Three statistics that will change the way you think about customer loyalty
Whether due to the rise of e-commerce, pandemic disruptions, or other industry-specific factors, old patterns of consumer behavior no longer hold true in today’s marketplace.
A strong brand is no longer the competitive advantage it used to be. While consumers are on the whole loyal by nature, this is only true up to a point. According to our recent publication 2022 Digital Consumer Trends Indexeven the 81% of consumers who define themselves as loyal to certain brands say they would always buy from competitors if it were cheaper or more convenient.
The bottom line here is that even your most loyal customers can’t be taken for granted. Today’s consumer is highly opportunistic and has the tools to deliver better deals or easier fulfillment. Moreover, they are also very protective of their data and how it is used. And they expect the brands they do business with to reflect their values.
That’s a lot for any brand to juggle. So we’ve combed through our report results to highlight the three most important stats affecting customer loyalty today.
Habit vs Loyalty
Key Stat: 67% – The number of consumers who frequently buy from the same business, but say they don’t necessarily have loyalty to that business.
Are your regular customers loyal or just habitual?
People are creatures of habit and tend to stick to what they know and trust in the absence of any compelling reason to do otherwise.
But brands would be seriously negligent if they confuse habit with loyalty. Habits are developed. Loyalty is earned.
Emotional and genuine loyalty is a result. It’s a goal you can only achieve by really knowing your customers and carefully nurturing each of your relationships. Every action, contribution and communication a client receives should make them feel valued and respected.
However, too many brands still invest far more resources in customer acquisition efforts than in customer retention efforts. Winning new customers is important, of course, but maintaining relationships with existing customers is just as important, if not more so.
Here are some reasons why customers are moving to other brands:
- 31% of consumers left a favorite brand because other brands have better promotions
- 26% of consumers have left a favorite brand because other brands have better shopping options
- 21% of consumers left a favorite brand because they didn’t feel valued as a customer
- 19% of consumers left a favorite brand because of its stance on social, political or environmental issues
Product vs Trust
Key Stat: 110% – Year-over-year increase in consumers citing “the ability to understand me as an individual” as a driver of brand loyalty.
There are many factors that drive brand loyalty, and the main drivers are quite simple:
- excellent product or service (55%)
- great customer service (38%)
- helpful loyalty program (34%)
- convenient to use (31%)
Of course, investing in these areas will ensure long-term returns and differentiate brands from their competitors. But a product can only be as good, or as cheap. Eventually, there must be another level of effort to retain consumers once all other factors become equal.
It comes down to relationships – how consumers feel about not just the product they bought, but the shopping experience (and who they bought it from). After “the ability to understand myself as an individual”, the brand loyalty drivers with the second highest year-over-year increase are:
- treat my data with respect: 71% increase
- matches my personal values: 58%
- admirable loyalty programs: 55%
This rise of conscientious consumerism, with customers proactively inquiring about a brand’s corporate, ethical and environmental values, is a burgeoning loyalty driver that feels here to stay.
Customer acquisition vs retention
Key Stat: 40% – The number of consumers who would stay loyal to brands that offer additional value other than product/price (a 67% year-over-year increase)
As we have now shown, the core of loyalty is not just the cheapest price, but a brand that creates emotional connections, fosters community, and recognizes the customer as an individual.
Marketing departments are constantly working to imagine new and exciting ways to keep their customers engaged, retained and loyal in a world filled with endless choices. In the age of the digitally savvy consumer, traditional loyalty program models are becoming obsolete – too transactional, too outdated and inefficient to significantly change consumer perception or behavior.
In fact, nearly a quarter of consumers (24%) say they are not loyal to a particular brand because the brand has done nothing to encourage that loyalty, even though they are frequent shoppers. It’s clear that brands need to offer more to stay in their good graces.
Here’s what consumers say brands can offer to build loyalty:
- Discounts (57%)
- Reward Points (52%)
- Exclusive/early access (19%)
- Personalized recommendations (16%)
- Recognition (11%)
- Competition (11%)
- Community Features (9%)
Few businesses would argue against the value of loyal customers. But far too many of them try to retain their customers using outdated and ineffective tactics. Up-to-date data on the rapidly changing mindset of today’s consumer is essential to ensure an effective strategy.
These three customer loyalty statistics are just the tip of the iceberg. For more research, analysis and insight into the evolution of loyalty today, stream the webinar on demand The latest consumer trends to inform your loyalty and relationship marketing strategy. Join Cheetah Digital VP of Content Tim Glomb and Loyalty 360 CEO Mark Johnson as they dig deeper into the 2022 Digital Consumer Trends Index and discuss how to create better customer experiences, to develop key loyalty drivers and navigate the value exchange economy amid broader industry trends like privacy and more.