11 Mind-Blowing Stats That Will Make Marketers Rethink Customer Loyalty

July 13, 2016

What is customer loyalty, exactly? Far too often, marketers confuse loyalty programs with loyalty, when in reality, a customer’s devotion to a brand is so much more complex.

Today, customer loyalty means breaking through the noise to earn a consumer’s allegiance when he or she has access to countless options, better information and more devices to help inform a purchase decision. Modern consumers are empowered to change their minds and switch brands faster than marketers can say “rewards program.” To better understand customer loyalty today, take a look at these 11 amazing stats:

1. Customer Loyalty is A Worthy Investment

According to an infographic by Invesp, repeat buyers spend 33% more than new ones, and just [tweetable]20% of existing customers account for 80% of a company’s future profits.[/tweetable]

2. Loyalty is A Priority to Marketers This Year

eMarketer found the majority of U.S. marketers intend to allocate more of their budgets to customer loyalty programs in 2016, and 13% anticipate significant increases in spending on loyalty programs.

3. Loyalty and Engagement Go Hand-In-Hand

Research from Rosetta found that customers that are actively engaged with brands and their loyalty programs make 90% more frequent purchases, spend 60% more in each transaction and are five times more likely to choose the brand in the future.

4. Loyalty Programs Have Low Engagement

Of course, loyalty programs alone won’t create loyalty. In fact, eMarketer found active participation and reward redemption rates are below 50% for most brands.

5. Experiences Are Everything

One way to either earn or lose consumer devotion is through the customer experience. As research from Forrester reveals, 71% of connected consumers feel negatively toward brands when they encounter inconsistent experiences, and 10% say these inconsistencies will make them stop interacting with a brand altogether.

6. Millennials Are More Loyal Than Marketers Think

Far too frequently, Gen Y consumers – the generation that will have a spending power of $8 trillion by 2025 – are pegged as fickle. On the contrary, Elite Daily found millennials are more devoted than any other generation, with 50% saying they are either extremely or quite loyal to their favorite brands.

7. Customer Service is Crucial

Brands that don’t have their customer service in order can forget about earning loyalty. According to Accenture, 52% of consumers have switched providers in the past year due to poor customer service, a behavior that costs brands in the U.S. $1.6 trillion.

8. Price Isn’t Everything

Some might argue that price and value drive allegiance, but that’s not necessarily true. We already know that consumers care more about experiences than things, but research from Nielsen shows 66% of global respondents are willing to pay more for products and services from companies that are dedicated to social and environmental change.

9. Shoppers Want Connected Brands

Connected consumers want to shop with digitally savvy brands. According to Apptentive, 66% of companies that saw a decrease in customer loyalty over the past year do not have a mobile app. Additionally, EMC found 93% of business leaders worldwide said technology has changed customer expectations in the past five to 10 years.

10. Negative Experiences Have A Lasting Impact

SDL conducted research that found consumers are more likely to remember a negative experience than a positive one. Among consumers that are able to recall a major negative customer experience that occurred in the past 10 years, only 55% can recall a major positive customer experience occurring in the same timeframe.

11. Loyalty Programs Must Be Relevant

Loyalty programs certainly aren’t enough, but they’re still important. If marketers want this strategy to work, the programs must be germane to their participants. Cap Gemini discovered the key reasons for negative sentiment surrounding loyalty programs were lack of reward relevance, flexibility and value (44%), lack of a seamless multi-channel experience (33%), and customer service issues (17%).

So, what is the key to earning long-term loyalty from customers? The answer is multifaceted, but knowing and understanding customers as individuals is a major piece of the puzzle. This is exactly what e-commerce leaders like Amazon and Zappos have mastered by making the most of their first-party customer data. It’s a strategy that keeps consumers coming back. And people-based marketing is the solution that can enable brands across industries to gain this level of devotion, too.

Building Brand Loyalty in a Digital-First World

Kelly Davis

Kelly leads Signal’s Client Services team to meet the needs of its clients, and has shaped its reputation for exceptional client support.

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