Customer Loyalty: the Brands that Succeed
Legacy, Money, and Pricing are Drivers but Customer Experience Reigns Supreme
Which brands generate the most customer loyalty and what are the drivers for their success? From coffee, chips, and cola to evening news programs, banks, and cars; my new article dives into the just released rankings by market from Brand Keys and offers reactions from a group of media, advertising, and pr professionals.
Consumer loyalty to brands is more complex and less stable than ever before and, in many market spaces, legacy or money spent on brand promotion does not equate to securing the leadership position. Many well-promoted brands backed by millions of spend or those with generations of availability to consumers are not the top-ranked in their categories and those with far less resources, comparatively speaking, are at the top.
But, if you can retain a customer today, your brand holds a distinct advantage as the cost to secure a new consumer is 15 to 22 times more than keeping an existing customer and an increase of customer loyalty of just five percent can boost long-term profits per customer by 86%.
When one considers that brand diversification has resulted in a 52% increase of the number of brands in the marketplace since 1997, solidifying relationships with customers and establishing ones that effectively interact with them to monitor successes and failures, is one of the best investments that can be made for brand.
These are some of the takeaways after reading the 28th annual Brand Key’s Customer Loyalty Engagement Index which examines customers’ relationships with 1100 brands in 104 categories and for the first time ranks each category with the top three brands as gold, silver or bronze levels to distinguish brand loyalty hierarchies.
Brand Keys, a global research-based consultancy firm, conducted its annual Customer Loyalty Engagement Index (CLEI) survey by engaging more than 81k consumers, aged 16 to 65 years, from nine US Census Regions in self-selected categories in which they are consumers and graded brands they patronize.
According to Brand Keys, the yearly study is designed to determine the drivers of brand loyalty, including how the consumer views the category, compares offerings and ultimately buys the product. The firm says its CLEI rankings are based on a brand’s ability to successfully deliver on drivers the consumer desire most, which are predictive of the highest levels of engagement and loyalty over the next 12 to 18 months.
I did an unscientific survey myself by sharing results with a dozen associates of mine who are professionals in various industries but mostly media, pr, and advertising to get their reactions which I will share along with any personal thoughts of my own.
Armed with that knowledge, let us dig into this year’s survey and what brands are leading what categories by first looking at some major industries:
Airlines – American took top spot in this category with Delta coming in second and JetBlue third.
Overall reaction was surprise, mostly because when everyone was asked to name a leading airline, they mentioned United as well as said they felt United had the most brand-exposure. An immediate lesson that well-established brands cannot rest on legacy, especially in markets where other long-established brands are present
Automotive – Hyundai took the top spot with Ford coming in second and Toyota third.
More surprise here based on people’s perception that Honda was the most successful brand in America in sales and antidotal evidence their cars are everywhere. In actuality, Honda had the fourth-best selling car in the United States in 2024 with its CR-V model. Toyota had the third best sales with its RAV4 while Ford had the best overall sales with its F-Series vehicles. Chevrolet, which did not rank in top three had the second-best selling vehicle with its Silverado. Ironically, Hyundai did not make the top ten. It’s best-selling vehicle, the Tucson, was the 14th most sold model last year.
Banks – Chase placed Gold while Citi took Silver and PNC was Bronze in this category.
Reaction was always going to be interesting for this category since unsatisfactory customer experiences and service levels coupled with high interest rates and overall negative perception of the industry fuel consumer disdain. Most said they were not surprised by Chase but also would not be surprised if Citi or several other banks made it to the top three due to what feels like a proliferation of advertising. PNC was a genuine surprise due to scale and perception its advertising was far less accessible which boosted belief its services might be helping its ranking.
Car Rental – Enterprise placed first while National was second and Alamo third.
This one did not seem anywhere as influenced by advertising or branding itself but by experience although a factor could be familiarity as it might be easier to rent from Enterprise in most markets than the other brands which could sway data. Less than 10% of my group had ever personally patronized an Alamo while 40% did engage with National while 90% had been a customer of Enterprise.
Evening News (broadcast) – NBC was at the top followed by ABC and CBS.
Fascinating results as the survey’s results did not reflect the overall season ratings for 2023-24 where ABC’s World News Tonight averaged 7.72 million viewers, down 5% from a season earlier, while the NBC Nightly News averaged 6.44 million, down 4%; and the CBS Evening News averaged 4.65 million, down 4%.
A sizable majority of my group did not watch any of these network broadcasts so conjecture led to those in the survey just happened to patronize NBC more or personal politics or legacy branding took place where NBC was the household choice.
Evening News (cable) – FOX was the leader in this category with MSNBC and CNN following.
This result reflects exactly how the cable news ratings have been for a long time now. Group comments included wondering if the participation rate in this category was lower or higher than broadcast and if the ages were clearly different than broadcast as well, which industry reports indicate skew far older. There was more consumption of this category of news in my group than broadcast by far.
Insurance (car) – State Farm took the gold while GEICO took Silver and Progressive Bronze.
The proliferation of insurance advertising is real and the influence of it resulting in sales increases for these top three brand cannot be brushed aside as those ever-present ads could certainly have played a role in driving consumers to engaging with and then ultimately purchasing from the brands. But the group agreed overall that it was likely customer experiences and pricing generated loyalty in this category.
Insurance (home) – Allstate led this category followed by State Farm and Farmers.
The home insurance television advertising wars are similar to the cola and burger wars of the 80’s except these commercials seem to have much less to do with actual product offerings and cost far more money. All three brands promote extensively and the group was frankly weary of it. As with car insurance, the consensus was all this spend on advertising had to influence loyalty – at least to the point of creating engagement. But customer experience and pricing can be very individualist in this market and seemingly, these three did well enough to generate positive results.
Online Retail – Amazon took first while Walmart followed in second and Etsy placed third.
No shock here as Amazon and Walmart are the two big giants in this category but Etsy was a real surprise. Beyond the big two, there are so many choices that Etsy coming in the top three impressed everyone. All had used the big two more than once in the past year. Only 20% had used Etsy. The persistence of the top two brands lends to the conclusion overall customer experience and satisfaction must be high enough to generate classic brand loyalty while based on scale, Etsy must be doing the same effectively to stand out in a crowded field.
Quick Serve Restaurants – McDonalds was Gold, Taco Bell Silver and Wendy’s Bronze.
Another crowded field filled with advertising and ads that are moving farther away from actual offerings to gimmicky spokespersons or characters personifying the brands. Despite a bumpy year in ’24 with recalls, service quality dips, franchisee grumblings, negative publicity on cost etc. the Golden Arches ranked first in the customer loyalty survey. McDonald’s should be heartened that amidst a relatively challenging year, the strength of its brand and overall offering created a top seed finish in this ultra-competitive marketplace.
The group was somewhat surprised with Taco Bell’s strong showing in second. It too has been the subject of negative publicity including food and service quality issues so this performance was seen as the chain’s ability to excel at fundamentals and attaining positive results. Wendy’s had a generally good brand perception by the group and if anything was surprised it had not been overtaken by chains much more aggressive in their marketing campaigns.
Retail – Department Stores
Macy’s placed at the top in this category. T.J. Maxx was second. Kohl’s third.
Lots of surprises here. Heck, all three brands were met with eyebrow raising and head-scratching. But more than this were some common questions. What happened to Target? Isn’t Walmart a department store?
Macy’s first place showing here is impressive. Outside of the flagship Herald Square store in Manhattan, most of the group’s observations and perceptions about the chain was that the stores were outdated, merchandise overpriced and digital shopping experience lacking in comparison to competition. So, at least with those who took part in the survey, they must be doing something right, right? TJM’s Silver placement was also head-scratching but the biggest surprise was Kohl’s which everyone felt had been outperformed in so many categories but competitors so the consensus was consumers were influenced overall by comfortable price-points and that led to the ranking. Target, on the other hand, should worry that after a few years of growth that had Walmart looking over its shoulders, it could not place in the top three despite investments in its website experience, brick and mortar designs, and marketing. Some attributed this to the company’s immersion into hot-topic political and culture war flashpoints but Macy’s had that too maybe not to the same extent.
Brand Keys’ CLEI rankings also went beyond industries to do brand loyalty rankings on specific types of products and services ranging from soda and toothpaste to coffee and yogurt. Let’s take dive into the data on some of these categories and see what brands excelled in the survey:
The glut of prescription and over-the-counter drug advertising has infiltrated nearly all media channels and is most prominent on broadcast television where it might literally be impossible to go an hour without seeing several such ads. For researchers, it provides a fascinating high-profile lab to examine how the marketing actually works and its strength of influence. The CLEI rankings offer an opportunity to debate did a brand rank highest because of advertising, pricing, accessibility, legacy, and customer experience (among others.) For pharma, these factors are even more intriguing to explore.
Choosing one of the broadest categories, the survey explored allergy-related brands.
Pharma – Allergies (Oral Decongestants) – Sudafed took top place followed by Zyrtec D and Allegra D
Pharma – Allergies (Antihistamines) – Claritin was first, Zyrtec and Allegra followed.
Pharma – Allergies – (Intranasal) – Flonase won Gold, Nasacort Silver and Rhinocort Bronze.
My group debated brand merits for the rankings, as most shared one or more of the brands in these categories were not effective in their personal experience. Regardless of category, the overall sentiment was all the money in the world spent on marketing and even best-of-price did nothing for brand loyalty if the product was not effective. So, the belief was this was a segment that a brand had to perform and deliver the best customer experience with pricing secondary.
Several members shared they had surfed around trying a few brands to see which was more effective so some sales could be boosted by this practice while others did say they had been, gasp, loyal to a brand, saw an alternate advertised which created awareness but the pricing was not compelling enough to try it.
Coffee (Packaged) – Dunkin was at the top followed by Peet’s and Green Mountain.
Key word here must be ‘packaged’ because a rare 100% of the group agreed this list was crazy! Where’s Folgers, Maxwell House, and Chock Full of Nuts? Clearly, ‘packaged’ coffee consumerism is non-existent with this group. The only feedback from half the group was over they years they had an opportunity to try all three and did not enjoy it.
Bottled Water – Nestle’s Pure Life captured the Gold, Aquafina Silver and Dasani Bronze.
The group’s contempt for this category included my own as we believed this was a rare category you could argue marketing had a clear influence with pricing secondary as ‘water is water’ in this segment. Strangely, Poland Spring did not make the top three which is intriguing as generally speaking it has legacy over these three brands and is typically less expensive too. Could it be taste or some other customer experience that fueled these rankings? Nahhhh!
Canned Soup – Campbell’s, was first with Progresso and Healthy Choice following it.
Half the group did not patronize this category any longer. The half that did mostly purchased Progresso or smaller brands not listed. Taste was the primary factor. Pricing was not a major factor in this segment. Speculation was Campbell’s had the scale and legacy to influence purchasing although it was stated the company had improved its lines of products in flavor and ingredients and the pricing was better.
Household Cleaners – Lysol came in first with Clorox and Mr. Clean behind it.
These categories are fascinating because in general, brands are typically offering the same product with the same ingredients with maybe one added feature but mostly it is all about the marketing and packaging. Also, these name-brand products have increased in price since the Covid days and are relatively expensive for discretionary spending so legacy can be factor. Everyone in the group had tried each of the top three at some point. Some did point out they did not like the smell of one or the other so customer experience must be accounted for too. Interesting point – along with this segment, store-brand products in general are eating market share in supermarkets and retailers like Target and Walmart as they offer lower prices and quality comparable to the giant brands.
Online Brokerage – Fidelity led this group followed by Schwab and TD Ameritrade
This was a rare segment that had near unanimous agreement that most had used Fidelity and preferred it over the others. Biggest driver was user-friendly experience followed by customer service and pricing. Interesting to note that this category has expanded with so many new providers that on the surface at least seem more popular with the younger demographics and media but, maybe, that is marketing!
Snacks - Potato Chips – Lay’s took Gold, Pringles Silver and Ruffles Bronze.
As with the bottled water category, just how much tangible difference is there among the three? Clearly, Lay’s has the legacy and is one of the most established brands so that accounts for something. The group agreed any differences are mostly in just how salty is each and the pricing which seems to fluctuate a lot. So here is a twist: maybe customer experience is a primary driver because of the actual physical chips themselves among brands. Our group did not care for chips that break apart too easily yet ironically, Lay’s was described as the worst in the segment among the three. And how about all those regional brands? Consensus was they are better than the big names in quality and ingredients.
Snacks – Pretzels – Herr’s came in first, Rold Gold second and Utz third.
As with bottled water and potato chips, just how much difference is there in this segment? To start, the group mentioned Herr’s should have been in the top three potato chip category too. Nearly half said they did not purchase this product and could not comment but had seen marketing for all three. Those that did purchase this product said there was more of a difference in taste in this segment that the chips. Final consensus: customer experience drives loyalty in this category.
Toothpaste – Colgate had the Gold, Crest took Silver and Sensodyne Bronze.
This segment stood out in the group’s response that whatever particular toothpaste was in their households had a place in their homes forever. Legacy ruled here. When I mentioned customer experience, it was big afterthought but confirmed because they kept using it and did not believe there was much if any difference among the brands of traditional toothpaste which Sensodyne, the group felt, should not have been included as it was viewed as a specialty product. Did advertising play a role? Most felt no. Pricing? Mostly no. It was all about what you had been exposed to at a young age and if you were happy enough with it, you continued to purchase it.
Noteworthy Mentions:
Tax Preparations – Intuit, H&R Block and TaxSlayer.
Search Engine – Google, Bing and DuckDuckGo
Pizza – Domino’s, Papa John’s and Pizza Hut
Pharmacies – Walgreens, CVS and Rite Aid
Online Travel – Expedia, Booking.com and TripAdvisor
Gasoline – ExxonMobil, Chevron and Shell
Flat Screen TV – Samsung, LG and Sony
Coffee (out-of-home) – Dunkin, McDonalds and Peet’s
Brand Keys determined that an increase in brand loyalty of five percent can increase lifetime profits per customer by as much as 86% and depending on the sector, an increase in brand loyalty of two percent can be the equivalent of a 28% across-the-board cost reduction of spending to promote the brand.
Robert Passikoff, founder and president of Brand Keys, said “economic dynamics like this drive loyalty and correlate extraordinarily highly with brand market share.”
The firm’s CLEI has consistently found “loyal customers to be six times more likely to engage with a brand, think of the brand first, buy it (and buy it again), and pay more attention to its marketing and social networking activities, which results in increased market shares and bottom lines.”
In addition, Brand Keys points out, “the brand whose drivers come closest to meeting (or even exceeding) those of the category Ideal is always the one whose customers will demonstrate the highest levels of engagement and loyalty over the next 12 to 18 months.”
“The proof, of course, is the marketplace itself,” noted Passikoff. “Discover has been #1 in the Credit Card category for 29 consecutive years, Google 25 years for Search, Domino’s 21 years, Dunkin’ 19 years for Out-of-Home Coffee, Konica Minolta 18 years for MFP Copiers, Hyundai and AT&T Wireless 16 years each, Amazon 14 years, and Home Depot 13 years.”
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