‘Even the most loyal shoppers spend more with rivals’

online-shop2Brands are being urged to rethink how they measure customer loyalty, with a new analysis revealing there is a major opportunity to increase revenue from current customers, as the majority spend most of their budgets with competitors.

That is according to the “Redefining Customer Loyalty” report from Cardlytics, which flags up how most marketers use first party transaction data to assess how often their customers are shopping or how much they are spending in order to define who their loyal customers are.

However, this approach can lead to an inaccurate view of loyalty because it overlooks whether these customers are spending with competing brands.

In order to shed light on what it really means to be brand-loyal, Cardlytics analysed $4.7 trillion worth of annual card spend to help marketers redefine audiences to make informed, strategic decisions.

It reveals that, on average just 10% of a retailer’s customers are loyal to that shop (with a clear first choice) and allocate 62% of their category budgets to that retailer. Of the remaining 90% of customers, only 9% of their category budgets are allocated to that company.

When it comes to the most loyal customers – those who spend most frequently – half (48%) spend the overwhelming majority (79%) of their category budgets with rivals.

Cardlytics claims there is significant “headroom” to increase spend from 90% of customers by making them more loyal and increasing share of wallet from 9% to up to 62%.

The study states: “What do these insights mean for marketers? Supplementing first party transaction data with category-level spending behaviour is essential to understanding and defining which customers are loyal (and which customers are not), thereby enabling more informed marketing strategies that deliver growth.”

Cardlytics chief business officer Evelyne Forester said: “Without insight into full category spend, marketers tend to view their most frequent customers as their most loyal customers. With 50% of card spend and whole wallet view, Cardlytics has an unparalleled ability to help marketers identify opportunities to increase loyalty and profitability.”

A separate Cardlytics “State of Loyalty” report released in August claimed there is still room for brand loyalty to influence spending behaviour, despite the ongoing cost of living crisis.

It showed, seven in 10 (69%) UK adults view trust in a brand as important to them when making a purchase, while three fifths (59%) say they have been loyal to brands for “as long as they can remember” – a clear indication that brand loyalty is well and truly alive.

However, affordability is vital in shaping and influencing purchasing habits. UK adults rank price as the most important factor in the decision-making process, followed by trust in a brand and convenience.

Related stories
Data still key as brands step up battle for Brits’ loyalty
Brands urged to help out as cost of living crisis deepens
Will data drive your cost-of-living crisis exit strategy?
‘Skint’ GenZers reveal their steadfast love of ‘purpose’
Brits ditch Gucci, Prada and Chanel for food and booze
Can brands help consumers fend off financial crisis?
Grocers must get smarter to fight shopping basket cuts

Print Friendly

Be the first to comment on "‘Even the most loyal shoppers spend more with rivals’"

Leave a comment