Nic Chidiac | Razorfish | Your Customers Aren’t as Loyal as You Think They Are - The Fragile Nature of Loyalty

Summary

CMO Confidential – “Your Customers Aren’t as Loyal as You Think They Are: The Fragile Nature of Loyalty”

Host: Mike Linton
Guest: Nic Chidiak, Chief Strategy Officer of Razorfish
Date: March 3, 2026
Podcast Network: I Hear Everything

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Episode Overview

This episode explores the true—and often overestimated—nature of customer loyalty in today’s fast-moving digital marketplace. Host Mike Linton and guest Nic Chidiak dissect new data from Razorfish, revealing the fragility of loyalty, why marketers vastly overestimate emotional bonds with customers, and how brands can adapt in an era where switching costs are low and powerful technological and behavioral shifts are underway.

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Key Discussion Points and Insights

1. The Loyalty Illusion: Disconnect Between Marketers and Consumers

• Major Finding:
  Marketers assume customers are far more emotionally attached than they actually are.
  • Marketer view: 65% believe repeat buyers are emotionally attached.
  • Consumer reality: Only ~15-17% cite emotional connection as reason for repeat purchase.

    "That's almost a four to five times difference." — Mike Linton (04:23)

• Problem: Marketers mistake repeat purchase for loyalty and over-attribute it to emotion rather than convenience, lack of alternative, or friction in switching.

Notable Quote

“Marketers are often mistaking repeat purchases for loyalty...there’s just an assumed element of emotion...there's no real substantive evidence.”
— Nic Chidiak (04:49)

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2. The Flaws of Current Loyalty Metrics

• Repeat Purchase:
  Only tells if someone is buying—not where else, nor why.
• NPS (Net Promoter Score):
  Helpful but often flawed, especially if used transactionally (e.g., after freebies), doesn't capture switching motivation.
• Unmeasured Switching Propensity:
  Most companies rarely measure a consumer’s willingness or likelihood to try other brands if given an incentive or easier option.

Notable Quote

“We’re rarely measuring a propensity to switch...how easy is it for you to renew with a brand versus to switch over?”
— Nic Chidiak (08:15)

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3. Switching Barriers and Category Examples

• Industry Examples:
  • Automotive: Even loyal buyers must re-apply for financing—a friction point that invites switching.

    “That added layer of friction creates propensity to sit and to shop around.” — Nic Chidiak (10:54)

  • Insurance: Switching is arduous, discouraging customers from moving, which is mistaken for loyalty.
• Friction Management:
  Key loyalty strategy is not just removing friction, but lowering switching friction relative to competitors.

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4. The Erosion of Risk and Rise of Challenger Brands

• Lower Risk in Trying New Brands:
  Previously, big brands provided assurance (“lemons problem”), but now:
  • Instant reviews, easy returns, AI recommendations = minimal risk to switch.

  • "When was the last time you bought a product that was crap?" — Nic Chidiak (13:46)

• Influencer & Social Proof:
  Influencers and social media democratize trust, making it easier for new brands to gain acceptance.

  "One in three people trust their AI agents more than they do their friends." — Nic Chidiak (13:46)

• Speed of Market Entry:
  Challenger brands (e.g. HOKA, Alo, Sold de Janeiro, BYD) grow and scale faster than ever, aided by manufacturing, social platforms, and shifting consumer openness.

  "Brands are moving at a much faster rate… BYD was essentially unheard of about four years ago, now we’re doing 11 million vehicles." — Nic Chidiak (18:42)

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5. Rethinking Loyalty and Building Defenses

Action Steps for Marketers

• Adopt a “Healthy Paranoia”:
  Treat each customer as at risk, conduct “war game” scenarios with hypothetical challenger threats.
• Upgrade Metrics:
  Understand reasons for repeat purchase, measure switching vulnerability, and differentiate between renewal vs. switching efforts.

  “Double down on moments that really matter and that inspire loyalty beyond reason.” — Nic Chidiak (23:04)

Moments of Vulnerability

• Effective Loyalty Isn’t Just Rewards:
  Brands win lasting loyalty by supporting customers in “moments of vulnerability” (e.g., Chewy sending sympathy for a lost pet, airlines supporting families flying with toddlers).

Loyalty Deficit

• Definition:
  Consumers perceive they give more to a brand than the brand reciprocates, creating a “loyalty deficit.”
• Calculation:
  Measure (1) consumer’s perceived effort to remain loyal and (2) how much they feel the brand reciprocates; subtract. Positive deficit indicates risk of churn.

  "Pardon my French, people begin…believe they’re getting screwed over." — Nic Chidiak (26:15)

Categories with High Deficit

• Banks, Mobile Providers, Streaming, Auto:
  All cited where consumers feel unrewarded for their loyalty and might switch if alternatives exist.

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6. AI’s Role in Loyalty & Experience

• AI Modeling:
  Predicts switching propensity, identifies customer vulnerabilities.
• Agentic Search:
  Must optimize site/content so AI bots “recommend” your brand.
• Personalization at Friction Points:
  AI enables hyper-targeted moments, not just rewards but proactive support.

  “The short answer…is everywhere. AI can help in a variety of things.” — Nic Chidiak (28:10)

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7. The Increasing Power of the Customer

• Switching Ease + Better Products + Personalized AI:
  The power balance is shifting toward consumers.

  "This marketplace is leaning way more towards the customer than ever before, and it's going to continue to do that?" — Mike Linton (29:56) “I think so.” — Nic Chidiak (29:56) “You could never take customers for granted, but the window to take them for granted maybe a lot shorter than it’s ever been.” — Mike Linton (30:37)

• AI as Trusted Source:
  Some consumers now trust AI agents for recommendations more than friends or review sites.

  “Almost a third of people said, the number one source I trust the most is my…AI agent over my friends and over review sites.” — Nic Chidiak (31:08)

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Special Segment: Untapped Boomer Value (32:09)

• Marketer Underinvestment:
  Boomers represent up to a third of spending and assets but receive only ~6% of marketer attention. Many brands fear targeting them will alienate other groups—a costly misconception.

  “Boomers are one of the most valuable and yet neglected consumers…It’s always about aging down the brand…this is a sizable segment.” — Nic Chidiak (32:09)

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Memorable Moment

• Pop Tart Panic:
  Nic shares moving to the U.S. for a top marketing job on Kellogg’s, realizing in a strategy meeting he didn’t know what a Pop Tart was, and secretly Googling it mid-meeting.

  “I had to excuse myself, go to the bathroom and lock myself in…the toilet for about five minutes YouTubing, ‘what is a Pop Tart?’” — Nic Chidiak (34:07)

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Important Timestamps

• 03:37 — Key metrics on loyalty gap introduced
• 08:15 — Explanation of flawed loyalty metrics and what to measure instead
• 13:46 — Risk reduction and shifting value of brand trust
• 18:42 — Challenger brand velocity and new market entries
• 21:13 — How to defend legacy and lead challenger brands
• 24:00 — Moments of vulnerability as key loyalty triggers
• 25:14 — Loyalty deficit concept explained
• 28:10 — AI's multifaceted role in managing loyalty and customer experience
• 31:08 — AI replacing friends/reviews for consumer trust
• 32:09 — Underutilized boomer market
• 34:07 — Pop Tart anecdote

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Conclusion

The episode offers a candid, data-driven rethink of customer loyalty for modern marketers. Nic Chidiak urges brands to scrutinize their assumptions, adopt better metrics, leverage AI, and focus on customer friction points and “moments of vulnerability.” Marketers can no longer afford complacency: The loyalty market is more volatile, customer power is growing, and AI will accelerate these shifts.

Memorable Takeaway:
“Assume your customers are up for grabs, every day.”
— Paraphrased from Nic Chidiak’s overall message throughout the episode

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Transcript

[Mike Linton]

The CMO Confidential Podcast is a proud member of the I Hear Everything Podcast Network. Looking to launch or scale your podcast, I Hear Everything delivers podcast production, growth and monetization solutions that transform your words into profit. Ready to give your brand a voice? Then visit iheareverything.com welcome to CMO Confidential,

[Nick Chidiak]

the podcast that takes you inside the

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drama, decisions and choices that go with

[Nick Chidiak]

being the Head of marketing.

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Hosted by five time CMO Mike Linton.

[Mike Linton]

When is the last time you researched something on a website? If you're like most people, AI did that work for you. And that raises a question. If AI is doing the work, what is your website really for? This behavioral shift means AI bots are becoming your most important new visitors. A challenge our sponsor Scrunch is taking Head on. Scrunch is the customer experience platform that helps you understand how AI agents experience your site, when and why they show up, and what's blocking them from being retrieved, trusted or recommended. Scrunch shows you the content and citation gaps and technical blockers and helps you fix them so your brand shows up when consumers start with AI because your most important site visitor might not be a human for our listeners, Scrunch is providing a free website audit that uncovers how AI sees your site and how you're showing up in AI versus the competition. Run your site through [e-mail] CMO welcome marketers, advertisers and those who love them. The Chief Marketing Officer Confidential CMO Confidential is a program that takes you inside the drama, the decisions and the politics that go with being the Head of marketing at any company in what is one of the most scrutinized jobs in the executive suite. I'm Mike Linton, the former Chief Marketing Officer of Best Buy, eBay, Farmers Insurance and Ancestry.com here today with my guest Nicholas Chidiak. Today's topic your customers aren't as loyal as you think. The Fragile Nature of Loyalty Now Nick is the Chief Strategy Officer of Razorfish. Previously he held a number of positions at Leo Burnett, including the Head of Planning and Strategy. Razorfish focuses on global digital marketing and transformation and customer experience and is one of the digital agency ogs. Nick is joining us today to discuss recent Razorfish research on loyalty. I can't believe I got through those three R's. Welcome Nick.

[Nick Chidiak]

Mike, thank you. Thank you for having me. It really, really is a pleasure. I'm a huge, huge fan of your podcast. I'm even a bigger fan of your podcast once you told me that the setting needs to be us having A cup of coffee and having a very casual discussion. As a, as a Lebanese Greek, where coffee is a big part of our culture, that got me even more excited. So, so thank you and thank you for that kind introduction.

[Mike Linton]

Well, thanks for coming here. Let's go right to the main topic. Your research indicates that loyalty is really a lot more fragile than I say in here. Most people. But I'm thinking, most marketers think. Tell us what you really learned. Give us this research writ large.

[Nick Chidiak]

Mike, the thesis is exactly as you said, is that loyalty is significantly more fragile than marketers think. And there are two kind of key beacon metrics that set up the study. One, when marketers were asked, thinking of people who buy your products consistently over and over and over again. So repeat buyers. Yeah. Why are they doing so? And 65% of marketers said, because they have some type of an emotional relationship to the brand, they love the company. And then when we asked exactly the same question to consumers who are repeat buyers, the answer was something within the 15 to 17%.

[Mike Linton]

So that's almost a four to five times difference. And is this marketer saying, like, I'm Comcast or somebody, they love me, they just love me and they're attaching me because they just keep paying me, or are marketers, you know, thinking about this the wrong way? Like, that is a massive gap. Tell us what's in that gap? Like, like where's the big difference between consumers and the companies?

[Nick Chidiak]

So I think, I think a couple of places, Mike. I think marketers are often mistaking repeat purchases for loyalty. Right? So I think that, I think that's, that's one important disconnect. I think the other disconnect is there's, there's just an assumed. And maybe because we as marketers have attribution bias where we, we like to sift and sort through information and stories in a way that, that correlates with the way we want to see our, our, our jobs or our job success. But there's also an assumed element of emotion that sits there where people are like, okay, marketers are basically saying the reason why someone is buying a product for me is because they have an affinity towards, towards my brand. And then there's just a, I think there's just a general myopic view of repeat buyers. There's, we aren't able to see the entirety of who they are. We aren't able to see, in most cases, total share of wallet. You're able to see that someone bought, let's say, five times, but you can see that they bought five out of a total of, let's say, 15 or 20 times.

[Mike Linton]

Yeah.

[Nick Chidiak]

And there's no real sense of why behind repeat purchases. Like, we don't really know that in most cases marketers.

[Mike Linton]

So when we were talking about this earlier, you said many marketers are delusional, and I'd love to take apart that line and then, then we can go into how as a marketer or a company, can I get a good beat on all this stuff?

[Nick Chidiak]

So, so, so I, I mean, I. I don't know if I would say. I mean, I know I did say delusional, but our PR team said better.

[Mike Linton]

Better. Not a little bit, if you want.

[Nick Chidiak]

Yeah. We can, we can walk it back. So I think there are a couple of things, Mike. I think. I think marketers that sit within the 65% and the 15% chasm have kind of a couple of qualities. They. They tend to sit at the helm of larger brands because we know repeat purchase tends to sit in the.

[Mike Linton]

In.

[Nick Chidiak]

In larger brands for obvious reasons. Right. They're bigger brands. They have more. More share, and that share has higher penetration, higher frequency.

[Mike Linton]

Yeah.

[Nick Chidiak]

To. They tend to have assumed that emotion is the dominant reason why someone is repeat buying. And by assumed, I mean, there's no real substantive evidence that basically says the reason why someone's buying 15 times is because they have some type of a loyalty beyond reason.

[Mike Linton]

Right. If I'm sitting here and I'm sitting in the marketing seat, and I could be an energy company or an insurance company or an airline, and you just. I keep getting you. You are purchasing me. I'm just making the leap that you are emotionally connected versus you are really. I'm the only game in town, or I have the best times, or I'm more convenient. Is that, Is that what you're saying?

[Nick Chidiak]

In more cases than not, yes.

[Mike Linton]

So how do I. If I'm sitting there in this seat thinking. And also I probably told my company, a lot of. A lot of this repeat purchase is me or it's us. It's all the cool stuff we're doing in marketing. How do I tear this apart? Like, how do I get to the real reason you're buying me?

[Nick Chidiak]

So I think the first thing you need to understand is the current metrics that are being used to define loyalty in many cases are flawed or incomplete. So repeat purchase has been one of the dominant ways. And so what it does is it tells you how many people are buying, it doesn't tell you where else they're buying, and it won't tell you why people are buying. So that's one. NPS is helpful, but often flawed. Mike. So NPS is another lever that people are using to assume some type of an emotional relationship towards why people repeat buying. But often it's not done properly. Like, you give someone a free ice cream and then they fill out a survey for you. It does not help you understand switching propensity, which I think is important, and it neglects that. And then we're rarely measuring a propensity to switch. We're not looking at three important questions. Which is, number one, really and truly, why are repeat buyers buying repeatedly? Like, truly, what is the reason why? Number two, can we measure switching motivation and how vulnerable we are to switching? Like, how are, like, how likely are you to trade a brand if someone else emerged, if there was an offer there? And then three, we're not looking at renewal efforts versus switching efforts. Like, how, how does that friction take place? Like, how easy is it for you to renew with a brand versus to switch over? Like, for me, those are three things marketers should be looking at that they're often not looking at. Like, dissecting repeat buyers, measuring switching vulnerability and propensity to switch. And then the third one is renewal efforts versus switching efforts. Like, how easy is it to move versus stay?

[Mike Linton]

Can you go into a couple of categories on that as examples? Like, look, I have a lot of experience with insurance and some other stuff, and insurance switching is kind of a pain in the butt. It takes a while. You don't want to do it. There's lots of things people do to kind of keep you. Is that an example? Or can you give us some industry examples where, where they're. The loyalty might be just misguided on a whole industry front.

[Nick Chidiak]

So I'll give you a really simple example around switching efforts. When it comes down to the automotive space, like, in most cases, when you're buying a new car or leasing a new car with the existing manufacturer, you often have to sit and you have to reapply for financing.

[Mike Linton]

Right?

[Nick Chidiak]

I mean, that's a really simple example. And that added layer of friction creates propensity to sit and to shop around. And, and all right, well, I have to do this is going to take me another two or three days. And so all of a sudden, you know, you're, you're, you start looking at other options. I mean, I know a friend just recently who literally was going to renew with an existing, with existing auto manufacturer and, and you know, he had to refinance and he started to look around, and next thing you know, he found someone else while he was in the process of refinancing. So that's. That's an example of. Of switching barriers and. And. And making things significantly easier for someone to stay within your portfolio.

[Mike Linton]

And let's talk about propensity to switch. Like, is that. Is that related to this? Or how do I use that as a. A. An example? Like. Or just give me a good example so people can lock onto propensity to

[Nick Chidiak]

switch and how to move. Propensity to switch is a really simple question, is, provided people have certain options around categories, would they switch?

[Mike Linton]

Right.

[Nick Chidiak]

I mean, that's the propensity to switch. Like, how likely. Like, a simple question is, like, how likely are you to switch if a competitor offered you a B or C, depending on what category you're in? Yeah.

[Mike Linton]

And it's a lot of this. I need to have research, like, lost customer research and a panel on the industry to look at this. Or, like, what do you do? Because part of this is you're saying, you also said, hey, there's a marketplace shift in how consumers buy and are influenced to buy. Let's talk about how.

[Nick Chidiak]

Yeah, and that's a huge point, Mike. That's. I think that's a huge point. So. So I think there's. There's a couple of things that are making brands today, specifically sizable brands, more volatile, at least have higher risk risk than. Than historic than historically was the case. Number one, like, trying a product today is nowhere. Trying a new product today from a brand you've never heard of is nowhere near as risky as it used to be. Yeah, right. And so let that. Let that, like, sink in. Historically, what used to happen is you had these big brands that were. That signaled quality, right? And so you used a big brand and stayed with a big brand because you knew there were enough lemons out there for you to want to stick with a big brand.

[Mike Linton]

Yeah.

[Nick Chidiak]

Like, and, Mike, when was the. And so. So then based on that and based on all the algorithms and. And reviews like you, you can. Like loyalty. Sorry. Lemons have pretty much been whittled out now. Like, when was the last time you bought a product that was crap?

[Mike Linton]

Right?

[Nick Chidiak]

And so people have a higher propensity to try new products. Like, we're seeing, for example, one in three people trust their AI agents more than they do their friends. We're seeing one in three people on social bought from a brand they'd never heard of before, 80% of which are satisfied with that product. So we're seeing people be willing to try new products in a way that they didn't before.

[Mike Linton]

And if I read between the lines there, what I hear you saying, correct me if I'm wrong, is it used to be I might get a crappy product because there wasn't full information on it. And there was a lot of risk in buying that product. Now because there's a lot more data on it, or in the case of like Amazon, I can return it for almost any reason. And now I have social media to vet anything. I'm, I have nervousness about it. The, the, the marker for what is really good is pretty more consistent across the board. And so when I want to switch, there's almost no risk to me in switching because a lot of those risks I had 20 years ago are gone. Is that.

[Nick Chidiak]

Yeah. And I think the other example, Mike, the other kind of case in point, is how influencers have kind of democratized celebrity endorsement, Right? Historically in the past, the celebrity endorsement meant that someone you trusted was associated with the brand and therefore created that, that transference of trust. In today's environment, you have a variety of micro influencers who most people in some cases may or may not have. Most cases have trust. And so that's another reason why there are reassurances around trying new products. So big brands, which traditionally stood for quality, are that strategic position is no longer as valuable as it once was. So I think that's an important point. The second component, Mike, which I think is really important is, is the speed and the velocity of competition today. Like you're dealing with a completely different speed of which competitors are emerging. Like if you look at, we did a study around, you know that show White Lotus.

[Mike Linton]

We are taking a quick break for

[Nick Chidiak]

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[Mike Linton]

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[Mike Linton]

Now back to our discussion with Nick Chidiak. Oh yeah, I love that show.

[Nick Chidiak]

So we looked at the velocity, not the size, the velocity of intent across the three seasons towards the individual four seasons hotels. I think one was in Hawaii, the second one was in Sicily and the third one was in Thailand. And it was like, I think each season was about a year and a half or maybe two years and some days.

[Mike Linton]

That's HBO Max, I think, right?

[Nick Chidiak]

Yeah, yeah, yeah, that's HBO Max. And, and what we saw is like with every season, velocity of travel, intention towards the specific hotel went up. So not just the sheer volume, but the speed of which it accelerated. Right. And you're seeing that across competitors today. If you look at Challenger brands and how fast they emerge today, like compare, let's say Hoka and on to Under Armour. Like Under Armour, year on year, growth was around 20, 25%. Now you're looking at Hoka, which is about 40 to, to 60%. Like Alo's growth versus Lululemon's growth sold to Janeiro as a, as a beauty brand. It became a billion dollar brand in the span of two to three years. And so brands are moving, I mean, and the other, I know it's not related to the, to the U.S. mike, but I do think it's a very interesting point.

[Mike Linton]

We got a lot of international listeners.

[Nick Chidiak]

Great, perfect. Well then, then, then, then they could resonate with the notion that BYD was essentially unheard of about four years ago or five years ago. And now we're doing 11 million vehicles outside of, outside of China. And that's a large ticket item. Like, who would have thought in the auto space if you and I had this conversation five or six years ago, that people would be willing to spend the amount of money you would for a car.

[Mike Linton]

Yeah. On a Chinese electric vehicle that just even got a review in the Wall Street Journal. Right.

[Nick Chidiak]

Yeah, exactly. And so I think that's an important consideration is like competitors are moving at a much faster rate. And the point you made earlier around Social, I think is key because like historically, like previous models for Challengers was you had to be in retail, then you spend in media and then consumers found you. Right. So it was distribution, awareness, demand. And now what you're starting to see is like, no, I can basically use platforms to function as almost like a zero cost shelf. So you have attention, demand and then distribution. Right. So look at, look at the good example is like Dubai Chocolate, Dubai Chocolate became a global behemoth in the span of nine months out of, out of nowhere. And I think the other factor that's making competitors move at a faster rate Is the speed to market like 60% of new consumer brands now launch using third party or white label manufacturing, of which the speed to market is 50 to 70% faster. So

[Mike Linton]

if I'm sitting there and I'm trying to say, look, all right, I got my net promoter score, I got my cltv, I'm sitting here thinking I just watched White Lotus blow up the four seasons in Taormina, Sicily through one television show. What should I be thinking about in terms of my vulnerability as a, as a market leader or if I want to be a challenger or start a new D2C brand? What is going through my head now on how to win from whatever place I start?

[Nick Chidiak]

So I think regarding the first question is like if you're a marketer sitting at the helm of one of these brands, I think there are a variety of things you should be thinking about. Number one, like, you need to shift your mindset and your metrics. Right. So shift your mindset in terms of like assume that your existing customers don't take them for granted and assume they need to be re earned over and over and over again. I would have, I would say from an attitude perspective like have a healthy, healthy source of paranoia is always very helpful. Again, I'm talking about some of our clients. What we do with some of our clients is we, we war game scenarios. Like what happened if a challenger brand emerged in this specific scenario? Like what are the three or four steps we would do? So I think that's important. Get your metrics right. Like start actually not just studying stuff like NPS and repeat purchases. Understand the reasons, understand switching vulnerabilities. Like would people be willing to switch? Would your consumer base be willing to switch? And then there are a variety of other factors like removing friction at a faster rate than your challengers. I mean we gave the example of, of, of the automotive cases is right. It's not just about removing friction. It's a moving, it's removing relative friction in comparison to, to other brands. And then there are, there are specific moments that you can double down on that matter more to consumers. So we, in our study, Mike, we found something pretty interesting which was traditionally loyalty is rewarded by rewarding milestones. And what we found is in high instances where there is a high degree of loyalty, brands actually reward people during moments of vulnerability. So take Chewy for example.

[Mike Linton]

Okay. The pet company.

[Nick Chidiak]

Yeah. What Chewy do as a pet company, what they do really, really well is they lean in when your pet passes. They make that moment really core and crucial to their experience. So you remember it. I mean, they send you a letter, they send you flowers, they make your cancellation significantly easier. So there are specific things that brands can do and moments that really matter and that inspire loyalty beyond reason, outside of just your traditional, let's reward people for specific milestones. Another good example for us is, and we've been talking to an airline company about, this is a moment of vulnerability that an airline could lean into is the first time you travel with your toddler, which is petrifying for most.

[Mike Linton]

That's usually traumatic.

[Nick Chidiak]

It is, right? And no one does that. No one does that really, really well. And that's a moment that counts more than every single other other flight you take. So how do you double down on a moment like that? So there are things you can do when it comes down to doubling down on moments that matter and that have higher propensities for people to stay within portfolios.

[Mike Linton]

Hey, just a few. Go ahead. That's. That's super interesting. So what you're basically saying is there's a whole nother potential layer on a loyalty program versus it's not just about behavior. It's about. Because most loyalty programs are built on consumer behavior and incenting it, it's actually about anticipating friction points or issues and using the loyalty program to address that, which I would say very few companies even think about.

[Nick Chidiak]

Couldn't agree more.

[Mike Linton]

So, and beneath this, I think you guys have a concept of a loyalty deficit. Tell us about loyalty deficit and what that means, and how do I know how big my loyalty deficit is?

[Nick Chidiak]

So, Mike, the loyalty deficit is a very simple calculation that sits at the helm of kind of two questions. And the intention behind it is to understand, do people believe they're giving more to a brand then the brand is giving in response? And so the question is very simple, is like we ask people, thinking of a brand you do business with repeatedly, how much sacrifice do you make to stay with this brand? And we give them a scale of 0 to 10. And then on the other end of the axes, we say, thinking of that very same brand, how much do you believe this brand sacrifices to reward your loyalty? And we give them a scale of 0 to 10. And then you subtract those. And in instances where you have consumers reporting that they make more of an effort to stay with a brand than the brand does to reward their effort, you have something called a loyalty deficit, which is basically, pardon my French, people begin. People believe they're getting screwed over.

[Mike Linton]

Yeah.

[Nick Chidiak]

And so those specific categories have significantly higher propensities to leak. If options existed so those categories are. I mean, in our study we have banks in there with mobile providers in there. We have basically vehicles in there, streaming platforms, mobile devices.

[Mike Linton]

So tell me about the mobile devices, the streaming platforms and the banks. All of which I think. And then you could throw in cable companies to boot if you want. All of which I think people will say, geez, I don't think you're treating me that well. Am I, Am I reading that right?

[Nick Chidiak]

Yes.

[Mike Linton]

So what's the big beef about streaming? Because I'm getting streaming for not that much money, but I have a loyalty deficit because why? I think you're holding me hostage.

[Nick Chidiak]

No, I think it would be in specific instances like streaming. And again, I would need to go into that data to look into it, but it would be people saying that, hey, I'm either paying too much or spending too much time here. And I don't feel like this streaming platform is rewarding my loyalty versus in comparison to, to the energy I invest.

[Mike Linton]

I got it. So that means I have to scroll through like 10 minutes to find something to watch. For example, the stuff I really want isn't on there. And when you give me recommendations, it's not really very good. Tell us, when I look at AI and the AI's ability to personalize all this and to customize loyalty and to actually hopefully customize customer experience around friction points, how should people be thinking about using AI in combination with loyalty as they are working either to be that challenger or protect their leading position?

[Nick Chidiak]

So I mean, the short answer, Mike, is everywhere is everywhere. I mean, AI can help in a variety of things. I mean, number one, AI can help you model out propensity for people to switch. You know, if you have the right data, AI can literally help you model out what that propensity is if you're building out synthetic audiences. So it helps you understand from a pure metrics perspective, where are you, where are you vulnerable with regards to how marketers should be marketing? I think, you know, increasingly you need to defend loyalty to not just people, but also system. And so understanding the logic of how agentic search is turning up queries and making sure your content is aligned and organized and indexed to it is, is important. And then understanding what platforms matter more than others and where to play. So short answer is literally everywhere, Mike.

[Mike Linton]

Hey, so Nick, if I, if I take everything we've talked about now and I put it in my little gronculator and I run it out to a conclusion. This is a marketplace that's getting better and better for consumers because they have more information, there's more personalization. They can switch easier than ever, and they can get a much better handle on value for themselves. Is that a fair way to look at this? Like, this marketplace is leaning way more towards the customer than ever before, and it's going to continue to do that?

[Nick Chidiak]

I think so.

[Mike Linton]

Yeah.

[Nick Chidiak]

I think so, Mike. And I would add to that. The products are getting better, or at

[Mike Linton]

least it also says if that's true, you have to get better or. Or you will lose because you can't fake it till you make it very much anymore.

[Nick Chidiak]

Yeah. Yes. I mean, when was the last time you bought a lemon? You know, and you don't mean an actual lemon.

[Mike Linton]

You mean a failure in the product.

[Nick Chidiak]

Yeah, sorry. I mean, if, like. Yeah, when was the last time. When was the last time you did that?

[Mike Linton]

Those.

[Nick Chidiak]

Does those just make switching significantly easier? And so. Yes, on all fronts, Mike. Plus.

[Mike Linton]

Okay, so this says, you know, and if I roll the customer experience in here, what I hear is the customer is getting more and more power at speed, and AI only increases that. And it also means loyalty is much harder to earn. So you really got to be thinking about it. You can't take. You. You could never take customers for granted, but the. The window to take them for granted maybe a lot shorter than it's ever been. And it's getting shorter. Is that fair?

[Nick Chidiak]

Yeah. You know, an interesting stat, Mike, we had is like we asked. We asked a pretty, Pretty hefty sample who use agentic search for products. We ask them, who do you trust more? Your AI agent or your friends or review sites? And in specific instances, almost a third of people said, the number one source I trust the most is my. My AI agent over my friends and over review sites.

[Mike Linton]

Yeah. All right. I have one wild card question before we get to our traditional last question. The wild card is, you know, you have some thoughts? It just might be worth talking about this on the baby boomer generation and marketers and how maybe marketers aren't taking advantage enough of baby boomers in the marketplace. Tell us what you mean.

[Nick Chidiak]

Oh, I mean, this is a. This is like. It's a. It's a. It's a bit of a separate point, Mike, but it is. It is a huge opportunity. I mean, the gist of it is boomers are one of the most valuable and yet neglected consumers. And again, I'm not advocating we segment based on age cohort, but what is interesting is we asked a bunch of marketers in a previous study, almost a year, a year and a Half ago, which I still think is very relevant today, is like what, what share of your. Forget what the question was. Something was something like what share of your marketing focus is. Is boomer related versus Gen Z versus blah blah, blah. And we had roughly 6% of marketers said boomers were, were part of their marketing efforts or their marketing spend. And in reality they, we know, we know they account for almost a quarter, if not a third of spend and probably like a huge amount of assets. Yeah, yeah. And, and, and there are a variety of reasons why that exists. I think there's these misconceptions that to recruit a boomer means to repel another consumer. But it's a huge segment that's just neglected. You know, it's always about aging down the brand and aging down the brand and bringing new users into the brand. And this is a sizable segment, by the way. We're living longer.

[Mike Linton]

Yeah, I'm sure hopeful that boomers live longer.

[Nick Chidiak]

So my Mike.

[Mike Linton]

Yes, there we go. Which brings us to our traditional last question. It's a two parter. You have to take one or both, but you must take at least one funniest story you can tell on the air and, or practical advice we haven't discussed yet. Your pick, Nick.

[Nick Chidiak]

I'll do the funny story, Mike. The funny story is I moved to the US in 2015. I'd never lived here before. I had visited, but I, I was not very familiar with the market. And I was brought here to run Kellogg's of all brands. And I remember I was in Battle Creek, Michigan in a, in a. My first month there, and I was in a Pop Tart meeting. And then about 15 minutes into the meeting I realized I'm like, I, I don't know what this product is. I have no idea what this product is. And so, so I had to excuse myself, go to the bathroom and, and lock myself in, in, in the toilet for about five minutes. YouTubing, what is a Pop Tart? And I went back into the room and, and then, you know, continued running strategy for Kelly.

[Mike Linton]

I like the frosted. I like the frosted ones. But as Tony the Tiger would say, that is a great story, Nick.

[Nick Chidiak]

Yeah, well, thank you, Mike.

[Mike Linton]

Okay, that brings us to the end of the show. Thank you for joining us, Nick. And thanks to everyone for listening to CMO Confidential. New shows drop every Tuesday and all of our more than 160 episodes are available on Spotify, Apple and YouTube, which includes is your next best customer an AI bot Colonel Mustard in the study with the job spec using AI for anticipation versus reaction. And why can can't hey all you marketers stay safe out there. This is Mike Linton signing off for CMO Confidential. When is the last time you researched something on a website? If you're like most people, AI did that work for you. And that raises a question. If AI is doing the work, what is your website really for? This behavioral shift means AI bots are becoming your most important new visitors. A challenge our sponsor, Scrunch, is taking head on. Scrunch is the customer experience platform that helps you understand how AI agents experience your site, when and why they show up, and what's blocking them from being retrieved, trusted or recommended. Scrunch shows you the content and citation gaps and technical blockers and helps you fix them so your brand shows up when consumers start with AI because your most important site visitor might not be a human. For our listeners, Scrunch is providing a free website audit that uncovers how AI sees your site and and how you're showing up in AI versus the competition. Run your site through [e-mail] CMO.