The dictionary defines ‘loyalty’ as “the quality or state of being loyal.“ More to the point it describes it as “a feeling of strong support for someone or something,” which is a good enough definition as an exact meaning of the word, but from a brand perspective we think it needs to be beefed up.
Loyalty is also a leading-indicator of brand profitability. Likewise a barometer of a consumer’s engagement with a brand. (And not to go off on a definition spree, but real ‘engagement’ is the degree to which a brand is seen to meet expectations a consumer holds for the Ideal in the category in which the brand competes.) It’s been validated that the more engaged consumers are with a brand, the better they behave towards it. And axiomatically, if a consumer behaves better toward a brand, the brand ought to do better in the marketplace. And they do. Both those things. Behave better, and do better.
Anyway, we were thinking about all this during the Super Bowl a couple of weeks ago. To be honest, as we specialize in predictive loyalty and engagement metrics, we think about them all the time, but during the game it was perhaps a bit more pronounced. Not because of the team-versus-team thing, or the advertising, but because of the Seahawks and their 12th man.
For the football-uninitiated, the 12th man is a term for the fans in the stadium during a game. There’s a league rule that allows a maximum of eleven players per team on the field at a time. Break that rule and you get penalized. So you couldn’t actually have a 12th man on the field but in this case the 12th man refers to the fans and implies that they have a role in the game and an impact on the outcome. And while lots of teams have fans, the Seahawks make a big deal about their 12th man. And we do too. More particularly about that kind of display of loyalty, and the benefits that come with it.
They call it their “12th Man” and are counting touchdowns. We call it the “Rule of Six,” and count sales. As regards positive behavior towards a brand, loyal customers are six times more likely to think better of the brand, are six times more likely to behave better toward the brand, are six times more likely to buy more of your products, are six times more likely to rebuff competitive offers, and are six times more likely to recommend the brand. So pretty much a winning game plan for any brand whether CPG, service, or sports.
And as it was sports that got us contemplating all this, according to new ratings from our 2014 Brand Keys Customer Loyalty Engagement Index, here’s how Major League Sports currently rank when it comes to fan loyalty and engagement:
- National Football League
- Major League Baseball
- National Basketball Association
- National Hockey League
Since there’s a maximum capacity for any stadium, loyalty and engagement benefits extend well-beyond just attendance numbers. For Major League Sports, loyalty and engagement correlates very highly with TV viewership and purchase of licensed merchandise. So go team!
We also measure retail brands in our Customer Loyalty Engagement Index, and sticking with our theme, here’s how Sporting Goods retailers ranked this year:
- Big 5
- Modell’s / Sports Authority (tie)
As mentioned, because brand loyalty and engagement correlate very highly with positive behavior and sales, and profitability, you usually see it perform in the marketplace arena. And it did.
At a time when retailers are struggling to just get by on razor thin margins, Dick’s Sporting Goods, rated #1 by customers in meeting their expectations, just reported that their fiscal 4th Quarter sales exceeded expectations, with consolidated same-store sales increasing by 7%. That’s nearly double the company’s original Y-O-Y estimate, with per-share earning up too. So go Dick’s shareholders!
The final score? From a loyalty and customer engagement perspective, the ‘Rule of Six’ matters more today than ever before. At a time where consumers expect more and decisions are made more carefully, that’s the kind of rule no brand wants broken.
Because just like football, there end up being real penalties for that too.
Loyal Fans: Sports Leagues and Sports Retailers