Brand owners have at last woken up to the fact that customer retention should be the primary focus over customer acquisition, but it has taken the threat of economic meltdown – as well as the cost of living crisis – to finally change their minds.
That is according to the 2023 Antavo Global Customer Loyalty Report, which shows that almost nine in ten (88.5%) businesses believe that loyalty initiatives will help them overcome the inflation crisis.
Based on the behavioural data from more than 290 million loyalty member actions and over 600 minutes of qualitative interviews, the study also includes data from over 260 industry professionals, including senior executives from Virgin Red, Adidas and American Express.
Antavo says the report is designed to help firms navigate and identify the investment opportunities for loyalty programmes, with a focus on business, customers and wider global issues.
The standout finding is that 93.7% agree that customer loyalty should be the primary focus over customer acquisition due to the current economic climate, with more than two-thirds (67.7%) planning to increase or significantly increase their investment in customer retention over the inflation crisis and possible recession.
In addition, nearly four-fifths (78.6%) of those with existing loyalty programmes are looking to revamp or make significant changes in the next three years.
The study also reveals the influence of loyalty programmes can have on financial performance, with the lifetime value of members who spend points in a loyalty programme claimed to be 6.3 times higher than those who are not.
Meanwhile, members who redeem personalised offers spend 4.5 times more annually and members who redeem partner rewards spend 3.4 times more.
Looking to the future, respondents identified greater personalisation of customer interactions and experiences as a key requirement.
They also cited the need for increased strategic partnerships for extended programme reach, more environmental social governance (ESG) influenced causes and greater use of card linking for continuing success.
Antavo co-founder and chief strategy officer Zsuzsa Kecsmar said: “We are facing a time of great uncertainty. Struck by the looming financial crisis and economic recession, brands and retailers need to invest in loyalty marketing and technology more wisely than ever.
“Even in such a turbulent economic climate, customer loyalty can be the way out.
“Companies plan to focus much more on their existing customers and studies from this year forecast that the loyalty management market will grow to $18.2bn (£14.9bn) by 2026. But, first, businesses will have to weather the storm of the current economic downturn by investing in their customer retention efforts – and that starts with loyalty.”
Late last year, an American Express study revealed that loyalty schemes are becoming a key battleground in the fight to win over consumers during the cost of living crisis, with over half (52%) of Brits saying they are more likely to shop with a retailer that has a loyalty club, and three-fifths (61%) believing retailers can do more when it comes to rewarding them for their custom.
The research appeared to fly in the face of previous studies that claimed Brits were shunning their regular retailers as they seek out the cheapest prices.
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