How to Avoid Bankrupting Your Brand

It’s an unfortunate byproduct of the COVID-19 crisis. Ill health of and the ultimate passing of brands.

Current market conditions attributed to COVID-19 have decimated some company revenues and are pushing already-struggling companies over the edge into Chapter 11. But as marketers and brand consultants, recent Chapter 11 filings by brands like J. Crew, Neiman Marcus, and most recently, J.C. Penney DID NOT come as a surprise to us.

According to our 2020 Customer Loyalty Engagement Index, J.C. Penney has been #8 (of 8 sector brands we track) when it came to customer loyalty for the past 4 years. Five years ago, they were #6, but have moved down after that. So last.

And no surprise that J.C. Penney’s sales have fallen every year since 2015. That tracks perfectly with its customer loyalty assessments, which are leading-indicators of customer behavior, sales, and profitability. For more details, we invite you to read this recent analysis.

Yes, factors other than customer loyalty do contribute to the collapse of brands as J.C. Penney’s 2011 CEO, Ron Johnson, found when he eliminated discounts in favor of everyday low prices and killed off in-house brands. He also killed off customer loyalty.

Customer loyalty metrics alerted us to that Mr. Johnson’s blunder back then because it went contrary to how consumers view the Ideal in the category and, ultimately, how they view, compare, buy, and buy again from brands that best meet customers’ expectations for their Ideal.

J.C. Penney didn’t, J.C. Penney doesn’t seem to have a clue as to what consumers expect and, as a result, J.C. Penney hasn’t made an annual profit in nearly a decade. All the debt restructuring in the world is no substitute for real customer loyalty metrics.

If configured and tracked properly, customer loyalty metrics give your brand the capability to avoid Chapter 11.

And – even in trying times like these – escape the ultimate passing of your brand.

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