Loyalty schemes draw 84% of consumers

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By: Wise Marketer Staff |

Posted on November 21, 2013

Nearly 60% of global respondents said that loyalty programmes were available where they shopped, and of those, 84% said they were more likely to visit those retailers, according to a study by consumer information and insights firm Nielsen.

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. Nielsen found that, on average, 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.

"While the concept of loyalty is nothing new, we are seeing a significant surge in retailers - and particularly those in developing economies - investing in loyalty programmes that give them greater insight into how to meet their customers' needs," said Julie Currie, senior vice president of global loyalty for Nielsen. "The most savvy retailers are mining their loyalty data and looking for new and innovative ways to provide the benefits that are most important to their best customers."

Loyalty programme benefits
According to Nielsen's survey, three-quarters (75%) of global respondents said that discounted or free products was the most valuable loyalty programme benefit. Enhanced customer service and free shipping incentives were important to 44% and 42% of global respondents, respectively.

Good customer service was important to more than half of respondents in Latin America (59%) and Asia-Pacific (53%). Exclusive deals (41%) and special shopping hours (36%) mattered most among loyalty programme participants in Asia-Pacific. Free shipping incentives were important for 46% of North Americans.

"In markets where loyalty programmes are long established, customers tend to be very savvy about copy-cat promotional offerings that don't offer any unique advantages," warned Currie. "Particularly in developed loyalty markets, retailers and manufacturers need to work together to offer exclusive awards that cut through the clutter. New and innovative concepts, especially in the online space, that connect with how consumers want to shop are proving to be most effective."

Loyalty sentiment is highest for mobile phones
Nearly one-quarter (24%) of global respondents claimed complete loyalty to mobile phone brands, mobile service providers and financial institutions, the highest percentages reported globally across the 16 categories measured.

Global respondents reported the lowest levels of loyalty to food and beverage categories measured and online retailers. Approximately 40% of global consumers surveyed said they were not loyal and likely to switch brands in the alcoholic beverages (43%), snacks (39%), carbonated beverages (38%) and cereal (37%) categories. Thirty-nine percent of global respondents said they were not loyal to online retailers.

"There is a strong link between the way consumers describe their loyalty habits and the way they subsequently buy-so even comparatively small shifts in what consumers say can manifest in big changes in what they do," said Currie. "While there is some consistency around the world in loyalty sentiment within categories and across retailers and service providers, there are also notable differences-especially for consumable products and in the online retailing space, where the likelihood to switch is greater."

Loyalty differences by region
Respondents in the Middle East/Africa showed the highest percentage of complete loyalty for mobile phone brands (35%) and mobile service providers (28%), exceeding the global average. They were also most loyal to snack brands (21%) and cereal brands (21%), compared to other regions. Other Nielsen studies indicate that while availability and choice may be contributing factors for this level of loyalty, loyal brand patronage is highly correlated with consumers in this region.

For food and beverage products, regional non-loyalty levels were highest in Europe, where 46% of respondents said they were not loyal to snack brands, 43% said they were not loyal to carbonated beverage brands and 42% were likely to switch cereal brands.

North Americans surveyed reported higher levels of loyalty for financial service providers (29%) and carbonated beverages (23%), compared to other regions. Latin American respondents reported the highest percentages of loyalty to over-the-counter health and medicine products (26%) and personal beauty products (25%).

Top incentives for disloyalty
According to Nielsen's survey, 41% of global respondents said getting a better price would encourage them to switch brands, service providers or retailers, followed by better quality (26%), a better service agreement (15%), better selection (10%) and better features (8%).

"While good prices may initially offer consumers enough motivation to change allegiance to a new product, it won't keep them for long if the product doesn't deliver on its promises," concluded Currie. "Getting the price/value equation right, having products in stock, and offering a satisfying shopping experience are still vital ways to build long-lasting customer loyalty."

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