Is loyalty really dead, or just misdefined?

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By: Wise Marketer Staff |

Posted on September 23, 2013

Market Track recently published the results of a study of retail shoppers in the US, and concluded that 'shoppers are not loyal', having found that 80% would switch stores or brands if offered a compelling promotion, 78% actively participated in 'showrooming', and over 80% said they use several promotional media to make their purchase decisions. But, asks Doug Pruden, principal for Customer Experience Partners, are we really ready to say that customer loyalty is dead?

Pruden suggests that the announced 'death of loyalty' might be a bit premature. Today's customers have much more information at their fingertips than ever before. With such availability to data, showrooming has probably become a 'fact of life' (so long as manufacturers can afford to maintain 'bricks and mortar presence'). Not disregarding the fact that price has always mattered we ask the following questions of the conclusions drawn:

  1. Given the researchers apparent use of 'double-barrelled' phrasing in their question (combining "stores or brands"), how can you possibly know whether it was the brands themselves, or simply the purchase channel that respondents had in mind when they responded? 80% of consumers indicating that they would walk away from their favourite brands based on a "compelling promotion" would be news. Price shopping among competing stores has been going on forever.
  2. Is it really that all customer loyalty is dead? Are consumers really willing to forgo their Apple iPhones, Kate Spade bags, or Ketel One Vodka? Or, is it really the case that loyalty applies more to the brand than the sales channel?
  3. Have both the online sales experience and the bricks and mortar sales experiences become so undifferentiated that price has come to be the main driver of purchase behaviour?
  4. Does the fact that 78% of consumers participate in showrooming mean that it's their predominant behaviour in shopping for most goods and services and in most categories? Or where study respondents really telling us that for select items, in a limited number of categories, they take the time to check out all options, forsake all loyalty, and buy based only on price.
  5. If there is no longer shopper loyalty then should we expect to see shuttering of doors as consumers buy only on price and "compelling promotions" and abandon the likes of Starbucks, Whole Foods, Tiffany and Nordstrom?

What brands and retailers should consider
It is doubtful that customer loyalty is dead - or even diminished in importance. But it shouldn't be taken for granted. To properly benefit from loyal customers, businesses of all types need to maintain and 'fuel' customer loyalty. The key to nurturing loyalty is to understand the Value Equation. It's a process for identifying and managing the unique aspects of your business's 'bundle of benefits'.

If the only thing that matters to some consumers is the lowest price, then unless you can afford to outlast your competition in the 'race to the bottom', you won't capture their business.

But for most businesses success is all about retaining their most desirable customers - the customers who generate actual profits. It's these customers who are consciously and subconsciously evaluating many more factors than price as they select what to (and where) to buy.

Continued and strengthened loyalty evolves from repeated favourable outcomes in the calculation of the Value Equation (product benefits + the multi-sensory customer experience divided by price). Stores and all brands can influence their value equation by first identifying and then providing what their customers value most. They need to learn whether that's more helpful staff, uniquely designed stores, easier to navigate websites, free samples, new items every week, and so on.

"If loyalty is truly dying or declining," concluded Pruden, "then it's most likely a result of businesses' failure to fuel it through managing the value equation." More information about managing the value equation and optimizing the total customer experience has been made available via the Customer Experience Partners web site - click here.

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