Brand Loyalty - October 2009 Marketing Blog

I was talking to a friend of mine on my drive to work this morning, she is a marketing executive at a micro-chip manufacturer. We were talking about the decreasing staffs in marketing departments and how, at least in Silicon Valley, if you don't have a unique branded marketing skill and you are out of work, it was time to change careers. The conversation may sound a bit harsh, but maybe it's true. We also talked about the challenge of having to lay off people or not lay off people. Her question to me was, when companies have to downsize, and roles change, why don't companies offer someone a job at lesser pay. Well, we have certainly seen mass payroll reductions as many companies have asked their employees to take 5 -15% pay cuts. Most people took those pay cuts, but she was much more specific.

Her point was, if a company chooses to deemphasize a role because it is changing its strategy, isn't it better to offer the incumbent employee the job at a lesser title and pay, rather than lay them off and rehire at a lower cost. Aren't the real costs of hiring, retraining, etc. lower by simply asking the person to stay at the lower rate of pay and diminished responsibilities? It certainly gave me cause for pause to think about what I would do if put in that situation. But maybe she is right; maybe now that we have all laid off so many people, maybe there is a cause for loyalty. Maybe we should give people more options rather than assuming that they wouldn't want the lower position and the lower pay.Loyalty is diminishing everywhere. I just read an article in the New York Times this morning about the lack of brand loyalty in the car business. How in the past there was allegiance to car brands for generations, and now only 20% of car buyers repurchase the same brand. Maybe brand loyalty starts with employment. We lived in a more paternalistic society in the past, where companies took care of their employees, now we are all "at will employees." We talk a lot about how the current generation sees themselves "free agents," not associated with any company that "free agents" are the employees of the future. But maybe, just maybe, if we want brand loyalty, we have to bring back some trust in society. Maybe, we will never know brand loyalty in the way we have known it in the past, because we just don't trust each other as much. Maybe that is the price of freedom and the price of choice.

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