The concept of customer loyalty is in danger of being consigned to the marketing graveyard, with the Covid pandemic triggering a major shift in behaviour, meaning over a quarter (27.4%) of consumers show no brand loyalty at all across any sector.
That is according to a new report entitled The Loyalty Paradox, published by Kin + Carta and Edit, now owned by The Salocin Group, which quizzed 2,000 consumers in the UK and US on the views on loyalty, personalisation, and customer experience, across a broad range of sectors.
Ecommerce scored particularly poorly, with only 6% of consumers claiming loyalty to brands within that sector. As the lowest scoring online segment, ecommerce brand loyalty was below that of finance (9%) and offline retail – food and drink (21.5%).
Edit joint managing director Rob McGowan said: “These results suggest that while the ecommerce sector boomed during the pandemic, brands would be wise not to confuse habitual purchasing with perceived loyalty.”
Outside of ecommerce, loyalty towards financial products increased with age and, unsurprisingly, with those who have an income of £75,000-plus, with over 20% of respondents in this income bracket claiming loyalty to brands within the sector.
In a digital-first customer journey, rewards are most likely to drive the sharing of personal data across demographics; some 43% of respondents suggested a discount code or incentive would persuade them to sign up to brand communications.
A quarter (25%) would like “exclusive products or first opportunity to purchase”, Gen Z consumers saw “exclusivity” as particularly appealing, with nearly a third (30%) interested in “first opportunity to purchase”.
While rewards were seen as an appropriate trade off for sharing personal information, more pragmatic considerations still remain the most important consideration to younger audiences, the report claims.
Operational and customer service communications outweighed rewards as a “return factor” for younger generations; over a third (34%) of Gen Z respondents, and a similar proportion (32%) of Millennials said that they would be deterred from making another purchase if they could not contact customer services via their preferred method.
McGowan continued: “Brands cannot rely on loyalty anymore. Brand affinity through emotional connection has weakened, to be replaced by habitual ties based on lived and related experience with brands and retailers.
“Brands therefore need to ensure that they look at the individual customer, and how they interact with the business to understand their behaviours and encourage habitual purchasing.
“Consequently, brands should be looking at the customer journey as a whole, as well as spotting opportunities to innovate through data. Do it right, and there is an opportunity to retain more customers, as well as bringing in new ones.”
Kin+Carta chief technology officer for data and AI Karl Hampson concluded: “Our research shows that brands must not confuse repeat purchasing with loyalty. Instead, they should balance repeat transactional activity with how engaged the customer is across all interactions.
“Data will be key to this holistic measure, but equally brands must invest in the capabilities to understand the human behind the data. This means making data more accessible, insights easier to unlock and bringing your customer experience and data teams closer together so a shared understanding and strategy can be achieved.”
The full report, developed alongside Censuswide, can be downloaded here>
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