Has the pandemic destroyed customer loyalty?

New research has revealed that the pandemic has had a huge influence on customer loyalty, with over a quarter of consumers now showing no brand loyalty whatsoever across any sector.

Customer data specialists Edit and digital transformation consultancy Kin + Carta interviewed 2,000 consumers from the UK and US about multiple sectors, finding that 27.4% had no ‘brand loyalty’ at all across any industry. 

As part of the report - entitled ‘The Loyalty Paradox’ - the ways in which loyalty trends differ across age and gender were also investugated. And whilst there was only a marginal (1%) difference between men and women, there was a clear distinction between age groups. 

Amongst Gen Z and Millenials, 18% and 23% respectively advised that they had no sector specific loyalty, compared to 34% and 39% for Gen X and Baby Boomers.

Despite the above customer loyalty age divide, when it comes to sharing personal data and contact information, the research shows that rewards are the most significant driver across all demographics.

43% of respondents advised that a ‘discount code or incentive’ would persuade them to sign up for communication from a brand, with ‘positive feelings towards the brand’ and ‘exclusive products/first opportunity to purchase’ also mentioned; the latter being particularly appealing to Gen Z (30%).

The power of rewards and incentives in opening up channels of communication between brands and customers is also supported by a recent study conducted by Google and the Boston Consulting Group.

43% of respondents advised that a ‘discount code or incentive’ would persuade them to sign up for communication from a brand

The research revealed that almost 1 in 3 people are willing to share their email address for zero incentive, compared to 90% when incentives such as discounts or a free sample are offered. 

While rewards were seen as an appropriate trade off for sharing personal information, poor customer service was the biggest factor in deterring customers from making further purchases. 

• 55% advised that being unable to contact customer services via their preferred method was likely or very likely to deter them from repeat purchases. 

• 32% advised that not being kept informed of the progress of their order and delivery would deter them from repeat purchases. 

• 25% advised that not receiving regular updates during the returns/refunds process would deter them from repeat purchases. 

On discussing the findings of the study, joint managing director of Edit, Rob McGowan, commented that: “Brands cannot rely on loyalty anymore. Brand affinity through emotional connection has weakened to be replaced by habitual ties.”

The sentiments on habitual purchases replacing customer loyalty were echoed by Kin + Carta’s Chief Technology Officer of Data & AI, Karl Hampson:

“Our research shows that brands must not confuse repeat purchasing with ‘loyalty’. Instead, they should balance repeat transactional activity with how engaged the customer is across all interactions.”