The annual Customer Loyalty Index (CLI) of 2023 has revealed some eye-opening insights into the mindset of UK consumers. The research, carried out by SAP Emarsys, unveiled that while immediate incentives like discounts and rewards might grab attention, they don’t necessarily ensure long-term loyalty among customers.
Diving into the detailed findings:
Price Remains a Dominant Factor
For a majority of UK consumers, price continues to be the primary deciding factor when making a purchase. The CLI data reveals that two-thirds of shoppers will readily switch products if a more cost-effective alternative emerges. This insight underscores the weightage of cost in the buying decisions of the UK market.
Decline in Incentivised Loyalty
However, while the inclination towards discounts remains, the report showcases a significant dip in Incentivised Loyalty – a loyalty cultivated through brand-offered incentives. From standing at 71% in 2022, this type of loyalty saw a sharp decline, settling at 51% in 2023. One major reason attributed to this decline is the consumers’ perception of ‘normal’ prices. With the quest for better deals, half of the surveyed consumers anticipate brands to provide exclusive offers as a reward for their loyalty. Concurrently, 42% of consumers expressed that a surge in prices could jeopardise their loyalty to a brand. In a telling statistic, 23% asserted their commitment to always opting for the lowest price, indicating a waning sense of brand loyalty.
The Impermanence of Incentivised Loyalty
These findings accentuate that while incentivised offers can be potent, their effect tends to be ephemeral. Brands striving for long-term loyalty need to strategise beyond just transient offers. The research indicates a sentiment among 21% of the consumers that brands should invest more effort to earn their loyalty. Additionally, 15% felt that they haven’t been adequately rewarded for their loyalty, indicating a limited window for brands to capitalise on incentivised loyalty.
Moving Towards True Loyalty
The CLI points out that the transient nature of Incentivised Loyalty should be channelled towards nurturing True Loyalty. This is a form of loyalty that stems from a deep-seated connection and love for brands. Notable examples include brands like Puma, Gibson, and Pizza Hut. Although the growth in True Loyalty was marginal, seeing just a 1% increase from 2022 to 2023, it remains one of the most steadfast once established, albeit challenging to attain.
Sara Richter, the CMO at SAP Emarsys, weighed in on the findings, stating, “Incentives are undoubtedly effective in capturing a customer’s attention. However, if price becomes the sole anchor of a shopper’s loyalty, the relationship’s longevity is questionable.” She emphasised the importance of a value-exchange, suggesting brands to elevate the shopping experience. This could manifest in forms like exclusive VIP experiences, early access to product launches, or even cashback incentives.
Richter further articulated the necessity of transitioning customers towards True Loyalty. “The journey towards genuine brand love should not be solely about dangling carrots in terms of reduced prices,” she remarked. She emphasised the essence of genuine understanding and data-driven personalisation in fostering a durable relationship with the consumer, highlighting the indispensability of an omnichannel approach in sustaining customer engagement.
The full Customer Loyalty Index is available here, exploring the different motivations for consumer loyalty across the UK and around the world, and what that means for brands and marketers alike.