January 22, 2017

Why are your customers brand switching and what is the reason for switching brands?

More and more brands and products are being launched every day. In the traditional retail mix, moden retailers like Walmart have started launching their own unique products. On top of that, Walmart has even tougher competition from E commerce companies. In E commerce, every day marks the launch of new and unique products, several of them being launched because they failed through traditional distribution channels.

At such times, the customer gives very less time and attention to your brand. You have to attract the customer within seconds. Thus, your brand building starts much before the customer enters the final buying stage.

Equally important is the fact, that at the buying stage, the customer can switch brands easily. Instead of deciding to go ahead with your brand, he can decide to finalise a competitor’s product or their brand. So what are the reasons for brand switching? Let us dwell deeper in the customer’s mind

Brand switching

Value for money – The first and foremost condition which comes to mind when a customer is buying a product is value for money. If the customer is buying a Levi’s jeans and it is costly, then he will still go for it if he can afford it. But the same customer will not go for a lower cost jean which is unbranded. This is because Levi’s jeans are clearly a status symbol also.

So one of the major reasons for brand switching is “not enough value” being provided by your brand against the price being offered to the customer. This value can be monetary, it can be an emotional value or it can be targeted towards the personality of the buyer. Increase the value offering to stop the customer from brand switching.

Marketing mix – A very basic concept but one on which a complete company can be built. Many companies have erred in their marketing mix by either keeping the price very high, or by having an inferior product, or by not reaching the proper distribution channel. The people of the company matter too. I have seen many product managers who have brought the right product in the market, but they did not have enough fire power to ensure that the product succeded.

Hence, your marketing mix can be one of the reasons for brand switching by customers. If your price is too high, you can offer a low cost variant which can be an addition to your product depth. Similarly, if your product is premium, you need to reach the premium channel of distribution and you might have to wait before you start distributing to every tom, dick and harry. Overall, there are many tweaks possible in a marketing mix to stop your customers from switching brands.

Improper service – There have been many times that I myself have switched brands because the service given to me was pathetic. Although the brand might be giving good service in the market, losing more than 10 % of your customers to a competition brand because of service reasons is an alarming situation.

Because when you are facing dire times, these 10% of customers will compound up to create a fantastic customer base. These 10% lost customers annually can bring 10% more customers and it will keep adding year on year. You need that customer base and you need to give proper service to your customers so that they don’t switch brands.

Outdated technology brand switching

Outdated technology – We saw the crash of Nokia in the last decade. So many customers switched brands in the start, and the movement got so solid that Nokia could not keep up. But why was action not taken right at the start? Was the introduction of Android thought of as a wave that will eventually play its part and die?

If it was that, then it was poor decision making from Nokia. A brand is made by innovators and not by adopters or laggards. And technology is the one thing which immediately attracts the innovator type of customers. Hence, If you are using outdated technology, It is highly likely that you might see your customers switching brands.

Marketing communications – The popularity of Vodafone is because of the popularity of the ZooZoo’s. We don’t buy Vodafone because we love the Zoozoo’s. But we know that Vodafone is a brand which takes business seriously. We know that they went out of their way to connect to the customers. And in the end, Airtel and other telecom brands might be wondering where their customers went and why? (Even though they were giving good service)

The role of marketing communications is to attract new customers and build the brand. Naturally, if your competitor is good at it, you will see a lot of customers shifting brands immediately. The only attack you can launch is to have an equally cut throat communications strategy. This will help you maintain your brand equity, and won’t change the PERCEPTION of your brand in the market. If anything, it will show you as a strong competitor and will help retain the market share. Hence, investment in advertising never goes waste, even though measuring the ROI becomes difficult.

Brand fatigue and Brand switching

Brand fatigue / “I wanna try that new product” – The last and most valid reason, is when people want to try new things. Now, you were busy with your own product catlog, refining it and pushing new life into it. And hence, you could retain customers for a long, long time. But ultimately, all customers start questioning – Is there something new out there?

Hence, when customers want to try something new in the market, they do brand switching and try out a new brand. Such customers are highly likely to return to your brand again and hence they are not going to cause a huge dent in your bottomline. For example – Instead of Dove, you try out a new shampoo or soap. However, looking at the next TVC, you immediately decide that you loved Dove better, and then you switch back to Dove.

Thus, in this case you have done brand switching twice. The best way to avoid such switching of brands, is if Dove keeps introducing new types and new products in the market which keeps attention of innovative customers captured.

Overall, the above are the main reasons for switching from one brand to another. There may be others as well. Influencers are people who themselves buy a brand and then influence others to buy the same brand. Similarly, word of mouth, social perception are all hidden reasons for which a customer might shift from one brand to another.

In the above points, I have also mentioned what you can do to avoid brand switching. You will always have a portion of your customers switching brand. The percentage leaving your brand may be higher for start ups than established companies. As long as it is limited to a prior approved value, brand switching is fine.

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About Hitesh Bhasin

I love writing about marketing and advertising. Would you like to ask me a question? Kindly send your queries and feedback via this Forum. You can also get daily marketing updates via email. Let's stay in touch :)

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