SeeMartin

Samsung’s marketers either do not profile their customers very well or don’t give a damn about CRM and brand loyalty. Android 2.2 Froyo operating system will not be pushed OTA (over the air) to Samsung Vibrant phone owners because “…this could potentially hurt Samsung Galaxy 4G sales”!? Dubious argument at best. The adverse effect of this decision, however, is clear – annoyed Samsung Vibrant owners. What were the folks at Samsung thinking? If someone shells out $500 for a smart phone s/he probably gives a damn about what it does and stays on top of things such as a major operating system upgrade.

The upgrade is available if you go to Samsung or T-Mobile website and search a bit or, as I did, burn some customer service money by chatting with a rep online until they sent me a link to the step-by-step upgrade instructions. I don’t know what Samsung and T-Mobile put in their prenuptial agreement regarding such decisions but not sending Android 2.2 OTA to existing customers makes them both look bad.

I remember once during a marketing strategy class, professor Christian Kim challeged us to think about passive vs active brand loyalty. Specifically, he wondered how significant and meaningful the distinction between “passive” and “active” is when it comes to loyalty. One could argue – he said – that brands should be content to enjoy the loyalty regardless of what type it is and it is a waste to dissect it any further. On the other hand – he continued – understanding the type of loyalty could potentially help marketers nourish and increase it.

This is where a definition of passive and active brand loyalty is in order but I’ll give examples in lieu of it:
Not switching to a new health insurance provider that offers slightly better premiums is a form of passive loyalty to your current provider — you don’t switch despite of the financial incentive not because you LOVE your current insurer but because it is too much of a hassle to switch, aka, the cost of switching is high.  Conversely, if you don’t find Haagen-Dazs ice cream in the store and decide either to go to another store or not buy ice cream at all, this is a typical example of active loyalty to the Haagen-Dazs brand.

Obviously, brand loyalty varies tremendously between different product categories, obviously there are many variables that shape it, and obviously it is too large of a topic to cover in a few paragraphs, but here are a few thoughts on how understanding passive vs active loyalty could help in marketing decisions: At first glance it appears that active loyalty is the “good” and stronger one and companies should strive to cultivate this type of loyalty. Passive loyalty, however, is not always a result of high switching cost or a contractual obligation; often companies give you something to earn your passive loyalty. Consider this example:  Most commercial banks offer free online billing, automated bill payments, e-bills etc. perks to their customers. This is value added for customers but is also one more reason not to switch to another bank – you have to go through the same tedious accounts setup, have to carefully time the switch not to miss payments etc. The bottom line – this is a fair way to boost passive loyalty and improve retention. In addition, if the customers are emotionally attached to the brand then you have the best of both worlds – I will not switch to brand “B” because I LOVE brand “A” besides,  brand “A” spoiled me so much that I’m too lazy to do it.