Consumers’ Loyalty to Brands is Falling Dramatically. Here’s Why.

Some common causes of a lack of customer loyalty for businesses:

  • Consumers expect more and brands can’t keep up
  • Loyalty schemes aren’t up to scratch
  • Digitization has increased competition
  • Customers are looking for your unique value
  • Brand marketing is too one-dimensional

For businesses, customer retention can be crucial to success. A loyalty increase of 7% can boost lifetime profits per customer by as much as 85%.

But the days of automatic loyalty are gone. Consumers now expect a higher level of service. It’s up to brands to achieve this through their online presence and interactions.

Right now, it’s tougher than ever to retain customers. Despite this, 44% of companies admit they focus more on customer acquisition than customer retention.

If businesses want more success, this is a key area to work on. With this in mind, here are some of the most common causes of a lack of customer loyalty for businesses:

  • Consumers expect more and brands can’t keep up

“We don’t want to push our ideas on to customers. We simply want to make what they want.” – Laura Ashley

Despite many companies investing heavily in marketing and customer service, they are often finding that it’s not enough. Consumers’ expectations are simply evolving too quickly. When making purchasing decisions, they aren’t looking at how much a brand has improved in the last year, or five years – they’re comparing it to the best in the market.

One of the key areas to consider in this is customer service. Poor customer service is one of the top reasons for consumers looking elsewhere. If you want to retain more customers, you need to focus on how the customer journey and how you present yourself to your customers.

Presenting the right image to your potential and existing customers is key to success. There may be more competition than ever, but rather than focusing on this, think about how your brand is presenting itself. Customers now expect companies to treat customers and employees well and to care about society. It’s essential that you create a brand identity that incorporates these values.

“Instead of focusing on the competition, focus on the customer.” – Scott Cook

Putting an extra focus on the customer’s experience can transform your business. It can also save you money, as you will find you don’t need to drop your prices as often. Research shows that 57% of people would pay more for an item or service if they know they will receive excellent customer service. Plus, 49% of buyers have made impulse purchases after receiving a more personalized experience.

You need to make sure you consider the customer in all of your interactions. If you don’t, you run the risk of losing out to your competitors.

  • Loyalty schemes aren’t up to scratch

For a long time, companies have used what’s often seen as a shortcut to customer loyalty: the loyalty scheme. However, these schemes are becoming ineffective. Why? Simply put: they’re not personal enough. Research shows that consumers prefer personalized rewards for their loyalty to a brand, with 68% indicating they would shop at a store offering them over one that did not.

“Customers will stay loyal for many reasons, but if you can reward them in kind for their loyalty, you’re not only providing a good experience for them but developing a mutually beneficial relationship for both parties as well” – Jay Baer

Failing to personalize your loyalty programs simply doesn’t work anymore. All it does is slash profit margins, so rather than creating more long-term customers, you end up just losing money.

“Customer loyalty isn’t a purchasable commodity. It’s a present – you can’t force it, but only earn it.” – Neil Patel

This doesn’t mean that loyalty schemes don’t work altogether. Research shows that 73% of consumers are more likely to recommend brands with good loyalty programs. You just need to remember that loyalty is not for sale. It’s something that must be earned.

Customers need to feel, more than ever, like you’re in touch with their needs. This is so important that, now, 95% of consumers say they are looking for some degree of proactive communication from the companies with which they do business.

  • Digitization has increased competition

The world is becoming more digital. The rise of smartphones, tablets, and online shopping has given consumers more transparency and more choice than ever before. This growing choice online means that consumers are more educated, more experienced, and more selective in their buying choices than ever. Because of this, they have become desensitized to many marketing techniques.

It also means that, if they don’t like what you’re offering, it’s very easy for them to look elsewhere. Most consumers now use the internet to compare brands while shopping. So, if a company doesn’t provide clear value, they’re very unlikely to remain loyal. In fact, 57% of consumers have stopped buying from a company because one of their competitors provided a better experience.

“If you are not taking care of your customers, your competitor will.” – Bob Hooey

  • Customers are looking for unique value

The average American consumer now sees between 4000 and 10,000 online ads a day. With this in mind, it’s no wonder so many brands struggle to stand out from the crowd. One of the most common reasons for customers not being loyal to a brand is that it simply isn’t relevant enough to them. It’s not that there’s anything wrong with the brand itself, it’s just that it didn’t stand out enough from the competition.

“Marketing is about driving profitable revenues, not just about” winning” campaigns. Marketers compete for consumers’ scarce resources: attention and disposable income.” – Heidi Cohen

In the last few years, marketers have launched so many new innovations that can be hard to keep up. Apart from the odd exception, many brands are finding they aren’t able to retain customers as long as they used to. Even the biggest brands are struggling. For example, Samsung customers might switch to Apple or Nokia without a second thought.

There are still some brands like Airbnb, Netflix, and Lyft are still trending well in customer loyalty, but even these market leaders still have to work harder to keep their customers. Trust in individual brands is at an all-time low, and consumer loyalty is falling. But, the good news is, consumers are still prepared to stick with a brand as long as they are providing clear value.

The question is, then, how can brands prove to customers that they offer value?

One of the ways they can do this is by focusing on their customer experience.

“Customer experience is one of the two core pillars of customer retention; the thing is, you can’t grow if your customers don’t stick around.” – Jes Kirkwood

Consumers are increasingly choosing to be loyal to experiences, rather than being loyal to brands. How, then, can companies tap into user experiences to set themselves apart from their competitors?

The first thing every company needs to do is try and better understand the customer. But understanding the customer is only partly achieved with buyer personas. We have to also look at how they use the internet, what they do online, their tangible online journeys. And by this, we mean getting a robust all-round view of the customer journey.

The mistake a lot of brands make is that they overinvest in quantitative data. Now, we’re not saying that quantitative data isn’t important – it absolutely is – but it often fails in one core area: understanding the customer’s “why.”

To understand the customer’s “why, companies carry out qualitative research, too. Simple steps like asking for feedback and engaging in conversations with the customer can help you see what they are expecting, what matters to them most, and where you might need to improve.

New technology, such as AI, has made it much easier to provide a more personalized experience. And because over two-thirds of companies now compete primarily on the basis of customer experience – up from only 36% in 2010 – customers expect this. It improves their experience and is essential if you want to improve customer retention.

  • Brand marketing is one-dimensional

This is an area that a lot of brands fall within. As many companies are divided into different departments – each one being responsible for a specific part of the customer journey – it becomes difficult to create synergy internally. Often, there’s hardly any contact between different departments, and this leads to a one-dimensional marketing approach.

If you want to encourage greater loyalty, you need to take a more holistic, multi-dimensional approach to marketing. One dimensional marketing simply doesn’t cut it anymore. All of the customer touchpoints need to be mapped as part of the customer journey. Without this, it can be challenging to understand why your customers aren’t coming back.

The reality is, consumers’ brains are overloaded with information now, and many one-dimensional marketing techniques are too passive for buyers. Multi-dimensional marketing adds sensory value, is more engaging, and helps your customers see the value of your brand.

Marketing used to mean gathering objective data about demographics and using it to target a chosen audience with ads, direct mail, or other methods. But consumers are now expecting more than this, and 63% of customers say that organizations should make getting to know them better a top priority.

Brands must focus on creating highly personalized interactions that can be tailored and refined at any moment. To deliver a competitive customer experience, brands must develop a greater understanding of their customers as individuals, and create a seamless journey as they move through channels and devices, from their initial interest through to conversion.

“Customers will stay loyal for many reasons, but if you can reward them in kind for their loyalty, you’re not only providing a good experience for them but developing a mutually beneficial relationship for both parties as well” – Jay Baer

If you want to encourage more loyalty, it’s extremely important that each stage of the journey must be frictionless. Consumers are expecting this, and by failing to do so, you may run the risk of losing out to other brands that do.

How are you approaching customer loyalty in 2020? Over to you!

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