Q&A with Wharton Professor Americus Reed II on the Power of Identity Loyalty
Today we’re thrilled to welcome Dr. Americus Reed II, renowned author, loyalty expert and Whitney M. Young Jr., Professor of Marketing at the Wharton School. As the Wharton Marketing Department’s pre-eminent “identity theorist”, Dr. Reed’s research and work as a consultant have been instrumental in helping many of the world’s most iconic brands such as Disney, Estee Lauder, Google and Microsoft to define a successful brand strategy. Through quantitative and strategic insights, Americus is adept at helping companies to better understand the specific triggers, attitudes and values that lead customers to identify with a brand and products - providing new information for marketers about what drives loyalty.
In the Q&A below, GBK President Jeremy Korst interviews Americus on the power of “identity loyalty” and what goes into creating a winning brand and building identity loyalty - not only as a strategic tool for brand growth, but also to create positive social impact.
Jeremy: To kick off, tell us more about your background. What led you to study identity theory and ultimately apply that to customer analysis, branding and marketing?
Americus: I have always been fascinated by when you’re going through your life, how do you take on certain labels that reflect who you are? Why am I a musician? Why am I an athlete? Why do I think I’m an athlete? When I became a father, how did I navigate being a dad? How am I a professor?
These are questions about self-reflection, navigating your sense of who you are, figuring out how to fit in, but also be unique. All these different things are really interesting to me. An identity theorist studies these sorts of questions, and is interested in understanding how all of these different moving parts come together to form the person.
I became enamored with the idea and more profound notions of identity, and went on to study social psychology and consumer behavior at the University of Florida, where I received my Ph.D. This led me to my role as Professor of Marketing at Wharton, exploring how social identity, social influence, values, attitudes and judgments interact in shaping purchase decisions and consumer behavior.
In addition to researching identity loyalty and teaching at Wharton, I’ve had the honor to consult with some of the greatest and most iconic brands in the world. I am always fascinated by those brands, products, companies and services that rise above. For example, what do Nike, Apple, Harley Davidson, Red Bull, Mercedes, Coca-Cola and Disney have in common? These are not just global brands with tremendous market valuation. These are symbols of self-expression. These brands have developed a community of brand evangelists who not only co-create the brand, but fiercely protect it.
Jeremy: Tell us more about your latest research. How do you define identity loyalty?
Americus: Identity loyalty really pushes marketers to think beyond repeat purchase. Traditionally, people define “loyalty” as someone buying the same thing over and over again. My argument would be: Sure, that person is loyal — to a certain extent. But what’s more interesting, from a marketing perspective is, how do I get that person loyal to the point that they see that brand, that product, that organization, that service as part of who they are?
And if a person takes the brand — not just its features, but other aspects of the psychological perception of what the brand means and stands for in the marketplace — and internalizes it as part of who they are, then there’s the potential to become loyal to that brand. Loyal in how the brand that communicates something about me that’s deeply personal and deeply emotional.
The brands who get it right are building a sense of connection that’s deeply based on self-expression and values. When you make this kind of connection with a consumer, price becomes a less significant factor in the purchase decision. If a competitor comes in with a cheaper product, it doesn’t work, because the entire connection is not based around a financial argument.
When a customer is identity loyal, any competitor has to ask your customer to change who they are. That’s fundamentally different and quite a difficult argument.
Jeremy: As Peter Drucker said, “the true purpose of a business is to create and keep customers”. While pretty much every business leader knows this, many companies fail to build identity loyalty for their brand. How do companies prioritize the right investments to build identity loyalty, and how do they effectively track progress for their efforts to make sure they create measurable business results?
Americus: Building identity loyalty for your brand is absolutely key. Not only do brands with strong identity loyalty grow revenue faster, they also see stronger customer lifetime value (CLV) and advocacy by their customers. In contrast, companies that prioritize functional priorities or near-term profits ahead of customer needs, end up losing customers.
Branding is an important, ubiquitous and inescapable phenomena that when embraced and harnessed properly, can be a positive force to help people improve their lives. But many companies fail to define or execute a brand strategy that creates identity loyalty.
The most successful companies today communicate a deeper story around their identity, their values, and what they stand for. This all goes into creating a powerful alignment with their target customers.
Take Nike for example. You will never see a Nike commercial that talks about the features of the shoes. a particular type of lace or what the sole is made of. They talk about how sports transcends your life. They talk about sports as a mechanism whereby you can become greater than what you are.
The core of my work is helping companies build that into their DNA. This begins with a positioning statement and identifies four crucial elements: the brand's purpose (it's "why"), the ideals and values it represents, the psychographic and behavioral attributes of its target customer and the value proposition offered by the brand to those who become identity loyalists.
Once you have defined your brand strategy and identity loyalty framework, the next step is to make sure you stay true to those brand values with consistent marketing that reinforces those messages, cementing them in the minds of customers. You also need to constantly measure brand perceptions to understand the effectiveness of your marketing. How do customers perceive your brand and products versus competitors? Through analytics, you can quantify and predict the specific attributes and factors that are most likely to create identity loyalty.
If a customer chooses your brand or product because it aligns with their own identity and values, that creates a much more powerful connection than any feature or functional benefit could. And that value in terms of CLV is very real and measurable, because it literally means that the customer is going to be onboard and buying for a very long time, in addition to being one of your strongest brand advocates.
Jeremy: What you are describing is the nirvana of marketing. Let’s talk about how a more established brand that already has a strong following might improve its identity loyalty. Take NASCAR for example, which has among the most brand-loyal fans of any sport in the US. How do they build identity loyalty with the next generation of fans, while maintaining a connection with their existing fanbase?
A: Great question. I know you're a huge NASCAR fan and this is also an example I’ve explored with my students as a part of the customer analysis course I teach at Wharton. The first thing a brand needs to do is to create a demographic and psychographic profile to clearly define their target customers or segmentation. What are the values of those target customers? What topics or social causes do they care about? What are they looking for in the sport? Why do they watch races?
NASCAR made headlines last year when it stood behind driver Bubba Wallace and banned the confederate flag, and has continued to reinforce its commitment to diversity and speaking out against racism this year. These moves have already made a big impact in redefining the values of NASCAR to begin to create alignment with a new generation of fans, but it’s obviously only a starting point.
NASCAR fans are fiercely loyal and talk about the sport they love in a very powerful, emotional way. But chances are younger fans or new fans don’t feel as strong of identity loyalty. Through social listening, NASCAR needs to identify conversations that younger fans are having online about the sport, show they are listening, and co-create the future of the brand with their evolving fan base.
As Simon Sinek famously said: “People do not buy what you do, they buy why you do it.” When we look at Nike and other companies that have built identity loyalty, we see a strong values alignment that underlie the brand. Consider Nike's campaign with Colin Kaepernick from a few years ago for example, with the tagline, “Believe in something. Even if it means sacrificing everything.”
Nike made a bold statement on a highly politicized issue, but it was actually a very smart move. Nike knows the direction of the demography of this country and understands that when you target a specific market with your message — be it identity based or otherwise — you are not trying to necessarily connect with everyone and you are okay if some choose to not align themselves with your brand.
Jeremy: Really well said. Americus, we are excited to have you join the GBK Collective team to help advise client partners. What are you most looking forward to in the role?
Americus: I am thrilled to join the GBK team and look forward to partnering with clients on strategies to extend their identity loyalty and impact in the market. We now live in a world where companies need to communicate their vision, values and aspirational narrative around their products and services in an authentic way that is truly customer led.
My expertise, along with colleague Samuel Botts, is in interpreting customer data to better understand how customers' identities are connected to the products and services they purchase. We have assisted dozens of major brands in creating stronger, "stickier" relationships, based on the brand concept of Identity Loyalty, with their customer base. Now in partnership with the talented team at GBK, we’re able to continue to expand that research and work with client partners across categories.