Losing customers in the downturn: Fickle people, or practical ones?

Panicked about loyal customers leaving?

CMO Council: "For the average brand, approximately one-third of all highly loyal consumers in 2007 completely defected to another brand in the same category in 2008, according to a recent CMO Council report. This report (Losing Loyalty) has major implications for marketers and underscores the critical need for brands to more effectively engage with individual consumers by tracking their loyalty behavior and responding with relevant offers."

Be more relevant - but without good customer data?

And yet consumer watchdogs strongly resist behavioral tracking. Companies want loyal customers, and customers want relevant offers at a good price. 

And even with all this behavioral analytics going on to determine who's loyal, don't the macroeconomic conditions change the "value and values" formulation in the exchanges between a company and its customers? 

What's a company to do?

I've got an answer. What's yours?

HINT: In a downturn, be proactive

A hint to my answer: Look at WholeFoods' experimentations on the value/values side, and ask: why? Is there profit? Is WholeFoods interested only in the profit side of their recent moves? For large, national brands, what range of responses is necessary when an economic downturn looks unavoidable? And can those companies move fast enough? Ah, the customer question has now become an organizational design, sector strategy. Funny how marketing isn't enough anymore.

Also, good reading here. Follow the Reese's Pieces to find Bruce Temkin's report from Forrester.

Comments

[Angela]

I'd be curious to know if the WholeFoods "value" campaign was actually a reaction to the downturn or if they were arleady looking to reach out to a wider customer base and the timing happened to coincide. Either way, I think it works. As a WholeFoods customer, I'm happy! Still, as you suggest, I'd bet most companies respond too slowly to be effective and responsive.

[Paul Ward]

It's a great point, Angela! I feel sure that Whole Foods was trying to deal with shareholder concerns that its growth rate was slowing, meaning that they might be saturating their markets. One way to deal with that is to broaden your appeal, but without losing your core brand values. Maybe the timing was serendipitous, but my impression is that Whole Foods is managed well enough that at least some of their investments and campaigns were triggered by internal concerns about macroeconomics.