CONSUMER LOYALTY IS EXPECTED TO LOOM LARGER

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ENGLEWOOD, Colo.-The late 1990s will be a period of great consumer loyalty, led by Generation Xers, says Watts Wacker, managing partner with Yankelovich Partners.

"Perhaps the most loyal consumer franchise in post-World War II American history will be Generation X," Mr. Wacker said at National Demographics & Lifestyles' Summit '94 here in July. "And so we have a very bullish orientation toward the future of branding and loyalty."

Increased product loyalty will stem from a need to seek comfort in an ever more stressful world, he said.

That need can also be used by marketers to introduce new products in a non-threatening way. For instance, Mr. Wacker said, some companies have seized the idea that spending opportunities can be couched in the form of new rituals-such as holding birthday parties every six months or celebrating step-grandparents day-that cement increasingly fragile family bonds.

In addition to comfort, Americans are searching for rest and relaxation, he said, explaining that the 1990s are characterized by the "energy model," in which the primary goal is the preservation of energy and the secondary goal is the accumulation of more energy.

As a result, it will be increasingly difficult to get ad messages across. Mr. Wacker cited a recent survey that asked people what they would most like to do on a free weekend day. The good news for advertisers is consumers' top choice would be watching TV; the bad news is their next choice would be to take a nap.

Fred Reichheld, director of Bain & Co., Boston, cited important advantages of product loyalty. Long-term customers:

Buy more per year.

Are cheaper to service because they understand the suppliers' systems and products.

Encourage more growth by offering referrals to associates.

Are less cost-sensitive than new customers.

Contrary to popular belief, customer satisfaction doesn't translate into product loyalty or market share, Mr. Reichheld said.

"One company found that most of its defectors were satisfied," he said, adding that value should be a company's top goal, and that is best measured by client retention.

"Loyalty becomes a good measure for managing the delivery of value," Mr. Reichheld said.

Keith Peterson, senior researcher at National Demographics & Life-styles, said companies can create a long-term orientation by focusing on "consistency and coherence-not a series of promotions." It's also vital to engage in trust-enhancing behaviors like asking customers to call with comments.

Since there are increasingly more venues for delivering messages, Mr. Peterson said, successful marketers will provide product and brand information in all possible media.

The event drew nearly 300 people seeking ways to hold onto their customers for the rest of the decade and beyond.

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