New Survey Finds A Drop In Brand Loyalty
Continued economic challenges along with evolving consumer preferences are leading to significant changes in brand loyalty, according to new research from SAP Emarsys.
In its recent 2023 Customer Loyalty Index, a survey of more than 10,000 consumers globally, including 4,000 in the United States, the U.S. experienced a drop in brand loyalty from 79% to 68%.
Among the five loyalty types defined in the survey, 49% of consumers fall under incentivized loyalty. However, incentivized loyalty has plummeted from 76% to 49%.
According to the report, incentivized loyalty depends on the suspension of normal prices. While 49% of Americans expect regular discounts, loyalty points and incentives, 59% of consumers said they would also typically switch products if a cheaper option was available, making cost the top reason a shopper would leave a brand. Also, 18% said they no longer feel they can afford to be loyal.
"Rather than being discouraged by this drop in customer loyalty, marketers should take full advantage of this opportunity to enhance their loyalty strategies and deliver exceptional customer experiences," said Kelsey Jones, global head of Product Marketing, SAP Emarsys. "Consumers now expect their loyalty to be rewarded by personalized and value-adding experiences. Achieving this level of customer devotion is made possible with AI-driven technologies, empowering retail marketers to gain precise insights into customer preferences, so they can deliver perfectly timed and tailored experiences at every touchpoint.
The report noted that in today's loyalty landscape, U.S. consumers demand tangible rewards for their loyalty. In the survey, 50% of respondents said having a loyalty card or account significantly influences their spending with a brand. Furthermore, 43% of U.S. respondents anticipate better prices as loyal customers, while 46% expect their loyalty to be rewarded by exclusive offers.
Additionally, 18% have signed up for or started using more loyalty programs to ensure they receive the best value from brands. Despite the popularity of deals, a loyalty card offering VIP experiences is of higher value for some customers.
U.S. consumers also insist on personalized, positive shopping experiences, with 52% switching brands due to unfavorable encounters, an increase from 48% in 2022.
Retailers excelling in customer service (52%), offering discounts, incentives, and rewards (49%), and providing diverse options for benefiting from such rewards (39%) are more likely to retain loyal customers, representing a unique opportunity for brands to rekindle and nurture loyalty among U.S consumers, the report found.
"As consumers' loyalty types shift, it is imperative marketers adapt by understanding changing consumer behaviors and leverage all available tools and data to attain and retain true customer loyalty,” Jones said. “This will require personalized offers, exceptional customer experiences, and a deep understanding of consumer preferences."