Loyalty trends reveal promiscuous consumers
As businesses and high-street retailers join the race to reinvent themselves, an analysis of consumer loyalty trends in Britain over the four years since 2009 shows that the days of pleasure shopping and retail therapy are behind us, as bargain hunting and rampant discounting have become the norm in a tough economy, according to Jon Worley, director of customer interactions for The Logic Group.
Today, consumers want instant rewards, and (42%) prefer to receive offers whilst they shop - with more than a third of consumers (37%) happy to receive general offers rather than rewards tailored to their shopping habits.
Sustained economic uncertainty (over the four years) has created the 'promiscuous consumer', who displays no obvious loyalty, instead choosing to shop around for the best bargains and, quite often, holding multiple loyalty scheme memberships. Today, over three quarters of consumers subscribe to loyalty schemes.
The uptake of additional loyalty schemes among existing members has been strongest for online voucher discount organisations (consumers are members of almost two schemes on average), although satisfaction with these types of schemes is amongst the lowest.
"The definition of customer loyalty has undergone a fundamental change in the past four years of economic uncertainty, and the Internet has necessitated a rethink of customer engagement strategies," said Worley. "Promiscuity on part of the consumer is a reflection of the perceived value of their interaction with merchants and brands. Consumers want more bang for their buck."
In 2009, more than 50% of the public was not an online customer of any business. Today, online shopping is more popular in the UK than in any other country in the world, with British consumers now spending an average of US$1,718 (approximately £1,083) a year (according to data from Ofcom). Moreover, nearly one in six (16%) of Britons admit to openly using their mobile phone to check product details, prices and reviews while shopping in-store. In fact, one in ten consumers have requested loyalty scheme offers on their mobile phones, and over one in ten have received them on their devices.
2012 also saw a new breed of social consumers, willing to explore brand engagement via social channels. Over a fifth (22%) of Brits visited the Facebook site of a company to which they are loyal, while only 8% have followed a company they feel loyal to on Twitter. Just under one tenth (9%) of adults in Britain have received a loyalty offer via a social networking site.
"The rapid proliferation of mobile technology and digital social communications will play an important part in the multichannel customer engagement strategies in 2013," Worley asserted. "Today, consumers place maximum emphasis on 'honesty and integrity' when judging a company's reputation. Merchants should integrate mobile and social communications channels to understand their customers better and to encourage a favourable reputation through tailored engagement."
For four years in a row since 2009, British consumers have expressed a feeling of loyalty to their banks/building societies and to supermarkets. However, the overall success for banks/building societies and supermarkets has come at a price - a lower overall sense of loyalty among their customers. Since 2009, the feeling of loyalty toward banks/building societies has dropped by 6% and supermarkets have experienced a 10% drop. Hotels, electrical/IT retailers and travel/transport/car hire/airlines have least attracted a feeling of loyalty from the cash-strapped British consumer.
While banks/building societies and supermarkets have commanded a sense of loyalty from customers, there is a clear shift in consumer perception of loyalty programmes and how they would like to engage with businesses. For long term customer retention, merchants need to revisit their approach to customer interaction to be able to turn the tide on the promiscuous consumer and their affinity to instant rewards.
"A successful customer interaction and loyalty programme needs to embrace a multichannel infrastructure that is built on a data-driven strategy to deliver actionable insights: the ability to capture, combine and analyse customer interaction data to offer personalised, value-add engagement to customers," Worley concluded.