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Imagine you find out that Ariyh has become very popular with QAnon conspiracy theorists. (It hasn’t, don’t worry).

You might start to ask yourself what you’re doing here: “I’m an evidence-based professional, why am I here with QAnon conspiracists? They’re the antithesis of evidence”.

It’s likely you would soon leave, or continue reading for necessity 📈 - but unhappily. (Heck, if that happened I’d probably shut everything down and run away myself).

But wait. What if Ariyh offered ‘Ariyh Pro’ - a premium more exclusive version used only by other evidence-based professionals like yourself?

As we’ll see, it’s less likely you would leave. You would probably upgrade instead.

P.S.: What’s happening is the opposite. I’m extremely impressed by how top-notch professionals Ariyh readers are. I take it as a compliment that you are here. Thank you.

Dissimilar new customers push away existing ones. Retain them by offering exclusive upgrades

Impacted metrics: Customer retention | Customer spending
Channels: Product | Loyalty rewards | Brand strategy
For: Mostly B2C

Tip type: Existing research (December 2018)
Previous tip: Emotionally volatile content is more engaging (All tips here)

Recommendation

When expanding your brand’s customer base, offer options to your most loyal existing customers to upgrade to other products that are more:

• Professional (e.g. enterprise plans)

• Expensive (e.g. new collections) 

• Exclusive (e.g. limited editions, more premium brand extensions - how Lexus is to Toyota)

Effects

• Previous research found that people avoid and abandon products to distance themselves from dissimilar people who use the same product or brand (e.g. a 40-year old executive would be put off by a teenager wearing the same scarf)

• Instead of leaving, another response can be encouraged: stay and upgrade to something more exclusive

  • Customers with a strong connection to the brand (usually the most loyal customers) will likely upgrade

  • Customers with a weak connection will probably simply leave

• For example, in experiments:

  • Business students with a strong connection to Under Armour apparel were 22.7% more interested in upgrading to more exclusive Under Armour products if they saw a computer science student wearing the same sweater, compared to another business student

  • Female students with a strong connection to Burberry were 75% more likely to want to upgrade to more exclusive Burberry products when they were told “working moms” were avid users of the same Burberry tote bag they used, compared to when they weren’t told that

• Interest in upgrading is weaker when:

  • The brand’s exclusive products are easily available to everyone

  • Customers have already been given a higher status (e.g. VIP) by the brand’s loyalty program

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Why it works

• We feel a threat to our identity when people we perceive as very different from us use a brand we love and feel close to.

• To defend from that, we either leave or look for a higher-status position to distance ourselves from different users of the brand.

Limitations

• The experiments in this study were:

  • Mainly on high-end apparel brands. These are products that people tend to identify quite strongly with. It’s unclear how the effect differs for other product types, but it’s likely weaker

  • On university students. It’s possible that this age group is more susceptible to feeling unique and disidentifying with other, different, groups of people.

  • Based on imagined scenarios and expressed intentions, not actual behavior

• It’s unclear how large the group of dissimilar new brand users needs to be for it to start having a significant ‘flee or upgrade’ effect on existing customers.

• It’s possible for new brand users to be people that are different but that customers admire (e.g. successful entrepreneurs). We don’t know how that changes (or reverses) the effect.

Companies using this

• Most companies offer a variety of products and exclusivity. It’s unclear how much of it is because they recognize this effect and how much is simply to cater to multiple customer segments and boost sales.

• Still, it’s surprisingly common for companies to be unprepared for this. For example:

  • Abercrombie & Fitch lost its customer base of college students when preteens started using it

  • North Face lost favor with outdoor enthusiast when it became popular among high school and college students

Steps to implement

• Identify which of your customers feel a strong connection to your brand (e.g. do they like your social media page?).

• Develop exclusive products, plans, or premium brand extensions and target them mainly to this segment, effectively giving them the option to upgrade.

• Ideally, you already have these options in place. If not, make this a top priority if you are experiencing a large influx of new customers that are different from the usual base. It may seem like a good thing right now, but the dangers are huge.

Study type

Lab experiments. United States

Research

Wang, Y., & John, D. R. (December 2018). Up, up, and away: Upgrading as a response to dissimilar brand users. Journal of Marketing Research, 56(1), 142-157.

[Link to paper]

Affiliations

Robert H. Smith School of Business, University of Maryland and Carlson School of Management, University of Minnesota. United States

Remember: This research could be disproven in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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