Consumers’ loyalty to brands is falling dramatically. Here’s why.

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%.

With 44% of companies admitting that they focus more on customer acquisition than customer retention, there’s certainly room for improvement in the loyalty department.

With this in mind, here are some common causes for the fall of customer loyalty towards brands:

  • 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, as 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 your projected value to the best in the market, while evaluating their customer experience with you.

“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 that you won’t need to constantly provide discounts or reduce 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. In addition, 49% of buyers have made impulse purchases after receiving a more personalized experience.

  • 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 fast becoming ineffective as they not personalized 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. This doesn’t mean that loyalty schemes don’t work altogether, as 73% of consumers are more likely to recommend brands with good loyalty programs.

Always remember that loyalty is not for sale. It’s something that must be earned.

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

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

If you’re passively running loyalty programs and yet fail to personalize them, you’re most likely running an ineffective initiative that is leaking retention opportunities.

  • Digitization has increased competition

The world is now digital. The rise of the internet, smartphones, and online shopping, has given consumers more transparency over their options.

As a result, consumers today are more educated, experienced, and selective in their buying behavior – they have become desensitized towards digital advertising and commonly used marketing techniques.

It also means that if a company doesn’t provide clear value propositions, while delivering seamless customer experience, and personalized follow up communications – a customer will unlikely remain loyal, and will simply look elsewhere.

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. It’s no wonder that many brands struggle to stand out from the noise.

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

Trust in individual brands is at an all-time low, and consumer loyalty is falling. Even established brands such as Airbnb, Netflix, and Lyft who are trending well in customer loyalty, have to work even harder just to retain customers.

How, then, can brands prove to customers that they offer unique value?

Start by focusing on the customer experience. Consumers are increasingly choosing to stay loyal to user experiences, rather than the brand itself.

“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

How, then, can companies tap into user experiences to set themselves apart from their competitors?

Start by enhancing typical buyer personas by adding online user behavioral actions into the mix, and do this for each individual customer.

Look at how they use the internet, what they do online, and identify their tangible online journeys. Get a comprehensive, multi-touchpoint view of their customer journey.

Without a clear picture of how each of their actions connect and lead to a purchase or drop-off, it can be challenging to understand why your customers aren’t coming back.

A common mistake brands make is that they over invest in quantitative data. While quantitative data remains an integral part of understanding consumer behavior – it often fails in one core area: understanding a customer’s “WHY“.

To understand the why, companies need to couple quantitative data with qualitative research. Start an active customer feedback loop, and engage in regular conversations with customers to help you see what they are expecting, understand what matters to most to them, and where you might need or must improve.

“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” – Convince&Convert

The rise in artificial intelligence (AI) in marketing has also made it much easier for brands to provide more personalized experiences. With over two-thirds of companies now compete primarily on the basis of customer experience, customers has grown to expect this.

  • Brand marketing is too one-dimensional

As many companies are divided into different departments – each being responsible for a specific part of the customer journey – it becomes difficult to create synergy internally – let alone external customers. This often leads to a one-dimensional brand experience.

Marketing used to mean gathering objective data about demographics and using it to target a chosen audience with ads, direct mail, or other marketing tactics. That is no longer enough.

Consumers today are expecting more than a generic advertisement, with 63% of customers saying that organizations should make getting to know them better a top priority.

Brands must focus on adding sensory and engagement value via creating frictionless, 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 (not simply as a segment), and create a seamless journey as they move through channels and devices, from their initial interest through to conversion, and after services – the “omni-channel” experience.

How are you approaching customer loyalty in 2020?

Leave a Comment

Your email address will not be published. Required fields are marked *