Customer loyalty is one of the most popular topics in marketing, but not all loyalty is created equal. Within the Big Picture methodology we have identified three types of loyalty, which we call Heart, Head, and Hand. While customers may exhibit different combinations of loyalty, one tends to dominate. Iconic brands like– Apple, Harley-Davidson, Tumi, etc.—are known for their heart loyal customers, people who feel passionate love for their preferred brand. Signs of head loyalty are present when a customer defends her or his preferred brand by discussing specific performance attributes, such as better gas mileage, easier to use, more durable, better taste, more sustainable. Both heart and head loyalties indicate a high level of personal involvement with the brand. Hand loyalty is more subtle. We find hand loyalty in customers who routinely select the same brand, but do so without much thought. For hand loyals, the brand is part of a regular routine, although they do not profess a clear rationale, nor are they particularly emotionally involved.
It is important for brand managers to understand the type of loyalty customers have for their brands. The consequences of misjudging the type of loyalty that predominates within the customer base can have disastrous consequences. A recent example involves well-known internet browser and search engines. Mozilla Foundation produces the Firefox internet browser. Although Firefox is not the market leader, its users are quite loyal, with most users exhibiting clear signs of hand and heart loyalty, such as actively adding the browser each time they upgrade hardware, and even making donations to the Mozilla Foundation. For 10 years, until late 2014, Mozilla had a worldwide contract with Google, providing the latter as the default search engine for the Firefox browser application. As part of the arrangement between the two companies, Firefox users would automatically be routed to the Google engine when they searched the internet. If a user wanted to use a different search engine, she or he would have to actively change their default settings—not a difficult task, but something few users would do. After all, Google is by far the market leader in internet searches, handling nearly 4 of 5 internet searches in the USA.
In November 2014, Mozilla entered into a 5-year agreement with Yahoo to replace Google as the default search engine for all Firefox users in the United States (Mozilla made separate deals in other countries). Yahoo agreed to pay Mozilla $375 million per year for five years (through 2019) for this arrangement. As a result, on December 1, 2014, all Firefox users woke up to find their search engine changed to Yahoo.
The impact of ‘forcing’ customers to switch brands would be different depending on the type of loyalty that is predominant amongst a brand’s customers. We can predict that heart loyal customers to Google would immediately change the settings on their Mozilla application to restore their preferred brand; had Google had mostly heart loyal customers, the impact of the new agreement would be negligible on market shares. We can also predict that head loyal customers would notice the change immediately but might evaluate Yahoo for a time, after which most of them will switch back. Finally, hand loyal customers would likely notice the change, and might or might not switch back depending on whether the two engines are similar enough in features to enable the customers’ search routine to continue without much effort.
The effect of the Mozilla-Yahoo agreement on Google’s and Yahoo’s share of search was immediate and very sizeable. On December 2, Google’s USA search share dropped from 80% to 60%, while Yahoo’s USA search share increased from 10% to 30%.(1) However, the share change was short-lived. By February, 2015, Google had regained a significant portion of its share loss from the Mozilla-Firefox/Yahoo agreement. This pattern is consistent with head loyalty to Google amongst Mozilla’s customers. Hand loyal customers might have noticed the shift, but would not have switched back to Google, assuming Yahoo met their basic needs. However, not all hand loyal users react in the same manner. A portion of hand loyal customers, noticing the disruption to their routine behavior, would raise their level of involvement in search engine choice, and enter a comparative selection process. Through this selection process, thus group would become head loyal to their new selected search engine, whether it be Yahoo, Google, or another search engine.
Since early 2015, Yahoo’s share has continued to erode, and by November 2016, Google had re-earned the entire share that it had lost to Yahoo, while Yahoo’s search share was back to it’s pre-December 2015 Mozilla-Firefox agreement. And Yahoo is still committed to the deal for three more years. It appears that Yahoo was unable to generate adequate loyalty – heart, head, or hand—to drive inroads into Google’s dominant share.
This example illustrates is the difference between non-loyal, hand loyal, and head loyal customers. Firefox users who were non-loyal Google users, likely didn’t even notice that a switch had been made. But for those were loyal, the type of loyalty was demonstrated in the changes in market share.
(1) Note about search share: Reported search shares vary depending on how they are measured and who is keeping score. The shares reported here were taken from several sources, and the specific extent of the share changes varies depending on the source. However, all sources agree that the directional changes discussed in this article did occur during the reported time frames.
Sources:
Yibada:
http://en.yibada.com/news/google-drops-to-its-lowest-us-web-search-share-percentage-yahoo-at-its-highest-share-9206 . Reporting results from StatsCounter GlobalStats, last accessed January 9, 2015.
SearchEngineWatch, January 21, 2015, by Mike O’Brien: “Google’s share of the U.S. desktop search market dipped from 67 percent to 65.4 percent from November to December of last year, according to comScore’s monthly qSearch analysis.”
Computerworld News, December 2, 2016, by Gregg Keizer: “Mozilla’s revenue jumps 28% in first full year of Yahoo search deal.”
