Last month the Nielsen Global Survey of Loyalty Sentiment polled more than 29,000 Internet respondents in 58 countries to evaluate consumer views on loyalty levels across 16 categories including fast-moving consumer goods, technology products, and retail establishments. On average, Nielsen found that more respondents claimed to be not loyal than completely loyal to brands, service providers, and retailers. Most respondents said they were mostly loyal, or unlikely to switch brands or providers without significant incentives.
Julie Currie, senior vice president, Global Loyalty, Nielsen, participated in a Q&A with Loyalty 360 to discuss the comprehensive report titled, “How Loyal Are Your Customers? -- A View of Loyalty Sentiment Around the World.”
What were your two or three biggest takeaways from this loyalty study?
The great news is that loyalty really matters to customers. In our survey, across all markets, industries and categories, the overwhelming majority of consumers said their decisions on where to shop and what to buy were positively influenced by opportunities for loyalty rewards.
Nevertheless, there are trends that show change is needed:
Engagement with existing ways of driving loyalty is on the decline. Consumers aren’t excited enough by the content of existing loyalty schemes.
Retailers and the brands they distribute are competing for consumers’ attention, creating a cannibalizing effect that’s only adding to the clutter. A more collaborative approach would both simplify and help cut through.
What was your biggest surprise from the study and why?
Ultimately, it’s the failure of businesses to use the insights customers are providing. Our survey shows that in developed markets, consumers are disengaging with loyalty schemes, while in developing markets, they’re signing up but not necessarily engaging.
Retailers and brands are using their loyalty schemes to reach and influence their customers, but they also need to treat and value their scheme as a gateway – the customer gives visibility to their shopping needs and behaviors, but if the gate is going to stay open it must work both ways, with the company giving value back. That value exchange is vital, and we believe the winners in loyalty will be the ones that figure out new ways to make the gateway work better.
What is your view of the point cited in your report that more respondents professed no brand loyalty rather than complete devotion?
In many ways, fragmentation – in retail channels, in media, in shopping behaviors – is a function of consumers enjoying independence of choice, an ability to buy from many sources without losing the convenience that historically dominated decisions on where to shop. In seeking out services for everyday living – for example, grocery shopping – devotion is not a realistic goal. However, some degree of preference is essential; without it, profitability is difficult to sustain.
So our survey delivers two essential messages for business leaders: It’s critical that they both understand how their brand is earning loyalty (and how well) and have the ability to manage the levers that drive it.
Based on this previous point, what can brands do to tap into this segment of customers who aren’t brand loyal? What are some missed opportunities?
There’s evidence of a need for better differentiation – too many me-too schemes, designed to capture data but not to inspire, are causing consumers to disengage. This introspective approach is not helping. If a company’s approach to loyalty is centered on measuring what consumers bought in the past, it can limit the ability to create a forward-looking connection with shoppers. Understanding current and expected trends in consumer demand is essential.
Here are three tactics that successful businesses are focusing on:
Use the right rewards – for example, customers who don’t participate in the programs or don’t redeem their points/rewards see less reasons to stay, and become more likely to switch.
Use the data to understand the causes of switching, and also to predict behaviors; this will reveal better techniques to keeping good habits.
Work smarter, don’t add to the clutter; use data to build the best offers, and keep innovating. More interest will work better than more communications.
Why do you think that most respondents said they’re not brand loyal?
There is a correlation between saying and doing: What I say tends to reflect a more emotional connection, whereas what I do is often more rationally driven. I might express loyalty to, say, a favorite perfume, but that doesn’t translate to investing continuously, whereas I might shop regularly at the same supermarket for a host of factors but still not declare myself loyal to that retailer.
What is clear is that services and brands must find new ways to keep consumers engaged. More loyalty schemes are not the answer; creating real value for consumers and differentiating the experience is where the battle for marginal loyalty is going to be fought.
Do you agree that price trumps the customer experience when it comes to customers who switch brand loyalties?
If a company treats consumers in a transactional way, expect consumers to do the same. So, if a company wins share only by investing in price, then when a competitor attacks on price, it shouldn’t be a surprise that those same consumers will be ruthless in moving allegiance.