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Examining the Challenges, Importance of Building Brand Loyalty

WWD chats with Havas Media Group's Isabelle Harvie-Watt Clavarino on the heels of the 2013 Meaningful Brands Index.

MILAN — On the heels of the 2013 Meaningful Brands Index released by Havas Media Group, Isabelle Harvie-Watt Clavarino, chief executive officer and country manager of the marketing group in Italy and also director of the global luxury division launched last year called LuxHub, revealed that “the majority of people worldwide wouldn’t care if 73 percent of brands disappeared tomorrow,” and discussed potential ways to build brand loyalty. Top ranking brands in 2013 include: Google in first place, followed by Samsung, Microsoft, Nestlé and Sony, Ikea, Dove, Nike, Wal-Mart, Danone, Philips and Procter & Gamble.

WWD: What are the main challenges for luxury brands in the future?
Isabelle Harvie-Watt Clavarino:
“Two, I narrowed it down to contents and container, which essentially means how you transmit a message. Contents obviously because before it was enough to transmit your brand heritage, the art of doing quality, exclusivity, your endorsement to celebrities, events, everything to do with your brand equity. But now what we have discovered from this research on meaningful brands is that the majority of people worldwide wouldn’t care if 73 percent of brands disappeared tomorrow.

That goes down to 60 percent  in new and emerging markets where it is still enough to just have a brand but it goes up to 90 percent in more evolved markets like the U.S., Italy, the U.K. And really very few brands were actually seen to be meaningful, with a positive impact on people’s life.”

WWD: How was the research carried out?
I.HW.C.:
“We’ve been doing this research for five years, and this last one covered 22 markets. We interviewed about 150,000 consumers online, not just the affluent target, and we analyzed 700 brands, and obviously we analyzed some of the luxury brands as well, and in particular in the U.S. What comes out it is that, whereas before it was all about the product in the beginning and then you had to become aspirational, now you really need to make a difference in people’s lives, because there is no brand loyalty anymore essentially. You have to create a series of values around your brand to really impact people’s lives. The Meaningful Brand Index, it measures the impact a brand will have on somebody’s personal outcomes or on the collective outcomes. People expect brands to positively impact their lives or the life of their community today and that’s just a basic fact.”

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WWD: Could you please define this impact?
I.HW.C.:
“It’s a brand that makes me feel better, let’s say Nike, or it’s something that helps me feel smarter, like my iPhone, it’s something which helps me to organize my life better, live better, like Ikea. Ikea actually is the top-performing brand in all of the markets across the world because they have done exactly that. They help you with your credit. They do a series of things that makes it much easier for you. So it depends: people expect different things from different brands and obviously it started with the green, but green is just one of the ways that a brand can become more meaningful in somebody’s life.

But it has to make sense, we went through this phase known then as the green washing, it was like the latest trend. What people are looking for is authenticity, in fashion you may not be able to be credible in terms of being green but there are all the other ways to become more meaningful and doing good. And basically what we’ve proved also with the Meaningful Brand Index over the years is that meaningful brands are doing good business, you can see just by the trend, in how they perform in the stock market, for example.

There is a very definite sort of correlation between businesses that are doing good and businesses that are doing well. Those kind of businesses that know how to create social value are performing well. For example, if we look at some of the brands in the U.S., we judged them in term of contributions as meaningful brands and thus the level of attachment is directly related. So therefore if you are perceived to be a meaningful brand you are going to have the much higher level of attachment.”

WWD: This year, half of the top 10 brands are in technology.
I.HW.C.:
“Unfortunately, there aren’t many fashion brands on the list, it might be interesting to do it just on the fashion business, but it is a small world. It’s been a few years now that brands started to realize that what they’ve been communicating until now is not enough. Burberry for example has been incredibly innovative in the way they communicate. In order to engage your consumer and to build a strong relation with your consumer, you have to go beyond; it’s not enough to build a story on your event, it’s not enough.

Because of the Internet [customers] know so much more and they compare, they discuss. Not only you have to tell a story that’s going to be relevant and great on some kind of personal level and collective well-being but also you need to tell a story that people feel personally connected to, tailored to your taste and what you like. You have to know your customer very well, you need to follow that customer and you need to make them feel like what you are doing is really pleasant to them and that’s the big difference. People are used to having what they want, when they want it and that’s what leads us to the problem of the challenge that today you have to become omnichannel, there is no doubt.”

WWD: Did any specific shopping pattern emerge from the research?
I.HW.C.:
“Typically there’s a gap of about 28 days between when you first start thinking about a purchase and when you actually make it. It’s 28 days. The last thing people do before they buy is typically go to the Web sites and compare the prices. You have this sort of back and forth between what we used to call online and offline, and the further you get towards the purchase, the more the digital affects people because they will discuss and share with their friends, compare the prices.
And interesting enough, what came out of this other research we did as well is that so many luxury brands are scared of not being able to transfer that brand experience online, or losing the exclusivity, which is very low in terms of people’s priorities, they don’t see it as a problem, they want to be able to get what they want wherever they want, whenever they want. If you look at the amount of money that people invest online, it is still very small….In general, in [the] luxury [arena] people fear they’re going to lose control.”

WWD: Do you think that the country of origin is relevant to customers?
I.HW.C.:
“I don’t think it is that relevant anymore. I think you need to be clear about the country of origin, I think you need to be honest about where it comes from but I don’t think it matters that much. I mean, made in Italy is always going to be important for l’artigianato [artisan craftsmanship], for very good and high-quality handmade products, and I guess in a way it could be a sort of a guarantee, but mainly I think people don’t want to be tricked.”