Is Loyalty Dead?
10th March 2022
Written by Tom Peace
Has the pandemic destroyed loyalty?
More than a quarter (27.4%) of UK and US consumers now show no brand loyalty at all. This is according to joint research from first-party customer data specialist, Edit, and digital transformation consultancy Kin + Carta, which revealed the impact of the pandemic on customer loyalty.
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The report, titled ‘The Loyalty Paradox’ shows that brand loyalty became a thing of the past in 2021.
E-commerce scored particularly poorly, with only 6% of consumers claiming loyalty to brands within that vertical. As the lowest-scoring online segment, e-commerce brand loyalty was below that of finance (9%) and offline retail – food and drink (21.5%).
Outside of e-commerce, loyalty towards financial products increased with age and, unsurprisingly, with those who have an income of £75,000 plus, with over 20% of respondents in this income bracket claiming loyalty to brands within the sector.
In a digital-first customer journey, rewards are most likely to drive the sharing of personal data across demographics. 43% of respondents suggested ‘a discount code or incentive’ would persuade them to sign up for brand communications.
A quarter (25%) would like ‘exclusive products or first opportunity to purchase’, Gen Z consumers saw “exclusivity” as particularly appealing, with nearly a third (30%) interested in ‘first opportunity to purchase'.
While rewards were seen as an appropriate trade-off for sharing personal information, more pragmatic considerations still remain the most important consideration to younger audiences. Operational and customer service communications outweighed rewards as a ‘return factor’ for younger generations.
So what's the solution?
Brands cannot rely on loyalty anymore. Brand affinity through rational benefits like points has weakened to be replaced by habitual ties and emotional connections based on lived and related experiences with brands and retailers.