Loyalty: “a deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior” 1
In today’s hyper-competitive, multichannel and omnichannel retail environment consumers seem less loyal than ever. In our 2014 global GfK FutureBuy study, 61% of the consumers surveyed reported that they were: “less loyal to any one retailer [today], because [they] have to shop around more to find the best value”. This trend is more pronounced in some local markets – in Brazil the equivalent figure is 76%, it’s 74% in China, 68% in the US and 65% in France – but overall there is a general move by consumers away from loyalty to retailers. When we looked at Leading Edge Consumers (LECs)*, more than three quarters (76%) said they were now less loyal to one retailer, compared to 58% of non-LECs. Because of their role as influencers of the mass market, this finding suggests retailers need to understand changes in consumer mindset and behavior around loyalty.
The key question is why are retailers, despite huge investments in loyalty programs and brand building, finding it so difficult to build and retain customer loyalty?
The problem could be their approach. Effective brand building acquires new customers, but it also creates and builds loyalty. Good loyalty programs retain customers, but also build and enhance the customer’s relationship with the brand as well as the retailer.
Despite this obvious interdependence, most retailers approach the management of their brand building and loyalty objectives in different and sometimes counter-productive ways. The “price-driven” and “deal-driven” tactics of many retailer loyalty programs further undermines customer loyalty by encouraging customers to go for the best deal above all other considerations.
The “emotional imprint” of customer experience
We need to manage customer loyalty in a more holistic, integrated and mutually beneficial manner alongside brand building. We must also recognize that the difference between success and failure for both depends upon exactly the same thing – the enduring quality of the customer experience.
Many experiences that consumers have with retailers produce little to no emotional response whatsoever. And that is the problem.
At GfK, we refer to the “emotional imprint” of experience.
“Good” experiences, associated with strong and vivid memories, reflect positive emotional imprints and are associated with strong, positive emotions (e.g., happiness, joy, love, interest, gratitude, etc.). “Bad” experiences, also associated with strong and vivid memories, reflect negative emotional imprints and are associated with strong, negative emotions (e.g., anger, disgust, contempt, frustration, sadness, etc.).
So how can retailers benefit from managing the emotional imprint of experience?
First and foremost, they can expect to see benefits extending well beyond the realm of purchase frequency. By managing and optimizing loyalty programs centered around drivers that leave positive emotional imprints, retailers can create and reinforce a positive cycle of consideration, purchase behavior and preference.
One finding from our FutureBuy study suggests that people will be more loyal to a brand or retailer if they feel they can contribute to it in some way. Just over half (52%) of consumers agreed “I would be more loyal to a brand/retailer that lets me give input or help shape the products/services I buy.” Regionally the sentiment is felt most strongly in Latin America (60%), dropping to 48% in Europe and 46% in North America. Of particular note is the figure for Leading Edge Consumers at 78% – compared to 47% for non-LECs.
Retailers may want to consider the options for involving their customers more. Repeated positive emotional imprints like this create the sort of “loyalty” that is far more likely to resist the competitive pressures on market and also help to build stronger, more durable relationships with customers. By building loyalty programs and brand management on the foundation of great experiences, retailers can make sure that their customers’ loyalty increases for all of the right reasons, instead all of the wrong ones.
David Robbins is Global Director, Customer Satisfaction & Experience at GfK; contact him at firstname.lastname@example.org.
1 Oliver, R. L. (1999). Whence consumer loyalty? The Journal of Marketing, 33-44, p. 34
* Leading Edge Consumers (LECs) are made up of three different types of shoppers: early adopters, inﬂuentials, and passionate shoppers; GfK FutureBuy 2014