The Loyal Treatment
The loyalty factor is critical to the long-term health of any industry.
May 6, 2010
It’s been a few months since I’ve written about my beverage background in this column, but the topic resurfaced recently at an industry event dinner I attended. When I mentioned in passing my personal history of covering the ups and downs of the beverage world for 11 years, one of my table mates started talking about how one relatively unknown brand of soft drink, Sun Drop, had a loyal following in his hometown of Shawano, WI.
“Other people gush about their Cokes and Pepsis,” said the man. “But in our area, Sun Drop is what everyone drinks because it was what they were raised on.”
Not to state the obvious, but this loyalty factor is very, very important for the long-term health of any industry. Being true to a hometown brand vs. national ones not only represents one’s pride in their community, but keeps local businesses competitive in our increasingly nationally- and globally-minded world. In the dozen years since I last covered the soft drink business, I’ve watched as this spirit of loyalty has largely disappeared. Today, customers tend to switch between Coke and Pepsi or Sprite and 7UP depending upon which is on sale that week at their local shop.
Having this conversation at our dinner table turned out to be a case a foreshadowing as it turned out. One of the speakers at this event was Dr. Corinne Alexander. An associate professor and Extension specialist at Purdue University, Alexander shared with attendees the results of one of the university’s recent grower studies. This included their buying habits, market practices, and overall industry views.
Not surprisingly, many of Alexander’s comments had to do with loyalty, or perceived loyalty. As is often the case in today’s world, perceived loyalty was more telling than its actual counterpart. For instance, when looking at brand names of crop protection products, only 13% of retailers in the Purdue survey believed their grower-customers were brand loyal, instead using product price as their deciding factor in making a purchase. “In reality, 33% to 39% of growers said they were loyal to a particular crop protection brand,” said Alexander. “The take-away here is that we’ve got to convince retailers that brands are important.”
More significantly, the loyalty factor towards retailers among growers is high. According to the data, 58% of growers are loyal to their retail supplier of crop protection products. “What happens if a retailer switches from a grower’s preferred brand?” asked Alexander. “Most say that they would stay loyal to that retailer regardless.”
If I were a retailer, I would be very encouraged by these statistics. I remember when I first started covering the dealership business in the early 2000s, many observers were predicting that hometown operations would be displaced by internationally-minded, Internet-based ones.
It didn’t happen. Grower-customers highly value the relationship their have with their retailers. It’s this sense of loyalty that promises to keep the industry growing for years to come.