brand loyalty

How Third-Party Aggregators Are Destroying Brand-Client Connections

With 20% of consumers now using it at least once per week, food delivery is definitely catching on.[1] As usage continues to increase, however, there is growing discontent with these third-party services. More and more firms are finding that allowing third parties to interact with their customers on their behalf can be toxic for their brands.

Third party aggregators decrease a firm’s autonomous control over its user experience—and therefore its brand. For quick-serve restaurants, where the physical space plays a huge role in defining the brand’s values, delivery disconnects the customer from every aspect of the brand except for the food and prevent vital brand-to-consumer interactions.[2]

At best, decreased interaction with consumers is just that—decreased interaction. At worst, third-party aggregators can actively damage a brand’s reputation. Advertising industry executive Nick Powills, CEO of NLA, used a personal story about one particularly bad food ordering experience to illustrate this worst-case scenario. When food he’d ordered through a delivery service app had yet to arrive ten minutes after the scheduled delivery time, Powills called the restaurant directly. They told him it had been sitting—ready and waiting for a delivery driver—for over ten minutes. One driver cancellation, multiple calls to the app, a terrible customer service experience, and an hour and a half later, the food was finally delivered—to the neighbor’s house.[3] The restaurant, through no fault of its own, will now forever be associated with this terrible experience.

This threat of subpar third-party service is not limited to the restaurant industry. In 2004, InterContinental Hotels Group found third-party websites were hurting its brand and prohibited them from offering hotel reservations on their websites.[4] Practices like listing sold-out properties, adding hidden fees, and using “bait and switch” tactics led to customer complaints about the booking process.[5] According to then-SVP Jim Young, hotel guests associated these hassles with the hotels themselves—not the booking sites.[6] When it is all said and done, he explained, “customers complain about problems during the booking process not to the online booking service, but...to the hotel when they arrive.”[7]

Selling through a third-party aggregator means exposing your brand to a sucker punch—it takes a hit every time the experience fails to live up to brand standards, even if your company isn’t at fault. Creating lasting, positive connections with consumers is crucially important to long-term success. Smart firms are working to earn and strengthen these relationships, not allowing third parties to mess them up.

 


[1] https://www.statista.com/statistics/259191/ordering-takeout-delivery-from-restaurants-in-the-us/; https://www.axios.com/ubereats-uber-ipo-valuation-fb086af6-4d57-4518-abbb-39c6a1b600e5.html; https://techcrunch.com/2018/09/18/postmates-funding/

[2] https://www.qsrmagazine.com/outside-insights/are-restaurants-facing-delivery-disconnect

[3] https://1851franchise.com/grubhub-restaurants-beware-they-could-be-killing-your-brand-2703942

[4] https://www.bizjournals.com/tampabay/stories/2004/08/30/story2.html

[5] https://www.bizjournals.com/tampabay/stories/2004/08/30/story2.html

[6] https://www.bizjournals.com/tampabay/stories/2004/08/30/story2.html

[7] https://www.bizjournals.com/tampabay/stories/2004/08/30/story2.html

Combatting the Decrease in Consumer Trust and Brand Loyalty

A recent Forbes article reported “the death of brand loyalty.”[1] Consumers are less and less likely to buy a product on brand considerations alone. Ninety of the top one hundred CPG brands are “losing market share on consistently low-growth categories.”[2]

Blame for brand loyalty decline has fallen on a number of cultural changes that have devalued loyalty overall. Americans now view work and careers as transitional, not permanent: whereas it used to be common to spend an entire career with one employer and retire with a gold watch, now the median salaried worker spends 4.2 years in each job.[3] Over 15.5 million people are self-employed, a number that is only expected to increase.[4] Trends in religion (23% of Americans now identify as atheist, 6% more than decade ago) and shifts in marital behavior (an increasing number of Americans are growing up with divorced parents) reflect similar decreases in loyalty toward traditional institutions.[5]

In an environment where simply being the familiar brand shoppers bought last time doesn’t cut it anymore, companies must work harder to reach and retain their consumers. This involves both continued innovation and, in the words of one CEO, “building an adaptive infrastructure that truly listens to what consumers want.”[6]

Some firms are trying to do just that. Coca Cola recently rebranded Diet Coke in an attempt to appeal to La Croix consumers by adding two flavors and investing in a package redesign.[7] Coke also reformulated the beverage with the same sugarless sweeteners used in Coke Zero Sugar to attract more health-conscious consumers who are increasingly reaching for water.[8]

Taco Bell is working on listening to its already-large vegetarian following. The first fast food chain to earn an American Vegetarian Association certification, Taco Bell is already well known among vegetarians for options like the 7-Layer Burrito, Double Tostada, and the Cantina Power Veggie Bowl.[9] They’re now rolling out a full vegetarian menu, which includes both existing and new vegetarian options. In doing so, the self-proclaimed “underdog” in the sector hopes to strengthen its position by adapting further to consumer demands.[10]

While it is too early to tell exactly how effective these changes will be, Coca Cola and Taco Bell have the right idea. Even if a revamped Diet Coke or the new vegetarian menu flops, both companies are taking a huge step forward by learning to adapt to the wants of their consumer base. Static, out of touch firms eventually fade from the minds of customers and from the Fortune 500 list. The only way to stay relevant (and profitable) is to deeply understand consumers’ wants and needs—and continually innovate in order to meet them.


[1]  https://www.forbes.com/sites/kathleenkusek/2016/07/25/the-death-of-brand-loyalty-cultural-shifts-mean-its-gone-forever/#5d19e9d94dde

[2] https://www.forbes.com/sites/kathleenkusek/2016/07/25/the-death-of-brand-loyalty-cultural-shifts-mean-its-gone-forever/#5d19e9d94dde

[3] https://www.bls.gov/news.release/tenure.nr0.htm

[4] https://www.forbes.com/sites/kathleenkusek/2016/07/25/the-death-of-brand-loyalty-cultural-shifts-mean-its-gone-forever/#5d19e9d94dde

[5] https://www.forbes.com/sites/kathleenkusek/2016/07/25/the-death-of-brand-loyalty-cultural-shifts-mean-its-gone-forever/#5d19e9d94dde

[6] https://techcrunch.com/2018/04/23/innovation-can-help-old-consumer-brands-win-customers-and-influence-people/

[7] http://fortune.com/2018/01/10/dietcoke-relaunch/

[8] http://fortune.com/2018/01/10/dietcoke-relaunch/

[9] http://fortune.com/2019/01/11/taco-bell-plans-to-start-testing-a-vegetarian-menu-later-this-year/

[10] http://fortune.com/2019/01/11/taco-bell-plans-to-start-testing-a-vegetarian-menu-later-this-year/