The pandemic has destroyed customer loyalty

Over a quarter (27.4%) of UK and US consumers now show no brand loyalty.

That’s according to a joint study by first-party customer data specialist Edit and digital transformation consultancy Kin + Carta, which revealed the impact of the pandemic on customer loyalty.

The report, titled “The Loyalty Paradox”, shows that brand loyalty has become a thing of the past in 2021.

2,000 respondents split equally between the UK and US answered multiple-choice questions on loyalty, personalization and customer experience, across a wide range of industries.

E-commerce performed particularly poorly, with only 6% of consumers saying they are loyal to brands in this vertical. As the lowest-rated online segment, e-commerce brand loyalty was lower than finance (9%) and offline retail – food and beverage (21.5%).

Habitual purchase

Rob McGowan, co-CEO of Edit comments: “These results suggest that while the e-commerce sector has exploded during the pandemic, brands would do well not to confuse habitual purchase with perceived loyalty.”

Outside of e-commerce, loyalty to financial products increases with age and, unsurprisingly, with those with an income of over £75,000, with over 20% of respondents in this income bracket claiming to be loyal industry brands.

In a digital-first customer journey, rewards are more likely to drive personal data sharing across demographics. 43% of respondents suggested that a “discount code or incentive” would persuade them to sign up for brand communications.

A quarter (25%) would like “exclusive products or a first purchase opportunity”. Gen Z consumers see ‘exclusivity’ as particularly appealing, with almost a third (30%) interested in the ‘first buying opportunity’.

While rewards were seen as an appropriate compromise for sharing personal information, more pragmatic considerations remain the most important consideration for young audiences. Operational and customer service communications trumped rewards as a “performance driver” for younger generations. 34% of Gen Z respondents and 32% of Millennials said they would be “deterred[ed] to make another purchase if [they] impossible to contact customer service via [their] preferred method’.

McGowan continued, “Brands can no longer rely on loyalty. Brand affinity through emotional connection has waned to be replaced by habitual connections 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 behaviors and encourage repeat purchases. Therefore, brands need to consider the customer journey as a whole, as well as spot opportunities to innovate through data. Do it right, and there’s an opportunity to retain more customers, as well as attract new ones.

Karl Hampson CTO data & AI at Kin+Carta, said: “Our research shows that brands shouldn’t confuse repeat purchases with ‘loyalty’. Instead, they must balance repeated transactional activity with the degree of customer engagement in all interactions.

“Data will be key to this holistic measurement, but brands must also 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 your business closer together. data teams to achieve a shared understanding and strategy.

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Key words: pandemic

Joseph P. Harris