Summing Up
Is the Potential Negative Impact of New Information Technologies on Customer Loyalties Overstated?
Customers will remain loyal to brands that meet their needs, regardless of the effects of new information technologies on their general knowledge about products and services. But new information technologies will punish weak brands faster and more severely than in the past. That's the general sense I received from responses to this month's column.
There was a minority opinion, however. As Carl P. put it, "If you have more information to make what you consider to be an informed choice, why would you have to be brand loyal?" Consumer loyalty, he continued, "will vary and fluctuate on a technological continuum of innovation/change (loyal one day and maybe not the next)." Based on personal experience, Ed Kensinger said that his exposure to a superior product and service on the Internet "could never have happen(ed) before … and pose(s) a threat to brand loyalty." If there is a weakness in your offering you are at risk.
Others were reluctant to reach such a judgment. In concluding that this is not an either/or choice, Nuno Cintra Torres commented that some people will always need references such as brands. Others will be more adventurous, enjoying the search for new features. "At the core of human behaviour is human biology and that will not change because of information technology."
There were doubts both about the quality of the information delivered by new technologies and consumers' ability to use them effectively. Gabriel pointed out that reviews are highly subjective "so you end up not knowing what to believe… The Internet and social media (don't) always make us better informed." Sergio Zaragoza suggested that this topic is "like the story of King Midas, we will be starved by the excess of golden information."
Still others suggested that marketers have little to fear, especially if they are willing and able to strengthen their brands. As Edward Hare put it, "I don't see the Internet 'technology' as a threat to customer loyalty…. Loyalty is earned by meeting and exceeding expectations. Do that, and you can maintain loyal customers." AIM added, "It is not the advances in information technology that (have affected our loyalties) … but lack of focus on our true needs."
However, there was a sense that new information technology could exact a heavy toll on marketers not able to raise their standards and performance. Gerald Nanninga commented that if marketers have a great story to tell, "the Internet is your friend. If you don't, then failure is accelerated. Think of it as a results magnifier—in either direction."Is the potential negative impact of new information technologies on customer loyalties overstated? What do you think?
Original Article
The world is fascinated by an international debate about information technology, security, and access to "secrets." Views referenced years ago in this column are playing out in the diverse worlds of national security, spying, and patriotism. Harlan Cleveland's words of more than 30 years ago keep coming to mind: "The information resource, in short, is different in kind from other resources. So it has to be a mistake to carry over uncritically to the management of information those concepts that have proven so useful during the centuries when things were the dominant resources.... These concepts include … the notion of hiding and hoarding a resource."
It's clear that information technologies have brought us into a new age of international relations, but they have profound implications for the way we do business as well. For example, a question has arisen about how information both about us and available to us affects our behaviors, specifically our loyalty as consumers and employees.
There are two predominant sides to the discussion of this question. One is that the amount of information about products and services is becoming so voluminous that it will lead to increased consumer confusion. As a result, the use of surrogates (such as brands) in our purchasing decisions will lead to greater brand loyalty, justifying today's massive expenditures to preserve brands.
The other view is that the quality of Internet "technologies," such as search and feedback mechanisms, is improving faster than the proliferation of information. This will give users of the Internet the upper hand in the battle for access to information and the ability to organize it, value it (based on feedback from users), and use it for decision-making.
The authors of a recent book, Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information, believe the latter outcome is the most likely, based on extensive research at Stanford and elsewhere. It will increase the tendency, particularly among younger consumers, to try new goods and services, possibly switching their loyalties. If this turns out to be the case, it calls into question a good portion of marketing beliefs and expenditures regarding brand building and the lifetime value of a customer. It may also suggest different approaches to the management of human resources, specifically methods for retaining employees who will be better informed about the job market.
If true, a better informed and less loyal customer is a big deal for others as well. It's important for those among us who believe that employee and customer loyalty are important determinants of businesses' growth and profitability. It may mean a lot for us as consumers as well, because the effectiveness of the search apps we use will probably be enhanced by the information that others have about us.
Will big data overwhelm us, thereby reinforcing such things as brand loyalty? Or will the quality of our search and valuation devices make us smarter, and less loyal, customers for goods, services, and even jobs? What do your own experiences tell you? Is Internet "technology" a threat to loyalty? What do you think?
To Read More:
Harlan Cleveland, "Information as a Resource," The Futurist, December, 1982, p. 37.
Itamar Simonson and Emanuel Rosen, Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information (New York: HarperBusiness, 2014).
My point is that the internet and social media doesn't always make us better informed.
I guess what I am trying to say is that in becoming more sophisticated at acquiring and evaluating information we as humans have become over-the-line short tempered, ever demanding and quite unreasonable in establishing our needs. The 21st century human has become truly spoiled. Now, please consider this from the view that majority of the world has not left the 20th century and some have barely begun.
There is nothing wrong with IT advancements (they have contributed in myriads of ways to societies), but we as humans should try to establish our values and basic needs based on our moral beliefs and be courageous and loyal enough to stick to them to not be affected by every little thing that comes along during the daily life. Rapid changes and attempts to adjust to them may make the person in the mirror unrecognizable and often not in the positive ways.
Loyalty to one brand or product will become more subjective, as more information continues to enter our "search & valuation" stratosphere. The point is, if you have more information to make what you consider to be an informed choice - why would you have to be brand loyal? Hence, the option to choose the best brand/product or service will be based upon what a consumer deems as the most "contextually viable"; for their personal consumption. Consumer loyalty or not - will vary and fluctuate on a technological continuum of innovation/change (loyal one day and maybe not the next).
In one scenario, I had to travel to new places where chosing a restaurant was a major challenge, so I relied on a website that gathers information about small, medium, & large restaurants throughout the country and that collects ratings from users who visit those restaurants. Initially, I compared my ratings of known restaurants to those developed by experts or users. And in the process over a period of time, I could match my instincts to generate nearly accurate results - my predictions matched with correct users. I became a loyal customer to that website.
While it's a great opportunity to learn about a product from other user experiences, the end result of brand loyalty depends upon how a product or a service fulfils purpose of consumers. Further, consumer loyalty, particularly for frequent switchers, varies from product to product, depending upon whether it's a one-time-purchase product or a product that has services associated with it. One quick solution for businesses to address those fast movers is to rapidly embrace the change.
Ultimately, the success or failure to gain brand loyalty through internet depends upon how the businesses put into use the technology to best serve the consumer needs.
The consumer's ability to easily access product and company information via the internet makes brands both stronger and weaker. With new and easy access provided by the Internet, the consumer has given himself/herself more choices. In the long run what will happen is that the weaker brands will not do well and will be driven out of business as the better brands will gain market share, thrive and strengthen.
Businesses that provide a good service and a good product at a fair price have nothing to fear from the Internet or the Internet user's hunger for product information or information on a marketer. Businesses that do not provide good service, good products or fair pricing will be exposed for being sub-par.
It has become so easy for consumers to post a positive or negative review on all types of products and services that any business that thinks it can get away with price-gouging and poor customer service is only diluting itself; time and technology are clearly NOT on the side of businesses that operate that way.
So if you have a great story, the internet is your friend. If you don't, then failure is accelerated. Think of it as a results magnifier--in either direction.
Innovations and new developments do not reach such users. and they form the majority.
Having said that, relevance of data for shaping consumer preferences is also to be recognised despite some cofusion being created due to excessive data being thrown out through the internet.
This is what I felt while reading this article and new thoughts arises to improve myself too. One should have the habit of accessing the information and organizing it.
y is built through the direct interaction between the company and its customers. That being said, the internet can be irrelevant to the downfall or uprising of a business if its stewardship to its customers is constant and reliable.