THE BLOG

The Loyalty Economy

10/02/2013 08:23 pm ET | Updated Feb 02, 2016
  • Paul Gorrell, Ph.D. Founding Principal, Progressive Talent Partners; co-author, 'The Coaching Connection'

Brands are presenting themselves in new ways because of the shift toward social media. They reach their consumers differently now, and this has created a new way to build loyalty that, in turn, drives business. Today we not only buy a company's product but "like" it on Facebook and join a community of fans. Yes, people become fans of their laundry detergents and underarm deodorants, exposing this loyalty to their friends and, on open websites like Twitter, to the larger world. With the increasing use of "second screen" devices like tablets and mobile phones, we consume entertainment differently, which means that advertising has become a social media project. Television commercials are no longer the core way to connect consumers to brands.

But there is another fundamental aspect of loyalty that must be recognized. People are becoming increasingly loyal to brands that share their perspectives on key cultural and social issues of our day. The LGBT community may be the best example of this. In 2011 Harris Interactive released an often-quoted study that demonstrated that LGBT people are dedicated to brands that advertise with LGBT imagery, support LGBT nonprofit groups, and provide equal benefits to LGBT employees. The study compared 2011 data to a similar study in 2007 to demonstrate that this consumer behavior was trending up. The 2011 study also concluded that LGBT people are very likely to switch brands and ignore price based on their perception of a brand's alliance with their cause. It appears that friends and families of LGBT people are also paying attention to these issues and adjusting their consumer habits, though I don't believe that this related phenomenon has been studied explicitly.

Last year this played out in the Chick-fil-A controversy after the company's chief operating officer, Dan Cathy, stated his opposition to same-sex marriage following reports that the company's charitable foundation had donated millions of dollars to anti-LGBT political groups. This summer there has been significant attention paid to the boycott of Russian vodka brands in the wake of the recent criminalization of pro-LGBT speech in Russia, the host of the next Winter Olympics. And this past week Barilla became the latest brand to feel the heat of an LGBT boycott because of its chairman's apparent disdain for families headed by parents of the same sex.

I grew up with the Coors boycott of the 1970s and the ExxonMobil boycott of the 1990s. I can't count how many Exxon or Mobil gas stations I've driven past in spite of of how long my fuel warning light had been blinking. No one had to ask me to make these decisions. Well-reasoned yet emotional, my consumer behavior is the one thing I can control to try to effect change.

Recently this happened on the local level for me. I have been a consumer "fan" of the Wine Library in Springfield, N.J. (adjacent to a town called Maplewood, which has a large gay community), for about five years. I rarely drink any alcohol other than wine, and let me admit here that I really like my wine, so I have been a pretty good customer of theirs over the years. They not only provide a great selection at great prices but offer a really wonderful consumer experience, with wine consultants who build a relationship with you, knowing your taste and interests, and a super-simple website for online purchases that often offers free shipping. With revenues over $45 million per year, it is not a small business.

The store was founded by the father of Gary Vaynerchuk, who was the public face of Wine Library for many years. Since then, he has become somewhat of a legend in social media advertising. He has two New York Times bestsellers, including The Thank You Economy, which analyzes the shift to social media and the power of creating a social brand that is gracious and personal. He describes this as the "humanization of business." Based on his tremendous success, Vaynerchuk started his own advertising agency, which, according to CNN Money, is one of the 25 most influential tech investors on Twitter.

Imagine my dismay this past summer when I found out through their Twitter feed that the Wine Library was hosting an in-store event to promote some alcoholic product that Adam Carolla, a standup comedian who is well-known for anti-LGBT comments, was marketing. Immediately I started to send messages to Vaynerchuk and the Wine Library through Twitter and the store's website.

Pretty quickly, Vaynerchuk engaged in a Twitter conversation with me (seen here) saying that the Wine Library had been ignorant of Carolla's comments, despite the fact that they had been widely reported. And we're not just talking about jokes. Carolla became a weekly contributor to Bill O'Reilly's TV program on Fox News, where he expressed anti-LGBT political views. I let Vaynerchuck know that I was very upset and could no longer be a customer after their decision. Vaynerchuk promised via Twitter to get my phone number from the store to call me, but he never did. Meanwhile, the store's social marketing employee promised that I would hear from someone at the store. Eventually I was very happy to receive a voice message and an email from the vice president of operations, who apologized and wanted to find a way to make it up to me.

Our conversation ended up only taking place over email, because I never received a call back after the first voice message. Through email I suggested that, "to make it up to me," the company could publicly donate money or product to an LGBT cause. Frankly, I would have preferred that they cancel Carolla's event (they had time, because my protest came days before the event was scheduled to take place), but given that they were not going to do that, I wanted them to take on the type of activities that the Harris Interactive study demonstrated are signs of loyalty to LGBT consumers.

The vice president of operations said that he would get back to me shortly with the compnay's plan. His email ended with, "[W]e want to do everything possible here ... and will do so." That email was dated July 29. I never heard from him again and have seen no evidence of any action on the Wine Library's part. I still follow the Wine Library on Twitter, hoping that my advice will be adopted. In the end the Wine Library has lost a customer. But, more importantly, they seem to have missed an important lesson about a core driver of consumer behavior. It's surprising that a leader in social media like Vaynerchuk would miss this lesson.

For LGBT folks, a local protest like mine and global protests like those against Barilla and Russian vodka brands are not petty affairs. We want our dollars to go to companies that do good by us. Believe me when I say that I really miss my amazing shopping experience at the Wine Library. Vaynerchuk and his company get the "'thank you' economy" down; I think they do it better than anyone in their business. But for those of us who make up the LGBT community, the "loyalty economy" will always trump the "'thank you' economy."

The way we use our purchasing power is partly why the acceptance of same-sex marriage and LGBT rights has accelerated so dramatically in our society. When we influence companies to recognize us, endorse us, and treat their LGBT employees fairly, these businesses create safe places for individuals to "come out" to their co-workers, building more personal connections between individuals with different sexual orientations and gender identities. These businesses end up creating communities of equality that influence the hearts and minds of fellow employees. They also broadcast a message of equality and acceptance to the broader marketplace through their advertising. LGBT-friendly businesses are not only influencing what people buy; they are influencing where people stand on LGBT equality and how people vote.

So it's great when a company expresses a "thank you" to me. It feels good. But it's much more meaningful when they express loyalty to me by acknowledging and supporting my rights. This is a far deeper connection. After all, loyalty begets loyalty.

CORRECTION: An earlier version of this post stated that the Wine Library was founded by Gary Vaynerchuk, when in fact it was founded by his father. The post has been updated accordingly.