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How Loyal Are Your 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%)

 

Incentives That Stimulate Switching

Getting the price right could be the difference between a sale and a switch. In fact, across five different product or service attributes analyzed (price, service agreement, selection, feature or quality), offering the right price held the most persuasive power to motivate consumers to swap devotion to a brand, service provider or retailer. Of the respondents who said they were not completely loyal, four in 10 (41%) said that getting a better price would encourage them to switch brands, service providers or retailers. While price was the major switch incentive for more than half of North Americans (61%) and Europeans 54%), price and quality were equal switch motivators among roughly one-third of respondents in Asia-Pacific and Middle East/Africa. Quality
was cited as a reason to change allegiance among 28 percent of Latin Americans, 22 percent of Europeans and 20 percent of North Americans.

Download complete copy of the report here

 

About the Nielsen Global Survey

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. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or 10 million online population for survey inclusion. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.

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