Loyalty: Likely Whys & Lows

Consumers more likely to visit retailers that offer loyalty program: Nielsen

Published in CSP Daily News

"In markets where loyalty programs are long established, customers tend to be savvy about copy-cat promotional offerings that don't offer unique advantages," said Currie. "Particularly in developed loyalty markets, retailers and manufacturers need to work together to offer exclusive awards that cut through the clutter. New and innovative concepts, especially in the online space, that connect with how consumers want to shop are proving to be most effective."

Nielsen information shows that nearly one-quarter (24%) of global respondents claimed complete loyalty to mobile phone brands, mobile service providers and financial institutions, the highest percentages reported globally across the 16 categories measured.

Global respondents reported the lowest levels of loyalty to food and beverage categories measured and online retailers. Approximately 40% of global consumers surveyed said they were not loyal and likely to switch brands in the alcoholic beverages (43%), snacks (39%), carbonated beverages (38%) and cereal (37%) categories. Thirty-nine% of global respondents said they were not loyal to online retailers.

"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 Currie. "While there is some consistency around the world in loyalty sentiment within categories and 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."

According to Nielsen's survey, respondents in the Middle East/Africa showed the highest percentage of complete loyalty for mobile phone brands (35%) and mobile service providers (28%), exceeding the global average. They were also most loyal to snack brands (21%) and cereal brands (21%), compared to other regions. Other Nielsen studies indicate that while availability and choice may be contributing factors for this level of loyalty, loyal brand patronage is highly correlated with consumers in this region.

"In developing economies, we see evidence of highly price-sensitive consumers choosing brands that are not always the lowest-price alternative," said Currie. "Making a switch from a tried-and-true product to something new can represent a trade-off that consumers with little discretionary income are not willing to make. On the flip side, the cachet of new brands can be appealing options for consumers with rising upward mobility status."

For food and beverage products, regional non-loyalty levels were highest in Europe, where 46% of respondents said they were not loyal to snack brands, 43% said they were not loyal to carbonated beverage brands and 42% were likely to switch cereal brands.

"High levels of promotions offered in snack 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."

North Americans surveyed reported higher levels of loyalty for financial service providers (29%) and carbonated beverages (23%), compared to other regions. Latin American respondents reported the highest percentages of loyalty to over-the-counter health and medicine products (26%) and personal beauty products (25%).

According to Nielsen's survey, 41% of global respondents said getting a better price would encourage them to switch brands, service providers or retailers, followed by better quality (26%), a better service agreement (15%), better selection (10%) and better features (8%).

"While good prices may initially offer consumers enough motivation to change allegiance to a new product, it won't keep consumers for long if the product doesn't deliver on its promise," said Currie. "Getting the price/value equation right, having products in stock, and offering a satisfying shopping experience are vital ways to build long-lasting customer loyalty."

The Nielsen Global Survey of Loyalty Sentiment was conducted between Feb. 18 and March 8, 2013, and polled more than 29,000 online consumers in 58 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America.

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