Oz brands just can’t buy love, study finds

Australia’s top advertisers are failing to build meaningful relationships with their customers, new research has found.

The study, carried out exclusively for B&T by innovation agency UDKU and research firm Stokes Mischewski, has revealed that despite continued major investment in advertising, some of Australia’s most iconic brands still have their work cut out in building sustainable relationships with consumers.

The research by Stokes Mischewski involved 2017 customers, 211 brands, 15 categories and 33 subcategories with over 22,000 responses evaluated.

As Colin Jowell, partner at UDKU, explains: “We wanted to create a tool to draw together two vital but different metrics for customer habits and attitudes into a single understanding.”

By doing this, the approach defined four relationship types: Advocates (customers with a strong usage habit and who recommend the brand highly), Habituals (customers with a strong usage habit but who are less likely to recommend it), Aspirants (customers with a weaker usage habit BUT who are likely to recommend it), and Switchers (where neither strong habits nor positive attitudes exist).

The research found that the top 20 advertisers in Australia are dominated by supermarkets, banks and telco’s, yet almost all brands in these categories fell into the switching or habit space.

"This result was not entirely unexpected,” said Dawn Mischewski, joint MD at Stokes Mischewski. “But where the data became interesting was that in almost every case, there was an exception to the category rule, or a segment for whom the relationship with the brand was quite different. It’s in these exceptions that the real insights lie. It gives clarity to the task at hand for marketers and examples of how others are succeeding.”

Failure to connect

So, does a telco have more in common with Apple or Energy Australia?

According to the study, when it comes to customer relationships, telco brands are more like a utility than a technology company.  Habits are relatively well-established in both utilities and telcos, but the proportion of customers willing to recommend them is relatively low.

“For telco brands to start enjoying the type of relationship that technology brands already enjoy with their customers, they need to create stronger emotional connections, but the data shows it might be more about the basics than the ‘wow’ factor,” said Mischewski.

“The evidence for this is that despite telcos’ efforts to align with the positive associations of technology brands and avoid becoming the “dumb pipe”, the only player measured to break out of the habit/switching space was Amaysim, whose offer of pure simple pricing has clearly been backed up by an equally simple on-boarding process.”

She added that another point of proof might be Optus’ relative strength in the sub-$50k pa. income market – given its historical dominance in prepaid, that would seem to make sense.

Buying deal, not loving deals

The telco example might lead some to believe it’s simply a matter of keen pricing, but that’s where the two dimensional view of the customer relationship is vital. For example, in the airline industry, it’s experience, not value, that drives a customer’s willingness to recommend an airline.

Singapore Airlines and Emirates drive the most positive attitudes. While the strength of habit using those brands may not be as strong due to more limited destinations within Australia, with a Singapore Airlines customer is 40% more likely to recommend their airline of choice than a Qantas customer. 

Conversely Tiger and Jetstar drive the least amount of recommendation – lower price is not enough of a compensation for people to actively recommend the brand.

Loyalty programs aren’t the answer to engagement either, or at least not in their current form. Qantas Frequent Flyer and Velocity both fall into the habit space with high usage, but low likelihood to recommend.

The answer lies in keeping one’s offer fresh and relevant, which is easier said than done,” said the study.

Virgin Australia Airlines has a relatively lower connection with its younger audience and is relatively weaker with female customers. Customers under 40 rate Virgin Australia and Jetstar similarly, both with far fewer customers prepared to recommend the brand.

Focus is the secret of success

The real success stories in customer relationship building can be seen in brands who have clearly segmented their market.

APIA’s single-minded focus on its demographic has delivered valuable and true advocates for the business that have been using the brand for as long as they have been able to, and have very high likelihood to recommend scores, especially with their newer customers.

Commonwealth Bank and Westpac both have notably stronger relationships with women, which may in part be credited to prominent and well executed “Women In Business” programs (and the fact the latter has one of Australia’s few high profile female CEO’s may also play a role).

That Nespresso’s strongest relationship is with its customers earning under $50k p.a. seems on the face of it, surprising, but could be evidence of one of the best text book cases of a “mass-tige” offer: something special, but not totally out of reach.

“At the end of the day, a marketing future that is more data-driven will require a multi-dimensional view of the customer. But for now, a two dimensional view may be a great place to start,” said Jowell.