How has coronavirus impacted customer loyalty?
All of our lives are different than they were a year ago. But has this translated into changes in brand loyalty and what consumers say drives their loyalty?
The DMA’s latest ‘Customer Engagement: How to Win Trust and Loyalty 2020’ research returned to a topic we last investigated back in 2018: customer loyalty. However, this time we conducted it amid one of the most dramatic shifts our generation has ever lived and worked through. Therefore, it would be remiss of us not to acknowledge the nuances of the world we find ourselves in during 2020.
Surprisingly, the results reveal that despite Brexit, coronavirus, and all the other challenges 2020 has thrown at people, it has not changed the core principles of trust and loyalty as much as some may have thought.
Digital engagement more desirable
That’s not to say coronavirus has had no impact. Life under coronavirus has altered so many aspects of consumer behaviour and attitudes, and brands should take note.
As periods of lockdown and social distancing have become part of daily life due to the pandemic, consumers have had to turn to digital channels to maintain essential communications. Almost half of consumers (47%) are now making video calls weekly.
They are also taking advantage of presence-free communications when engaging with brands. One in 10 (12%) of consumers have video called a brand, and a further 23% would be interested in doing so. In addition to video calls, half of consumers (52%) have used chat customer service and would do again, or express interest in doing so in the future.
While digital engagement with brands is a more viable and necessary option for consumers during the coronavirus period, we expect the experiences of living through the pandemic will increase willingness to engage with brands remotely in the future.
Compassion is a loyalty driver
A key question raised in our research was what do consumers expect brands to communicate during the pandemic? To what extent do they expect brands to show compassion in the current times?
The majority (77%) expect brands to show customers compassion during the coronavirus and a minority (22%) feel they receive too much communication about the coronavirus from brands. This suggests that more consumers want brands to engage with them directly about the pandemic and explicitly show compassion.
Other data suggests that compassion is best shown through action than sentiment alone. The majority of consumers (76%) expect brands to be flexible about cancellations during this time – a form of practical compassion that could also hold some long-term benefits for brands, as 56% of customers agree they are more likely to stay loyal to brands that are able to offer flexibility in the current climate.
When asked specifically what brands should communicate during the coronavirus, consumers are more likely to rank practical support, for both customers and staff, as important, even more than getting discounts and promotions. Two-thirds (66%) want brands to tell them what they are doing to help customers – rising to 80% among the over 65s – and 59% want brands to tell them how they are keeping staff safe.
How can brands stand out?
The latest update to our loyalty segmentation within this research reveals that 51% of consumers are ‘Active Loyals’ and this remains consistent with 2018’s figures. Similarly, the number of ‘Active Disloyals’ at the other end of the spectrum also remains consistent at around a fifth (21%) of consumers.
In 2020, the small rise in ‘Habitual Loyals’ could be attributed to consumers focussing more closely on everyday purchasing during the pandemic. But overall, the picture of customer loyalty is remarkably stable, even under the stresses and strains of the coronavirus crisis.
This stability reminds us that consumers crave consistency in the brands they engage with, their routines and habits, and that most consumers display at least some active loyalty in their purchasing.
To further understand what is driving loyalty, we asked consumers in more detail why they are loyal to their favourite brands. We gave consumers a range of 19 options, which can be categorised into seven key drivers.
In 2020, functional drivers remain ubiquitous and underpin loyalty for practically all consumers. This fundamental pillar continues to be a foundation that successful brands have to achieve and is perhaps unsurprisingly unchanged by the pandemic. However, it is interesting that the two sets of drivers around compassion, along with ‘Brand charisma’, have grown in importance, with more consumers this year naming these as drivers of their loyalty.
The significance of personal compassion has grown from 47% to 52%, and societal compassion to 58%, from 55%. Some of these shifts can be explained by the wider context of the coronavirus. As consumers look to brands to show them support and compassion in difficult times, brands that are offering this on a personal level are being recognised – through helping consumers achieve their goals, making them feel good, etc. On a societal level, through caring for staff and the environment, as well as upholding values.
It is also interesting that ‘Brand Charisma’ is on the rise as a driver of loyalty – from 50% to 55%. Consumers are increasingly recognising brands that are innovative and embody a “personality”.
Arguably, it will be these additional pillars that help brands to truly stand out, as it becomes harder for brands to differentiate themselves based on functional excellence – as easy payment options, efficient delivery mechanisms, and gateway titan brands such as Amazon become more uniformly accessible.
Discover more customer trends
Overall, this year’s research findings show the core principles of trust and loyalty have not changed as much as some may have thought. In fact, despite the pandemic disrupting so much of our lives, half of consumers (51%) remain actively loyal to brands and functional excellence also remains fundamental to driving long-term loyalty for most consumers (89%).
That’s not to say there haven’t been shifts. Clearly, our lives are all different today than they were a year ago. Coronavirus has accelerated many key trends we’ve been tracking in recent years, such as digital-first routes to brand engagement. It has also seen further increases in consumers calling for compassion from their favourite brands.
Further details about this research are available in the full report, which you can find on the DMA’s website.