Does brand loyalty still exist?
With a shock shift in consumer behaviour patterns in 2020, identifying the “norm” for purchase behaviour is still a work in progress. Existing customers are considered a reliable source of sales for most businesses and are even seen as the main way to generate new leads through positive word of mouth. From a customer perspective, brand loyalty means there is comfort in a brand you know and trust, that uses a customer experience you are familiar with. However, with a surge in online purchasing, customers are being enticed by better customer experiences and greater rewards, meaning brand trust and familiarity is no longer enough to ensure customer loyalty. According to McKinsey, more than 75% of consumers have tried new brands during the economic crisis, so does brand loyalty still exist?
In a recent report by eMarketer it was stated that 42% of consumers said that they “would stick with those brands they recently encountered”. Attitudes to brand loyalty though may be heavily influenced by the demographic of the audience. Gen Z and Millennials confess to switching from their original “go to” brands”, as their shift to online-only shopping has exposed them to a much greater level of choice.
So, what is important to customers now and how can you stop them going elsewhere? According to research by The CMO Council on “Critical channels of choice”, all generations want to see a well-structured customer experience. They also want to be remembered, as highlighted in the statistics below, which shows that one of the biggest frustrations for customers is repetition across channels. The research emphasizes the importance of an optimised customer journey and how a digitally adapted brand can secure loyalty; one flawed experience is enough to lose new leads and even loyal customers regardless of demographic if their customer journey does not flow and meet their expectations.
Transitioning loyalty to digital
Loyalty matters online just as much as offline, however, it is much harder to maintain. The recent pandemic has put a strain on this loyalty, with businesses fighting over customers online.
Ocado is a prime example of a brand that initially struggled with its customer experience at the start of the pandemic, with a surge in demand for their grocery delivery service that they struggled to keep pace with. At the peak of the crisis, they had wait times on their website of up to 10 hours and the loyalty of their customers was seriously challenged. They managed to recover from this by improving their experience first and then had to regain the trust of their customers, which they did by enticing them back through online incentives, a better loyalty program and money-off deals. They managed to do enough to protect their revenues from a decline, but it certainly could have gone better. By comparison, Waitrose was far more prepared for the surge in demand and demonstrated their understanding of the importance of customer loyalty to their business by offering existing customers first dibs on delivery slots.
The above examples show the need for preparedness in the online customer experience, but there is also a need to capture and use customer data effectively to deliver a personalised experience. Customers expect you to remember them and to adapt their experience based on their past behaviours. If brands do not adapt their content to suit each customer, they risk losing them to competitors. A loyal customer will already have trust and comfort in the brand, but they also expect the brand to know what they like and to quickly pick up and fix any issues along the way, so it’s key to also have direct digital communications features such as chatbots and live messaging as well as tailored content to help facilitate online loyalty.
Incentives beyond the loyalty card
Loyalty used to be all about loyalty cards and points, but online seems to be driving a change in this area too. According to Forbes “In 2017, 31% of the 1,001 people surveyed had never redeemed credit card rewards” and this decline is predicted to continue. This can be seen even in natively digital brands such as Uber for example, which is currently relying on incentives for its business to succeed. Uber rewards are constantly adapting its point system for customers; it previously required 500 points to “unlock” rewards but has had to lower the bar recently for what it deems to be loyal behaviour to just 250 points. Successful brands online it seems, need to find other ways to offer loyalty schemes beyond a card and points-based system.
Loyalty program innovation is and will continue to be crucial in securing consumer loyalty. In previous years online supported offline to secure brand loyalty, however now digital must do both. Ensuring existing customers feel valued and remembered must take priority online, along with putting in place a rapid response system to fix any issues that do arise. If these things aren’t in place, customers will go elsewhere. Equally, whilst you risk losing customers if you aren’t able to deliver these areas, the rewards if you can deliver them is that you may well find you are taking customers off others. The opportunity is greater, but so is the threat!