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Where is customer loyalty headed?
According to a new study from ICLP, only 14 percent of U.S. consumers are devoted to their favorite brands, meaning that 86 percent are inclined to “cheat” by engaging and shopping with competitors.
Devotion, which factors how passionate, committed, and intimate consumers feel with a retailer, is crucial when it comes to creating effective loyalty strategies that generate valuable and long-lasting customer relationships.
ICLP surveyed 1,000 U.S. consumers, ranging from millennials to baby boomers, to examine the psychological parallels between human and brand relationships. The poll rated their experiences with friends and romantic partners, as well as brand relationships on seven core relationship criteria including recognition, rewards, reciprocity, reliability, respect, trust, and communication. By partnering with a global authority on relationship dynamics, Professor Ron Rogge from the University of Rochester, ICLP created a customer-brand relationship model based on Sternberg’s Triangular Theory of Love.
The theory focuses on three key components of a relationship: intimacy (willingness to share information with a retailer), passion (brand enthusiasm), and commitment (loyalty). In a retail context, this model provides brands with a deeper understanding of its customer base, therefore allowing them to foster increasingly loyal relationships.
According to the study, the most loyal categories of consumer groups – ‘romantic’ relationships and the all-important ‘devoted’ relationships – shop more frequently, spend more, and are better advocates for brands. As a result, it’s imperative that retailers drive this level of loyalty by truly understanding the behaviors and preferences of their customer base.
Here are some other key findings:
Foster brand advocacy: 96 percent of devoted customers would recommend a retailer to others, demonstrating the importance of creating and maintaining devoted customer relationships.
Create stronger rewards programs: 74 percent of U.S. consumers would buy more if they were better rewarded. This emphasizes the power of using personalized rewards that surprise and delight customers to move them towards the most positive relationships – romantic and devoted
Take time to understand customers’ needs: 59 percent would buy more if retailers understood their individual needs and requirements better. Retailers can use data to achieve this and foster the intimacy Sternberg cites as key to building devoted relationships
Build respect and trust amongst consumers: 60 percent would buy more if retailers treated them with more respect, and 53 percent would buy more if they trusted brands more. Trust and respect are essential in driving commitment
Communication is also crucial: 53 percent would buy more if brands communicated with them better. Communication is strongly linked to driving the passion and intimacy that is essential for the strongest relationships
So why are so many consumers willing to avoid being truly loyal?
Phil Seward, Regional Director of the Americas, ICLP, told Loyalty360 that the main issue with loyalty programs in the U.S. is commoditization.
“Hundreds, if not thousands, of loyalty and rewards programs, focus exclusively on transactions, with couponing and discounting encouraging consumer price sensitivity and brand promiscuity,” Seward explained. “On the other hand, savvy brands are investing in loyalty and customer engagement programs that do the opposite, switching emphasis to the customer experience by providing proactive, distinctive benefits that deliver a more personalized customer experience across all touch points.”
For retailers, in particular, engaging with customers consistently across all channels has become critical in driving brand devotion, Seward noted.
“To truly ‘un-commoditize’ loyalty, retailers shouldn’t underestimate the re-emerged importance of the physical store experience and the opportunity it provides for human connection and a differentiated experience,” Seward explained. “Secondly, taking advantage of the endless functionalities that mobile can provide extends the customer dialogue. But, remember that mobile no longer just pertains to millennials-- gen Xers and boomers are on their phones all the time too, many using those same loyalty apps. Finally, consumers are placing more importance on brand purpose in their relationships with brands. Communicating a consistent brand purpose with customers further reinforces their shopping preferences, builds trust and influences their likelihood to recommend. Additionally, ICLP’s research indicates fifty-three percent would buy more if brands communicated better and this is strongly linked to driving the passion and intimacy that is essential for the strongest relationships.”
Similar to personal relationships, consumers’ relationships with brands can and do change over time, often due to changes in the customer’s needs, a bad experience that leaves them feeling disappointed, or the brand’s ability to remain relevant.
“Successful brands will recognize this and need to utilize their customer data to assess the relationship they have, identify the opportunity to influence, and prioritize the actions they can take to improve the customer relationship,” Seward added.
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