How Low Will Brand Loyalty Go?

The pandemic accelerated a great many changes in consumer retail behavior. Brand loyalty, for example, is one area that’s taken it on the chin. But joint research from U.K.-based digital consultancy Kin Carta and the first-party customer data providers at Edit, finds that while consumer loyalty has slumped across retail, the food and drink sector is faring better than any other category.

In their report titled, The Loyalty Paradox, the research shows that brand loyalty has shifted significantly with over a quarter (27.4%) of U.K and U.S. consumers showing no “brand loyalty” at all across any sectors. Interestingly, consumers expressed the most loyalty (21.5%) in brick-and-mortar retail food and drink. This compares to only 6% of consumers who claim loyalty to brands within all e-commerce sectors.

Age also plays a role in brand loyalty. According to the report, the older the consumer the greater the likelihood that there is any brand loyalty at all. While 18% of Gen Z (16-23) and 23% of millennials (24-42) have no sector-specific loyalty, that number jumps to 39% among Baby Boomers (55-73).

Kin Carta also makes the distinction between the increasingly habitual shopper and loyalty.

“Our research demonstrates that overall, there are low levels of perceived loyalty by consumers towards brands and outlets,” writes Gary Arnold, customer data director, Kin Carta. “Brands shouldn’t confuse repeat purchasing as ‘loyalty’, but should instead create a balance scorecard that looks at purchase [regency, frequency, value] RFV, alongside engagement (how and where customers interact—are they following the brand socially? Do they regularly engage with content? Are they subscribed/signed up-to communications, and do they open them? Do they open feedback?) and advocacy (i.e., do they actively promote the brand and refer to friends?),” he adds.

A better definition of loyalty is one that moves beyond repeat purchase, he continues. With this information it is then possible to identify the common traits of a retailer’s core loyal audience and use that to drive acquisition and retention strategies more tailored to them.

The Power of Rewards

The report further found that rewards are most likely to drive the sharing of personal data across demographics, with 43% of respondents suggesting “a discount code or incentive” would persuade them to sign up for brand communications.

“[Rewards] provide explicit initial value to a customer at the start of their purchasing journey, where implicit value via customer experience cannot yet be established,” notes the report.

Women, finds the report, are more prone to chase rewards, while men show a greater reluctance to sign-up, with only a slight propensity to wanting to share info. Women are also more inclined to receive personalized greetings.

Keep Them Coming Back For More

Retailers hoping to build loyalty will also benefit from keeping shoppers informed and rewarded for their repeat business. “Control and choice keep customers returning,” says the report, which finds the top two factors that most deter customers from a repeat purchase are not being informed of the progress of the order and delivery, and not being rewarded for being a loyal customer.

“Brands must invest in the capabilities to understand the human behind the data by making data more accessible, insights easier to unlock and bringing customer experience and data teams closer together so a shared understanding and strategy can be achieved,” concluded Karl Hampson, chief technology officer data and AI at Kin Carta.