PredictingMarketSuccessPredictingMarketSuccessNew Ways to MeasureCustomer Loyalty and EngageConsumers with Your Brand

ROBERT PASSIKOFF, PHD

John Wiley & Sons, Inc.

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Praise for

Predicting Market Success

Brand marketing is at a crossroads, and Robert Passikoff shows the way to thefutureshattering conventional branding wisdom with one hand, and givingactionable advice with the other. Predicting Market Success delivers the key in-gredients for breakthrough marketing strategies: a clear-headed understandingof brands, and a predictive approach to measuring them.

Marc E. BabejPresident, Reason, Inc.

In the newly created world of utility deregulation, companies like KeySpanneed to be able to differentiate themselves from their competitors. PredictingMarket Success provides an easy to understand manual for applying engagementmetrics to the brand, and defining what values create differentiation to createa successful brand platform for success.

Bob CatellChairman & CEO, KeySpan Energy

Managers who cannot accurately measure and predict the performance oftheir brands cannot succeed. They are doomed to failure. This book providesan excellent road map with proven measurement tools. If managers follow it,they will not just succeed, they will dominate their competition.

Larry Chiagouris, PhDAssociate Professor of Marketing,Lubin School of Business, Pace University

In a world where any marketers most important skill is dealing with con-stant change, Robert Passikoff is consistently the best signpost for what willhappen next. His book will help marketers be more nimble and more purpose-ful in our nimbleness. Robert Passikoff has a well-established reputation as theguru of loyalty. By sharing his methods and insights, he offers all marketers achance for engagement enlightenment.

Scott DeaverExecutive VP Marketing, Cendant Car Rental Group

Robert Passikoff comes as close to understanding how brands can profitablydifferentiate themselves in an increasingly commoditized world as anyone weveever known. His data is clear, the measures concise, and his f indings totally

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actionable. He is our resource of choice for the most complex branding assign-ments we undertake.

Joe DellAquilaManaging Partner, Continental Consulting

Think of customer loyalty as the air that viable brands must breathe in orderto survive. Then think of Roberts customer loyalty metrics as a brands lifesupport system.

Leonard EberCEO, Karen Neuberger

Robert Passikoff s single-minded approach to life and his amazing BrandKeys invention takes much of the uncertainty out of making tough marketingdecisions. Its a predictive tool that works. Putting your money on a 95 per-cent sure thing as part of the process, is just common sense. FollowingRoberts advice is a staggeringly obvious no-brainer. Reading Predicting Mar-ket Success will help all of us do what we do better.

Ray HanksRegional Business Advisor, Creative Industries, U.K.

There is no more important category to understand a consumers emotionalbond than in the automotive segment. All decisions are emotional with a ra-tional component, with each component rarely defined in proportion and per-spective. Brand Keys does this with true insight and accuracy and quantif iesthis critical intelligence for actionable planning.

Kevin KitagawaSVP Dentsu, Latin America

Predicting Market Success is a must read for marketers who want theirbrands or their companies to surviveand thrivein a cluttered andchaotic marketplace. Dr. Robert Passikoff, a pioneer in customer loyalty re-search, shows how to get beyond what consumers say to learn what is un-saidthe true, unspoken feelings that shape how people view brands,categories, and companies and ultimately make buying decisions. The in-sights contained in this book will help you improve the power and effective-ness of your communications, re-energize your brand, and build andmaintain a bulletproof corporate reputation.

George McGrathPresident, McGrath Matter Public Relations

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Robert Passikoff is one of the most thoughtful and practical researchers onthe planet. His insights into how public relations builds brand engagement gowell beyond the typical rear-view mirror research common today. Thesemethods are predictive. He can tell you whats going to work before youspend the budget. If you want your brand to succeed, read this book.

Tom NicholsonVP Public Affairs, HSBC North America

Robert Passikoff not only successfully argues that twenty-first century con-sumers are much more savvy about their brand choices and identif ies loyalty asthe real battleground for brand marketers in the future, but provides the re-search weapons with which to arm yourself. For the f irst time, a truly predic-tive weapon with which to win the brand loyalty war. Read, learn, and bethankful!!

Kerry OConnorMirror Group Newspapers, U.K.

Loyalty is the single most important factor in determining the depth andlongevity of any customer relationship. Loyalty is the key determinant of prof-itabilitynothing else even comes close. Yet for something so important, sur-prisingly few do it well. We have little control over risk and no way to manageit, until we measure itand measure it accurately. The techniques and ap-proaches in this book represent the leading edge of customer loyalty measure-mentmaking this a must read.

Barry SheehyFounder, CPC Econometrics

Success in this crowded and competitive consumer marketplace comes tothose brands that understand what drives customer loyalty. These unspokenmotivators are diff icult to quantify which is why Brand Keys is so valuable.Passikoff s Brand Keys helped us develop metrics with which we can compareadvertiser brand loyalty effectiveness across various cable networks. The resultsof this study proved the value of our networks in enhancing the brand image ofour advertisers and resulted in new and increased share of business.

Charlene WeislerSVP Research, Rainbow Media

In a business landscape getting cluttered with watered-down product dif-ferentiation and commoditized brands, marketers are quickly realizing thatfact-to-face events create a bond with customers that no media can break.

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Robert Passikoff and Brand Keys have pulled the curtain back and showedus the power of developing loyalty metrics that brand marketers can take tothe bank.

Dan HanoverEditor & Publisher, Event Marketer Magazine

In this postinformation age world, it is tragic that so many companies rely onold, dated preinformation age sources of brand tracking data. Its about timethey learned about Robert Passikoff s Brand Keys approach to tracking con-sumer brand loyalty. Measuring brand loyalty, not just brand awareness andusage, is key for consumer product companies that want to get out ahead of thecompetition and take control of the future of their brands. Roberts new bookprovides essential insights for companies to manage their brands better.

Pam DanzigerPresident, Unity Marketing

Loyalty is not about being complacent with the past; its about being proac-tive and predictive about the future. This book shows the way forward.

Joseph JaffePresident & Founder, jaffe, L.L.C.

Internationally acclaimed, Dr. Robert Passikoff, pushes aside todays sys-tematic malaise of data-heavy marketing methodologies to reveal a clear-cutpath toward pinpoint accuracy in def ining and building brand success. Pre-dicting Market Success, is no book on theory, but an insiders look at the BrandKeys approach to measuring customer loyaltyvery possibly the GPS oftwenty-f irst century brand marketing navigation. Passikoff punches throughthe ponderous, carpet-bomb, marketing mantras that beleaguer corporateAmerica today in one book with a shelf life that will most assuredly be meas-ured in decades.

Timothy R. LaurenceCEO, Richards Laurence Communications Inc.,Toronto, Canada

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PredictingMarketSuccessPredictingMarketSuccessNew Ways to MeasureCustomer Loyalty and EngageConsumers with Your Brand

ROBERT PASSIKOFF, PHD

John Wiley & Sons, Inc.

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Copyright 2006 by Robert Passikoff. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form orby any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except aspermitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the priorwritten permission of the Publisher, or authorization through payment of the appropriate per-copy fee tothe Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax(978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission shouldbe addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts inpreparing this book, they make no representations or warranties with respect to the accuracy orcompleteness of the contents of this book and specif ically disclaim any implied warranties ofmerchantability or f itness for a particular purpose. No warranty may be created or extended by salesrepresentatives or written sales materials. The advice and strategies contained herein may not be suitablefor your situation. You should consult with a professional where appropriate. Neither the publisher norauthor shall be liable for any loss of profit or any other commercial damages, including but not limited tospecial, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact ourCustomer Care Department within the United States at (800) 762-2974, outside the United States at(317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print maynot be available in electronic books. For more information about Wiley products, visit our web site atwww.wiley.com.

Have You Stopped Beating Your Wife Extract from YES PRIME MINISTER Antony Jay &Jonathan Lynn. Copyright agent: Alan Brodie Representation Ltd., 6th f loor, Fairgate House, 78 NewOxford Street, London WC1A 1HB info@alanbrodie.com. Reprinted with permission.

Library of Congress Cataloging-in-Publication Data:

Passikoff, Robert, 1948Predicting market success : new ways to measure customer loyalty and engage consumers with your

brand / Robert Passikoff.p. cm.

Includes index.ISBN-13: 978-0-470-04022-5 (cloth)ISBN-10: 0-470-04022-X (cloth)1. Customer loyalty. I. Title.

HF5415.525.P37 2006658.8343dc22

2006014656

Printed in the United States of America.

10 9 8 7 6 5 4 3 2 1

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Dedicated to my why and wherefore,my cause and effectmy family.

Who never, ever have to thank mefor coming home at night!

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ix

Contents

Foreword xiJack Trout

Acknowledgments xiii

Introduction: Why the Four Ps No Longer Workand the Three Words (Including Loyalty) That TookTheir Place 1

Chapter 1Why Marketers Cant Predict Customer Behavior

Whoops, Now They Can 15

Chapter 2From Brand Guessing to Brand Building: How to Profitably

Engage Your Customer 28

Chapter 3How to Measure Customer Values, Expectations, and Loyalty 58

Chapter 4Loyalty Is 70 Percent Emotional: An Emotional Bond Engages

Customers and Makes Money 88

Chapter 5Easy-to-Implement Customer Loyalty Metrics: How to

Supercharge Traditional Research and Marketing 111

Chapter 6The Four Proven Drivers of Customer Loyalty:

A Category-by-Category Expos 152

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Chapter 7The Power of Human and Celebrity-Based Brands: When

It Works, When Its Wasted 175

Chapter 8The Future of Branding 207

Conclusion 228

Epilogue 232Don E. Schultz, PhD

Index 235

x Contents

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xi

Forewordby Jack Trout

They promise me miracles, magic, and hope, but somehow it always turns outto be soap.

Allan Sherman ( last line of Chim Chim Cheree,parody on his album My Son, the Greatest)

Its become a lot tougher for marketers to differentiate their brands and engageconsumers. With smarter customers, and more competition, there is no shortageof companies slipping from glory days to grueling days. The truth is, its goingto get even tougher. My own books, Positioning, The 22 Immutable Laws of Mar-keting, and Differentiate or Die, were written to help marketers recognize the keyissue they needed to address: creating the right differentiating strategy.

Robert Passikoff has pioneered a method for helping marketers create an ef-fective differentiating strategy, based on customer loyalty research. Now itscaptured in a book. If you read and apply Predicting Market Success, you will beable to measure the values and expectations of your customers, and more im-portant, you will know whether your next marketing/branding campaign willsucceed or fail, because you will be able to predict how customers will respond.There is an elegant, effective simplicity in Roberts method.

A good example of values-based differentiation is the tag line I created forPapa Johns Pizza: Better ingredients, Better pizza which acts as a powerfuldifferentiator for a brand in a highly competitive category. Papa Johns ongo-ing success with this strategy is substantiated year after year by winning theBrandweek magazine Customer Loyalty Award (which is powered by Robertsown Brand Keys measurement system). This is just one example of how, if youknow which customer values really count, you can rally your whole team tocreate an extraordinarily successful brand platform. Take a look in this book at

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the results of Roberts Brand Keys Customer Loyalty Index for your productcategory if you want proof that differentiated positioning and loyalty lead toincreased market share and increased profits.

Many modern branding diff iculties are the result of companies relying onlegacy research tools that measure customer attitudes but are lousy at predict-ing customer behavior. The problem is that people talk one way in an inter-view and behave differently when it comes time to actually make a purchase.Mark Twain put it perfectly when he said you dont get the truth until peopleare deadand dead a long time. The best marketing research combines thetraditional, rational measures with customers emotional perceptions of thecategory and the brand. This requires building customer loyalty metrics intoany research and capturing real emotional perceptions and deep brand in-sightstechniques pioneered by Robert and described in this book. Miss thatand you miss out on the perceived strengths and weaknesses, and what strate-gic opportunities exist in the mind of the target group of consumers. In short,you may miss out on the key customer insights that will lead you to make thesoundest strategic brand decisions with the greatest measurable return.

In my book Big Brands, Big Trouble, I wrote that big trouble isnt easy tofix. Customer loyalty metrics are a powerful navigational aid to keep yourbrand, and profits, off the rocks and out of big trouble in the f irst place. Theyare predictive, and they are preventative. If anyone still has any doubts, seehow far out Robert was able to predict the rise, and fall, of brand titans thelikes of Coke, AT&T, Kmart, Krispy Kreme, even the most famous of what hecalls human brands, Martha Stewart. Understanding and applying a new gener-ation of customer loyalty metrics will help you to successfully differentiateyour brand. Its a pretty simple idea once you put your mind to it.

xii Foreword

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Acknowledgments

This book is the result of a process that was developed and nurtured over along period of time. Many people made signif icant contributions that got usto this point, and the book would be incomplete without such an admission.So my thanks to the following collaborators, starting from our very earli-est days:

Kerry OConnor, who provided Bundles from Britain in the form ofsubstantive support, stationery, and enthusiasm when we needed it most.Without him, there would be no Brand Keys. To Paul Kaplan who knewabout computers and computer simulations when virtually nobody knewabout computers and computer simulations. And to Len Stein of VisibilityPublic Relations, who made us more famous than we ought to have been soearly on.

Peter Boyko and Bill Callahan who for the past 22 years have seamlessly al-lowed the statement the research goes out, and the research comes back tohave been made in complete honesty.

The Brand Keys Brain Trust; Steve Hunter and Charles Karmiol, whoknew all about creative, Jack Trout, who knew all about positioning, LisetteBerry, who knew all about statistics, George Javornik, who knew about TQMand strategic dashboards, and Tom McCann, who quite literally knew abouteverything else, whenever we needed it.

Our loyal clients, whose faith and trust allowed us to jump light-years inthe development of the postmodern, customer-loyalty engagement model andits applications. But f ive in particular: Joe DellAquila formerly of AmericanGeneral, Al Gerber of KeySpan, Manuel Gutierrez of Kohler, Bruce Leonardof Leonard/Monahan fame, and Charlene Weisler of Rainbow Media.

Michael Lefkowitz, our smart f inancial guy and the best unofficial clippingservice in the world, my agent Nat Sobel (to whom I hope I kept my promiseabout not being a pain), and my editor, Richard Narramore, whose invaluableskill helped us to separate the loyalty wheat from the research chaff.

xiii

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