and shifts in consumer behavior in China. We’ll unpack the unique “cultural DNA” of this incredible market and take a closer look at brands that have successfully captured the mindshare of Chinese consumers. Board members can register here.

For a quick look into what consumers are doing in China, Board members can also check out a few of Iconoculture’s latest global consumer observations.

By Anthony Bell

Emerging markets will certainly be the driving force behind any growth in consumer demand across the next decade. The Economist Intelligence Unit’s five-year compounded growth rate for 2014 to 2020 shows that average private consumption per country in the BRIC group could quadruple to surpass those of the G7 nations, and shows that total private consumption in emerging markets will likely triple its current level to match the G7 countries in 2020. Although most of the growth will come from elsewhere, rich world consumers will still undertake the lion’s share of global spending across the next 10 years. The chart below shows that, on current trends, the U.S. will still be home to the world’s most active consumers in 2020 but that China, India, Russia, and Brazil will all have joined the top 10.

Chart 1: Top nations by consumption, 2009 and 2020 Economist Intelligence Unit, Corporate Executive Board Research

This means that firms should continue to pour time and effort into understanding and operating in emerging markets, both the obvious ones, such as the BRICs, and some of the less obvious (Indonesia, Chile, and Thailand for example). But they shouldn’t neglect their developed-world consumers, who will still account for a high proportion of firms’ revenues. These consumers’ tastes might change over time but they’ll still reward firms handsomely for providing good products and services at the right price.

It is difficult to make an accurate one-year projection, let alone an accurate 10-year projection but Research has become adept at identifying important market changes. The challenge is, however, while Research is the voice for insight into future market conditions, we struggles to drive stakeholder action. Progressive research organizations have shifted trends conversations away from abstract mega-trend ideas to more vetted market opportunities that provide better context for business decisions. Instead of boiling the ocean, with a broad net across the market, refocus your change-sensing efforts to identify a manageable number of new opportunities grounded in analysis of the company’s market share. A customer driven scenario ranking grid is a good way to prioritize potential scenarios’ likelihood based on customer views to ground discussions around market scenarios’ probabilities rather than internal perceptions. Research will be in the driver seat as company’s pay more attention to emerging markets in the next decade. We just have to make sure we deliver on the right opportunities, rather than mega-trends, to provide line partners with the confidence and context necessary to act.

This week’s guest blog comes from our sister program, the Marketing Leadership council. Take a look at the latest survey data examining Business to Business purchase decisions and drivers.

It used to feel like a consultation – customers calling you early on asking how you can help them. Now it feels more like scratching a lottery ticket at the end of the buying process, knowing you can’t alter what’s printed under the security coating – you’ve either been chosen or you’re not. This year, we have heard repeatedly from our members that the B2B purchasing process feels increasingly out of their hands as customers shifted to doing much of the research and comparisons on their own, turning to suppliers only very late in the game. Informally, our B2B members feel that 70% (or thereabout) of the buying process is completely out of their control, and they’re grasping onto the tail end of the purchase process which used to be much more malleable. Is that fear warranted? Read More »

This week’s guest blog comes from Ian Lewis, Director, Research Impact Consulting at Cambiar.  Ian was an MREB member when he led the Consumer Research & Insights team at Time Inc.  To weigh in on the future of research, take the survey here.

Think back 10 years. No broad­band, no social media, no smartphones, no LED TVs or DVRs, no iPads. And who had heard of MROCs, neuroscience, consumer listening, crowdsourcing, or virtual shopping?

Now think ahead.  What will this decade bring?  Common predictions include the “digitization of everything” and a “river” of information.  There will be enormous innovation in research methods.  And the C-Suite is demanding that Market Research be a partner in driving growth, not just a risk reducer.  If that’s not enough, the global economic landscape will change fundamentally in the decade ahead as China approaches the US and Europe in GDP, and growth for US and European companies comes from beyond their borders.

Market Research is facing a strategic inflection point (with a nod to Andy Grove in Only the Paranoid Survive), and the need to get ahead of the changes has never been greater.

What’s needed for the industry to seize this as an opportunity, when ignoring it could lead to Market Research becoming disintermediated and irrelevant?  And what are the challenges and opportunities for today’s market research practitioners?

To address these questions, my partners at Cambiar and I are fielding a Future of Research Study to both client and agency researchers. We will address macro events driving change; the future of the research function; and enablers and barriers to success. The study design has been informed by online discussions, a brainstorming session with industry leaders, and MREB’s Business Impact Diagnostic.

Our insights will incorporate the perspective of thought leaders who have addressed the future of research and include a perspective from CMOs across a wide range of industries.  We will paint a picture of market research in 2020, together with the talent needs, enablers, and barriers to success.

We need your help to paint the picture as seen by market research practitioners in client organizations! Participants will receive an executive summary as our thank you.  The Board will be analyzing member-submitted data as part of its ongoing study of Market Research’s business impact, so your contribution will make those resources more relevant and valuable for you.   Click here to participate.  Thank you!

Tragedies like the natural disaster in Japan often bring out the best in people.  Occasionally, an event of this magnitude brings out the best in a brand as well.  If a brand can use its reach, resources, and the captivity of its audience to help connect consumers to a cause that ignites their passions (or compassion) all involved can benefit: consumers, brands, and the cause at the center of the ecosystem.

As we look across effective cause marketing efforts, a couple of themes emerge: First, effective brands need to clearly understand how consumer values and motivations overlap with a cause—what outcomes are consumers ultimately hoping to achieve? And what values are driving their association with a given cause?  Second, a brand must have a clear understanding of their “permission” to associate with a cause.  What has our brand done to earn a spot at the podium?  Why are we the right rallying point for consumers who care about this cause?

Our sister program, the Marketing Leadership Council has spotlighted two companies that have credibly put cause marketing to work for their brands: Pedigree’s efforts to support pet adoption, and REI’s practical environmental stewardship efforts.  While these are both cause marketing strategies that matured over the course of several years, Wal-Mart has also proven that well-executed cause marketing can be spontaneous through their innovative and immediate response to the Katrina crisis.  One theme across all of these examples: each company has made overt branding subservient to the cause itself.  Brands must have faith that doing right by their consumers and sticking to their own brand values will ultimately drive engagement.

Who better to speak on behalf of consumers than the Market Research Function? Research must create the entire picture of a consumer, not just their buying habits but their day to day life. Whether an executive immersion event or compelling deliverable, make sure your senior leaders see more than price points when examining consumer behavior.

Check out a few of Iconoculture’s favorite cause marketing efforts from recent months to spark your own cause marketing efforts can:

• Cause-inspired dieting serves waistlines and the greater good
• Snickers really satisfies Americans’ hunger
• 7 -11 uses its platform (the cup) to display art with a cause
• Chase bank gets mobbed with Facebook love
• Pepsi wants to Refresh Everything (including how brands use ad dollars)

Stay tuned for more from Iconoculture on cause marketing later this week.

In April of this year, the 5th annual Iconosphere – Iconoculture’s consumer insights extravaganza – will burst into life at the Eden Roc Renaissance in Miami Beach. Just like in years past, the not-your-mama’s conference focuses solely on consumers, highlighting the shifts that are shaping our culture and most keenly affecting marketers.

Don’t expect the chart-induced eyestrain and soggy pasta that’s de rigueur at typical industry events, though. At Iconosphere, the pool shimmers. The cocktails are sloshier. Best of all, curious people – members, Iconoculture strategists, colleagues – connect over inspiring ideas and shared challenges.

Stripped bare, what the event offers – what’s core to its value for those who attend – is the chance for marketers and researchers to unselfconsciously immerse themselves in the brainier parts of their jobs for a few days. It’s the opportunity to eject from the office, shove off day-to-day bureaucracies, and carefully consider and discuss where the culture is going, what consumers are really thinking, and what to do about it.

We can even sneakily peek at the content debuting in April. A sampling of this year’s sessions include: Media maven-led monitoring of consumers’ relationship with mobile marketing; a close examination of Americans’ post-recession pragmatism; and a tour by our Team India through the twists and turns of the Indian consumer’s retail experience.

The ex-’sphere-ience is not at all conference-as-usual (attendees have been known to crowdsurf). In fact, it actually feels a little more like hot yoga for your consumer insights brain. Except air conditioned. And with cocktail shakers. And no physical exertion. Don’t bring a mat.

If you want to hear more about Iconosphere, contact the Iconoculture team or Register Here