How effective are loyalty programs in getting customers to stick with your brand? This research from Nielsen looks at snack and mobile brands across the globe which regions have the most loyal customers.
Standing out in a world of choice isn’t easy. Earning consumer devotion to a brand or store takes more than just offering a good product. Price, packaging, customer service and reputation are just some of the factors involved in a consumer’s decision-making process. But getting to the heart of what makes a consumer stick or switch can be the difference between flourishing and fading. While Nielsen research shows that bigger rewards generally inspire higher loyalty levels, loyalty programs are no guarantee of loyal behaviors.
“There is a strong link between the way consumers describe their loyalty habits and the way they subsequently buy—so even comparatively small shifts in what consumers say can manifest in big changes in what they do,” said Julie Currie, senior vice president Global Loyalty, Nielsen. “While there is some consistency around the world in loyalty sentiment within categories, across retailers and service providers, there are also notable differences—especially for consumable products and in the online retailing space, where the likelihood to switch is greater.”
So how do you turn a fickle fan into a faithful follower? You start by understanding the needs and motivations that drive their purchase decisions. And then you deploy the strategies and tactics that deliver the most value. The Nielsen Global Survey of Loyalty Sentiment outlines the reasons why consumers switch brands, service providers or retailers and identifies the loyalty program attributes that potentially have the most staying power.
The survey polled more than 29,000 Internet respondents in 58 countries to evaluate consumer views on loyalty levels across 16 categories that range from fast-moving consumer goods staples to technology products to retail establishments and found that, on average, more respondents professed to be not loyal than completely loyal. Most respondents fell somewhere in the middle, claiming they were unlikely to switch brands or providers without a significant incentive.
The survey findings suggest a direct link between the frequency of purchase and the level of loyalty to that category. For everyday use products, ongoing decision-making often changes the relationship. For example, one-quarter (24%) of respondents around the world claimed complete loyalty to their mobile phone brand/service provider and financial institution—the highest loyalty percentage reported globally for any of the 16 categories measured. Conversely, the lowest levels of loyalty on a global scale (respondents said they were not loyal and likely to switch) were found within the food and beverage categories reviewed: alcoholic beverages (43%), snack brands (39%), carbonated beverages (38%) and cereal brands (37%).
Importantly, the relationship between the provider and the brands they sell can be quite different. In the grocery sector, respondents expressed more loyalty to the retailer (globally, 74% said they were loyal to a grocery retailer) than they did to brands (average 61% loyalty across the categories surveyed). By contrast, 76 percent of all respondents professed loyalty to a mobile phone provider, which was aligned with 75 percent who also said they were loyal to mobile phone brands. For online retailers, global switching sentiment was higher (39% claimed non-loyalty) than for other retailers and service providers measured.
For food and beverage products, regional non-loyalty levels were highest in Europe, where 46 percent of respondents said they were not faithful to snack brands, such as candy, cookies, chips and sweets (only 10% claimed complete loyalty), which was markedly lower than other regions. Forty-two percent were also likely to switch cereal brands, and 43 percent claimed disloyalty to carbonated-beverage brands.
“High levels of promotions offered in snacks and beverage categories, particularly in Europe, condition consumers to shop around for deals,” said Currie. “Retailers can reverse the impact of falling basket values and lower trip frequencies by better connecting with the unique needs of their shoppers.”
Other findings include:
• Incentives that stimulate switching behavior.
• Loyalty program prevalence and patronage go hand in hand.
• Loyalty program benefits that matter most.
For more detail and insight, download Nielsen’s Global Loyalty Sentiment report.