Are consumers really becoming less loyal? Let's look at the evidence...
Consumer shopping habits have changed in recent years thanks to the internet and social media. Customers can easily view product ratings and reviews online from their smartphones, and their social media habits have shaped what products they view and interact with.
Does that mean consumers care more about the product than the brand? Are loyalty programmes fighting a losing battle? Below, take a look at the state of brand loyalty today.
Brand loyalty trends
Shopping habits differ based on the group you’re talking about. In 2016, what matters most to Millennial consumers — those who are ages 19-35 (in 2016) — is price rather than store, brand, and availability. But it’s not just about price. Millennials are more likely to make a purchase based on value for money.
If Millennials care so much about price and value, does that mean they’re not brand loyal? That may not be the case. In fact, 69% of Millennials belong to a loyalty programme, and 70% of those say they’re happy with that programme.
How do these younger consumers differ from older generations? They don’t, really. Both Baby Boomers and Millennials are said to be invested in price/value when shopping, although Boomers are considered more intrinsically brand loyal. Although Millennials are considered more tech-savvy, both groups routinely use online sources to research products, and they all use social media so much that it has become the number one place to obtain shopping information.
Even though Boomers are thought to be more brand loyal, Millennials are more likely to heavily advocate for the brands they’re loyal to. In fact, 43.5% of Millennials say they use social media to spread the word of a brand.
You can’t forget about Generation X, either. These are individuals ages 36 to 56, and they currently have more spending power than any other generation. Like Boomers and Millennials, Gen Xers are tech-savvy and frequently use the internet to research product information. They’re most interested in connecting with sincere and trustworthy brands, and 40% of them will stick with brands they like.
Overall, 28% of consumers are loyal to a brand. While each generation treats brand loyalty slightly different, that’s not to be interpreted that people are becoming less brand loyal.
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Does the industry matter?
Apart from loyalty habits present in each generation, it’s important to look at your industry. In 2015, for example, brand loyalty in the automotive industry hit a 10-year high.
Customers are most loyal to mobile phone brands and providers, financial institutions, cable and internet service providers, and personal computer brands.
On the flip side, they’re least loyal to alcoholic beverage companies, snack and cereal brands, soda companies, and personal electronic brands.
When are customers most likely to switch brands?
Customers are loyal to the brands they love. However, the trick is getting them to love your brand. A single bad customer experience could cause customers to switch brands and never return to yours.
According to AccessDevelopment.com:
- 47% of customers would take their business to a competitor within a day of experiencing poor service, and 79% would do so within a week.
- 52% of customers have switched providers in the past year due to poor customer service.
- 68% of customers who make the switch will never return.
- 80% of lost customers say they feel the company could have done something to retain them.
- 83% of customers who switched say that their decision could have been impacted if the company provided better live or in-person support.
All of this could cost you. It’s estimated that costs total $1.6 trillion in customers lost due to poor service. It’s one thing to obtain loyal customers; it’s much harder to keep them.
How to win customer loyalty
People are historically brand loyal, but how do you get customers to become loyal to your brand in the first place? Here are a few suggestions:
Build targeted messages
With social media being the center of many people’s day-to-day lives, consumers want to see that brands care about them. Consumers are constantly bombarded with ads, so yours can easily get overlooked. How do you stand out? Try targeting your ads, using campaigns that appeal to your audience’s specific interests, and customizing your messages with a personal touch.
Develop a loyalty programme
Customer loyalty programmes are a huge factor in retaining loyal customers. 44% of customers have between 2-4 loyalty cards, and 25% have between 5-9 loyalty cards. 43% join loyalty programmes to earn rewards, and 45% say it’s a primary driver for purchasing from a brand. As you can see, loyalty programmes are a huge deal with customers, and it pays by getting them to come back to your brand whenever they decide to shop.
However, be aware that you’re more likely to retain customers through a free rewards programme. The majority of people (52%) aren’t willing to pay a membership fee.
Adopt a mobile strategy
Brand loyalty has gone mobile. Seventy-seven percent of smartphone users say that mobile offers have a positive impact on their brand loyalty, according to AccessDevelopment.com. This can include surprise points and rewards or exclusive content.
Another 66% of consumers say they’d have a more positive opinion of a loyalty programme if it was available on their smartphone or in a mobile wallet app. Furthermore, 73% of smartphone users are interested in having loyalty cards on their phones.
What happens if you fall behind your competitors and don’t offer a mobile solution to your loyalty programme? You’ll likely see a decrease in customers. 66% of companies that saw a decrease in customer loyalty in the past year didn’t have a mobile app.
Another reason brands lose customers is because they don’t respond to their needs. In today’s fast-paced social landscape, customers expect brands to respond to their feedback, and quickly. 97% of customers say they’re more likely to become loyal to a company that implements their feedback. By ignoring them, you’re sending a message that their loyalty doesn’t matter, and with that, they’re likely to move on to a brand that shows them otherwise.
Although ideas about brand loyalty have shifted from generation to generation, people are still brand loyal today. However, you will have to adopt strong social and mobile strategies to retain customers who rely on the internet landscape to make buying decisions.