Brand loyalty is down, here’s how to push it up

It’s a cliche to say Covid has changed everything, but like so many cliches it contains a grain of truth. A good example is the impact the pandemic has had on our shopping habits, attitudes, and product purchases.

Across Europe and North America, since 2020 there’s been a drop in consumers saying they’re loyal to brands they like. For marketers, that’s a problem.

With the majority of physical retail stores closed during national and local lockdowns, online shopping naturally became the norm. Our US research shows that more people in this country are discovering brands through social media ads, consumer review sites, and ecommerce sites since last year. 

This means the shift toward digital media is having a clear impact on how we come by new products and make our minds up.

Instead of having a handful of choices, as per all but the largest physical store, we can now browse a gazillion options from our sofas and evaluate them with the help of online customer reviews.

And while that’s brilliant in many ways, it can make it harder than ever for brands to build lasting relationships with consumers. Right now, in 23 of the 48 countries we track, more consumers say they’d rather shop online than in-store.

This has led to a saturated, increasingly competitive online space, and as a result, the sort of brand loyalty that more or less everyone felt to some extent is largely a thing of the past. 

How to increase brand loyalty 

OK, enough about problems. Let’s talk solutions. Brands need to attune themselves to the new consumer reality, so without further ado here are five actionable insights drawn from our research that can help businesses build brand loyalty. 

1. Bargains are important, but they’re not the whole story.                      

The pandemic caused a lot of economic uncertainty, which meant bargains became a big deal to a lot of people. Today 44% say they spend time looking for the best deals, and the majority would rather save up and wait to buy a product than sacrifice other spending to buy it sooner.

This influences what people want from brands. Besides delivering high quality products, rewards are the most popular way for brands to inspire love and turn customers into advocates. 

Deal hunters are much more likely to buy from a company that offers free delivery or coupons. Brands need to acknowledge this ongoing hunger for financial support and respond accordingly, because if the price is right many will still buy.

That said, we’ve seen a shift in thinking. Even though most people would rather delay their purchase and save up, this group has shrunk a little over time. 

In fact our Zeitgeist research shows that consumers are stuck between saving and treating themselves. In some countries, indulging actually ranks higher than saving, with reports of revenge spending cropping up all over the place. 

Economic confidence has climbed back up since 2020’s lockdowns, and we’re now nearly back at pre-pandemic levels. 

Consumers still look out for bargains, but since early 2020 there’s been a drop in people saying they spend time looking for the best deals and a slight rise in people using “buy now, pay later” services. This supports the idea that a “want it now” attitude is gaining traction in many places. 

Bring all this together, and consumers are definitely ready to switch loyalties, although for some promotions, rewards, and discounts aren’t always the deciding factor. Instead they want an all-round positive experience – great customer service in-store, as well as seamless checkouts and clear layouts online. 

2. Adapt and survive thrive.

As we’ve just seen, the reasons consumers are less loyal to brands today aren’t all financial. In fact Western consumers in high income groups have seen a similar percentage drop in brand loyalty as low income groups.

While cost and saving have shifted brand loyalties they’re not the whole story, with people’s changing needs and priorities playing a part. People still travel and go out less than pre-Covid times, but the number who’ve bought or are planning to buy an experience is climbing.

The challenge is getting hesitant consumers to join the growing numbers heading outdoors. But in the spirit that every problem is an opportunity in disguise, brands can do plenty to help themselves make the most of all this, starting with embracing change.

In the travel sector, for example, consumers want more communication and security, with announcements like restriction-free travel and flexible cancellation prompting a step-change in bookings this January. 

Alongside the general population, more US travelers describe themselves as “adventurous” compared to 2020, which is why travel providers have been advised to sell YOLO experiences. 

Brands need to reposition their offerings and messaging to attract customers and win their loyalty. We can sum this up in one word: agility. Rapidly evolving on offer in response to events is the key to loyalty and success. Essentially it’s iterative rapid prototyping – try something, improve it, try it again.

And in the end, what’s the alternative? Agility is increasingly the ticket to the game.

If you’re not agile, you’re potentially exposed – as any brand suffering a collapse in consumer loyalty will tell you. 

Agility is:

• Responding to change, not sticking to a plan.
• Rapid iterations, not big-bang campaigns.
• Testing and data, not opinions and conventions.
• Numerous small experiments, not a few large bets.
• Collaboration, not silos and hierarchy.

3. Build love with subscriptions as well as loyalty schemes.

When it comes to groceries and everyday household items, loyalty schemes still hit the spot.

Online grocery shoppers are more likely than average to say loyalty schemes would most increase their likelihood of buying a product.

And because groceries are recurring purchases, consumers are more likely to get a long-term monetary benefit from repeat purchases – which of course helps increase brand loyalty. 

But just like bargains, loyalty schemes have become slightly less popular over time. Not to worry, though. As we’ve moved online, subscriptions have started to become a viable way to build long-term loyalty. 

The percentage of online grocery buyers in the US who say they use loyalty or reward programs has dropped by 12% since Q2 2020. On the flip side, the number who use a food box service like HelloFresh has risen by more or less the same percentage since last year.

We still see a lot of enthusiasm for loyalty programmes in the UK, where 53% say they use them. The US scores lower on this front (45%), but brands there are ahead of their UK equivalents in using subscription-based services, creating loyalty by other means.

As online grocery shopping grows in popularity, a subscription business model is an important weapon in the fight to build brand loyalty. Walmart in the US and Tesco in the UK have both launched a “Plus” subscription service offering additional rewards to those who sign up, with the latter reporting almost £9 average increase per shop during the trial. 

4. Find ways to mimic the real world.

Another challenge is replicating key aspects of the real world shopping experience online.

Our US research offers more signs that, when it comes to brand loyalty, a good experience is just as (if not more) important as financial incentives. While 43% of US shoppers say coupons are important to them when shopping online, having an easy-to-navigate website or app ranks higher and has gained influence over time. Clear product descriptions and images have also become more valuable to consumers. 

Choosing one product over another in a physical store often takes account of physical attributes like packaging, materials, ingredients (certainly for groceries) and overall look and feel. But this stuff is just as important online when it comes to capturing – or recapturing – consumer loyalty. 

Brands need to go the extra mile to provide and promote a digital equivalent to the in-store experience.

That could mean anything from tucking a personalized message into their product packaging, to reaching out to people who post rave reviews on social media.

Whatever approach brands take, the goal is to be “front of mind”, so that consumers come back for another purchase and leave another positive review. It just takes imagination. 

5. Take your tech to the next level.

Another challenge brands face when selling online is the ability to explain their products well.

Augmented reality (AR) may hold the key. So far uptake has been slow, but with 5G adoption gathering pace and in-store shopping taking a back seat due to the pandemic, AR-enhanced shopping has a unique opportunity to establish itself.

User demand for AR-enhanced shopping is high, particularly among younger groups.

A large group of consumers want more retailers to offer the ability to “try on” products digitally, particularly buyers of luxury items who want to explore the product in detail before buying. In this situation, AR is the next best thing to a shop visit.

AR is equally useful in the FMCG sector, with 1 in 5 online personal care product buyers seeking more AR features. The beauty industry was already using AR pre-COVID, and the pandemic has only accelerated this trend.

And when you consider that pandemic restrictions mean consumers often can’t physically test beauty products, an AR-based alternative becomes very attractive, making this tech a strong candidate for mainstream adoption.

And if you think it’s just big brands who can afford this then think again; the introduction of the “YouCam Makeup” app in Shopify means smaller D2C brands can get in on the action.

If AR was a nice-to-have feature prior to the pandemic, it’s now solving real pain points for consumers and businesses.

Brands would be bonkers to miss out on building loyalty via what is essentially an extra layer of interactivity enhancing the shopping experience. 

Brand loyalty gives you a strong base

Each of the five responses we’ve just described has the potential to increase loyalty; but combining some or all can create an exceptional customer experience that’ll keep them coming back for more.

Ultimately, brands need to think creatively and act quickly to showcase the value of their products online in a way that separates them from the noise. If they get this right, they can’t go too far wrong.