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MEMO TO APPLE: When Delight Becomes Expectation, Loyalty Becomes Uncertain

It may surprise consumers to realize, but it was only nine short years ago that Apple introduced the iPhone. Sure, that’s nearly an eon in tech-time, but with that introduction Apple set a very high expectation bar – as well as a very fast pace for innovation and design ­– for all smartphones to come.

The level Apple set became the “delight.” One that kept users upgrading again and again for the past 8 years as well as enticing users of competing systems to defect to Apple – even in the face of lower-priced offerings. Every year Apple met, set, or exceeded expectations consumers had for their Ideal smartphone. And doing that kept consumers loyal and the brand very profitable. Quod erat deomnstrandum.

But then the competition reset category expectations. Two years ago Samsung introduced the first water-resistant smartphone. Earlier this year they introduced the two-camera lens system. LG introduced their version of that camera shortly thereafter. Samsung had already developed greater screen resolution and had extended the screen to the edge of the phone, a trick of design that made the screen appear bigger. Last week Apple unveiled their long-awaited iPhone 7.

Yes, it has improved battery life and a dual-lens camera. It’s water-resistant now. They’ve removed the headphone socket from the bottom of the phone, which now requires wireless AirPod headphones (or a converter to use your traditional headset). Apple still has its integrated, easy-to-use hardware/software, but that’s not new. Neither is their legendary customer support infrastructure.

But questions regarding loyalty and customer defection potential abound. What of the organic design that created the original category expectations and that currently drive nearly 40% of the loyalty in the category? How likely is the “new” iPhone to engage customers – both current and competitive? Will smartphone users of all stripes find enough brand value in Apple’s new version? And if not, will current iPhone users hold on to their existing devices longer? Oh, and how long before I lose my AirPods?

To provide some insights into those questions, Brand Keys measured the iPhone 7 (as introduced by Apple) using our predictive engagement and loyalty metrics to compare the Apple 7 to earlier Apple loyalty measures collected back in January of this year.

Back then Apple rated an overall 89% (versus a category Ideal configured at 100%), which ranked Apple #1 but just 1% higher than Samsung. Back then Apple was seen by customers to best meet their very high expectations for the single category loyalty driver having to do with “Cameras, Apps, and Multi-Media.” They also did very well when it came to “Brand Value and Customer Support,” but did less well when it came to “Organic Design” and “Personal Connectivity,” the two most-important loyalty drivers in the Smartphone category.

So optimally, the new iPhone 7 would raise the brand’s ability to better meet the expectations consumers held for each of the four category loyalty drivers, thus increasing brand engagement, independently validated to correlate very highly with positive consumer behavior in the marketplace. QED.

Regrettably, the new assessments do not bear out that objective.

When it came to “Organic Design,” the Apple iPhone 7 was rated significantly lower than January assessments, and only directionally higher for “Personal Connectivity.” Thus are the vagaries of customer expectations, and the removal of traditional headsets, one can only suppose. There was no change when it came to “Brand Value and Customer Support,” which one might have guessed. They’re Apple, after all.

The only significant increase was in the driver “Cameras, Apps, and Multi-Media,” and all together, looking at Apple’s 4-driver weighted average versus the Ideal of 100%, actually resulted in a decrease of 2% for the Apple brand, or an overall loyalty and engagement rating of 87%. To paraphrase Alexander Pope, “Hope springs eternal for all tech brands,” but it’s not necessarily accorded.

And sure, Apple can count on the Innovators, the (Very) Early Adopters, and the Apple Passionistas to line up for the 7, although we think it’s fair to point out they only account for about 17% of the population. Additionally, Apple, which has provided opening weekend sates data for the past 8 years, has decided it’s not going to do that this year. Or any more. They rationalize that decision citing initial sales aren’t the best indicator (anymore?). Oh, and estimates for iPhone sales in the coming year are modest at best.

None of this comes a surprise to us. In our annual survey of the most innovative brands in America this past July, Apple slipped from the #1 spot to #4. Yikes! It would appear that what was once seen to be iconic is now viewed as generic. And a brand that once delighted now battles to meet consumer expectations.

And build customer loyalty, too. QED.

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.