Beauty Trumps Technology, Retail Shines as Consumers Opt for Emotional Connections with Brands

NEW YORK, NY September 29  – Cosmetic and moisturizer brands – including Mary Kay, Estee Lauder, and Clinique – accounted for a third of the 10^th annual 2010 top-50 Brand Keys Loyalty Leaders, in the annual survey by Brand Keys (www.brandkeys.com), the New York-based brand, customer loyalty and engagement consultancy.

“Brand loyalty is absolutely driven by emotion,” said Robert Passikoff, Brand Keys founder and president. “And the rankings on this year’s list make it clear that consumers are looking to emotionally connect with brands more than ever before.”

This year’s Brand Keys Loyalty Leaders List includes 501 brands in 70 categories. The brands in the 2010 top-10 include: Apple iPhone, Samsung cell phones (#1 and #2 respectively for the second consecutive year), Wal-Mart, Grey Goose vodka, Apple Computers, Hyundai, Amazon, J. Crew, Blackberry, and Avis.

The 2010 top-50 Brand Keys Loyalty Leaders is comprised of eight general categories. Cosmetics and moisturizers (mass and luxury brands) accounts for 30% of the leading brands. “The ‘emotional engagement’ that women share with their favorite beauty brands is very powerful,” said Passikoff. Technology brands – primarily smart and cell phone brands – account for 26% of the top-50. “There’s nothing out there today better at fueling a consumer connection than technology,” noted Passikoff. The technology group also includes search engines (Google, Bing, and MSN), Apple computers, and Kodak digital point-and-shoot cameras.

Retailers Ring Up High Loyalty Ratings

Sixteen percent (16%) of the top-50 Brand Keys Loyalty Leaders represents retailers (bricks, clicks, and catalogs). Wal-Mart was rated #3. J. Crew took two places; one for clothing catalogues (#8) the other for retail apparel stores (#13). “J. Crew has done all the right things in terms of the store experience and migrating the brand to another level of quality,” said Passikoff. For Department Stores, Kohl’s earned its loyalty ranking this year (#44), as did Amazon (#7) for on-line, and Target (#26), Sam’s Club (#29), and B.J.’s (#42).

Of the top-50, 12% of the leading brands were alcoholc beverages, principally vodka brands, including: Grey Goose, Ketel One, 3 Olives, Stolichnaya, Rain, Chopin, and Sky. “The number of alcohol brands may just be a reflection of how consumers feel about both the category, and the economy,” said Passikoff. Sam Adams (#46) was the only beer brand to make the top-50 ranking.

On the other side of the bar, Dunkin Donuts coffee (#14 up from #54 in 2009) and McDonald’s coffee (#18) were the only other beverage brands to make the top-50 loyalty rankings.

Car Brands Run Out of Gas

Automotive brand loyalty rankings were generally unchanged from last year with only two car brands in the top-50: Hyundai (moved up from #295 two years ago to #24 last year) is now #6, an increase in loyalty largely due to significant increases in product quality, success of its new higher-end models, and the on-going halo effect from its innovative and emotionally resonating buy-back campaign. “Brands that can make a real, not superficial, emotional connection with consumers alwaysengender higher levels of loyalty,” noted Passikoff.

Toyota, a perennial loyalty leader, #15 last year, is now #37. “They’re still feeling the effects of the recalls and bad press over the past year,” noted Passikoff. There’s good news though. “It could have been worse for Toyota. They owned high degrees of loyalty and the ‘Loyalty Rule of 6,’ kicked in for them. (That’s when loyal consumers are six times more likely to give the brand the benefit of the doubt in uncertain circumstances). “That truth showed up in this year’s relatively small decline, considering the situation and profitable bottom lines,” said Passikoff.

Loyalty Winners and Losers

Some brands that showed the greatest gains in loyalty this year included: Progressive Insurance (+78), Avon (+53), and Domino’s Pizza (+38).

“Progressive has been doing it right,” said Passikoff. “Their spokesperson, Flo, has turned out to be a trustworthy and uniquely cool emotional center that holds for consumers andtelegraphs a future of painless online transactions.” Avon recently introduced a new, more emotionally-based stand-on-your-own campaign, and Domino’s success has had a lot to do with the introduction of their new recipe and a new, consumer-inclusive approach to category satisfaction.

Among the brands that saw the greatest losses in loyalty were: Palm (-407), Tylenol Allergy (-199), and BP (-326).

Palm, at one time almost a generic for PDAs with very high loyalty, fell behind rivals who merged mobile and data management. Palm’s latest operating system, webOS, and newest model phone, received a lukewarm consumer reception, when introduced a few days before a new iPhone entered the market. The brand, along with customer loyalty, faded away and in April it was acquired by HP.

Tylenol’s loyalty loss coincided with a number of product recent recalls, and BP, rated last in this year’s rankings (#501), learned that “if you’re an oil company who built its house on being green you need to avoid blowing up oilrigs, destroying livelihoods and fragile ecosystems. You can’t be any more emotionally destructive than that,” said Passikoff.

“Some brands have suffered loyalty losses because of the economy as consumers shifted to less expensive brands that held the same degree of meaning,” said Passikoff. “But brands that understand that real emotional connections can serve as a surrogate for added-value, will be able to create stronger loyalty bonds no matter the economy.”

The study updates last January’s Brand Keys Customer Loyalty Engagement Index, which was conducted among 35,000 consumers. Eighty-five percent (85%) of the interviews are conducted on the phone; the remaining 15% are conducted via central location intercepts to account for the increasing number of cell phone-only households.

Unlike economic use models, which rely heavily on historical data and profitability conjecture, the Brand Keys Loyalty Model and rankings are 100% consumer-driven, and are predictive, leading-indicators of brand and corporate profitability. “The good news is that brand loyalty is understandable. The better news is, it can be quantified and predicted,” said Passikoff. “And, in these economic times, knowing what’s coming down the road gives a brand an extraordinarily powerful advantage.”

For a the complete 2010 rankings visit www.brandkeys.com/awards/leaders_10.cfm

Contact: VISIBILITY

Len Stein

cel 914 527 3708

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