Past purchases are no indication of current or future brand loyalty

Discussion
Photo: @lira_n4 via Twenty20
Feb 08, 2022

New research finds low levels of perceived loyalty by consumers towards brands and concludes that at least some brands are confusing repeat purchasing with loyalty.

The joint research, “The Loyalty Paradox: How to Create Connected Experiences That Keep Customers Returning,” from UK-based digital consultancy Kin + Carta and first-party customer data providers Edit, argues brands should create a balanced scorecard that looks at purchase RFV (recency, frequency, value), alongside key engagement measures, such as:

  • How and where customers interact;
  • If they follow the brand socially; 
  • Whether they regularly engage with content; 
  • If they are subscribed/signed up-to communications and if they open them; 
  • Whether they open feedback.

The scorecard should also take in advocacy (i.e., whether they actively promote the brand and refer it to friends).

Using this loyalty criteria, a survey of 2,000 consumers split between the U.S. and UK exploring loyalty, personalization and customer experience across a broad range of sectors determined more than a quarter (27.4 percent) showed no brand loyalty at all. Among the sectors, e-commerce scored the worst, with only six percent of consumers claiming loyalty to brands within that vertical versus 21.5 percent for offline retail – food and drink and 12 percent for offline retail, excluding food and drink.

Key factors at play in keeping consumers attracted to a brand were found to increasingly relate to the “control and choice they have around interaction.” Kin + Carta said this is somewhat expected given the freedom online purchasing has given buyers while reducing the bonds to physical service factors, which had anchored consumers to their preferred establishments.

Gary Arnold, customer data director, Kin + Carta, said in the report, “Once they have a better definition of ‘loyalty’ which moves beyond repeat purchase, it’s possible to identify the common traits of this core ‘loyal’ audience and use that to drive acquisition and retention strategies more tailored to them.”

DISCUSSION QUESTIONS: Have habitual purchases become a less reliable indicator of brand loyalty? Have engagement and advocacy become significantly more important factors in fostering loyalty with the continued advancements in online selling and engagement?

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"The best thing we can do is be more realistic that consumers don't owe anything to brands."

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29 Comments on "Past purchases are no indication of current or future brand loyalty"


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Dick Seesel
BrainTrust

As the old saying goes, “Put your money where your mouth is” — or, in today’s world, where your engagement is. Frequency of clicks onto a particular retail website means little if the consumer isn’t spending money there.

Yes, engagement metrics are more important than ever but they are only a good predictor of customer loyalty when combined with the traditional measure of RFV. The broader question of “site loyalty” (e.g. Amazon) versus loyalty to a specific brand deserves more understanding, too.

Jeff Sward
BrainTrust

Sometimes insights are best expressed in the wisdom handed down from ancient philosophers. In this case Tom Cruise gave us, “Show me the money!”

Jenn McMillen
BrainTrust

This turns predictive modeling upside down, as repeat purchase has been a mainstay variable. But I’d like to know the ages of those who participated, as brand loyalty definitely manifests differently by age groups.

Katie Thomas
BrainTrust

We conducted research and found similar results – that only 22 percent of consumers never or rarely purchase a competitive brand from one they’re loyal to. We have this obsession with referring to “loyalty” of consumers – and I’m not sure why! In some ways, it’s semantics but I think it would be great to move away from this language. Similarly with the prompted questions – you can’t force consumers to engage with and advocate for your brand, particularly in a way that seems authentic. And loyalty is built through emotional connections with the brand that can’t be manufactured (e.g., my grandma always bought Coke and we drank them on her porch together).

The best thing we can do is be more realistic that consumers don’t owe anything to brands.

Ian Percy
BrainTrust

You are so so right Katie! Brilliant comment.

Ken Morris
BrainTrust
RFM (recency, frequency and monetary) value has been around for 50 years, so we’re not fooled by creating a new acronym (RFV) to make us feel like it’s a groundbreaking study. Lifetime Value (LTV) is another term that is gospel. Any suggestion that these behaviors are not valuable is nonsense.  I believe that the best way to get customers back is through a personal connection with your target audience. Take Amazon for example. Everything they do is for the customer’s convenience. It is easy to buy items, rate your purchases, find similar purchases, and it is even easy to return. This is how Amazon can almost guarantee loyalty. Sometimes repeat purchasing signals scarcity, not loyalty. To avoid confusion about what loyalty should be, there’s a cute puppy in the photo to represent true loyalty. We’re in the tech business, so I won’t dis digital totally, but this study is all about digital footprint. Loyalty can’t be fully measured by a scorecard like this. Loyalty is measured customer moment by customer moment. When given a choice… Read more »
Jeff Sward
BrainTrust

There’s a difference between brand loyalty and brand advocacy. I can be loyal to a brand without being a social media advocate of the brand. I just made a purchase last week. I opened and read yesterday’s email. Just because I now don’t open a brand’s email for a couple of days doesn’t mean my loyalty is slipping. Patterns of past purchases offer a trend line of loyalty. Steady frequency, or increasing frequency or decreasing frequency all indicate a level of loyalty. To say past purchases are “no indication” of loyalty makes no sense.

Chuck Ehredt
BrainTrust
This research is helpful for those brands that report customer loyalty in a meaningless way. People build habits over time that can be very hard to break, but that can be confused with loyalty to the habits rather than loyalty to the brand. The engagement metrics cited are important to measure real affinity for a brand, and a customer’s willingness to help the brand grow or optimize its business in exchange for incremental value (soft and hard value). I do agree with the notion that loyalty to brands has declined overall, but averages are not good indicators in a complicated marketplace. Loyalty to those brands engaging with their customers on both rational and emotional factors has gone up in the past five years, while those brands that just put product on the shelf and promote it with shotgun methods are in a more precarious position now than at any time in history. There are so many competitors, new technologies, and new business models coming into the market every year, that brands really need to operate… Read more »
DeAnn Campbell
BrainTrust

With our access to a world of choices brand loyalty has never been more elusive, especially with online shoppers. Even customers who have regularly purchased from the same company can be tempted away by a viral Instagram post or TikTok video. The wild card of social media peer influence is something brands and retailers can’t control. But at the end of the day, does loyalty matter if it doesn’t result in a sale at some point? Content engagement, opting in to communication and return visits are a great indicator of brand loyalty, but how long can you stay in business if no one eventually buys?

Dave Bruno
BrainTrust
I am not sold on all of the engagement metrics from this study as being defining indicators of shopper loyalty. I am a very loyal shopper of several retail brands that I rarely, if ever, visit their websites for any reason but to shop, do not follow on social media, do not write reviews for, and do not engage with their content. I am extremely loyal (with a relatively high RFV score) to these retailers because they offer the assortments and experiences I seek, at what I deem to be fair prices for the value I receive. As a marketer for 30 years, I appreciate and value the role of digital and social marketing as part of a holistic brand marketing strategy, but I have never been convinced that engagement equates to loyalty. This may reveal my status as an aging Boomer, but I still believe that getting the right products in the right place at the right time is the key to loyalty, and IMHO habitual purchases are an important indication that you’re getting… Read more »
Doug Garnett
BrainTrust

We have vastly overstated the value of brand loyalty. As Byron Sharp has observed, the true consumer behavior is one of brand polygamy. We might have tendencies to prefer one brand over another but circumstance, sales, out-of-stock, convenience and many other factors mean consumer brand preference ranks merely as one among many factors when it comes to purchase.

Retailers need to understand this in order to maintain realistic expectations of customers in response to their programs.

Georganne Bender
BrainTrust

If I am really honest, I am less loyal to companies than I am to the items/brands I buy. I go back to the places that have what I want and are easy to do business with. If the retailer makes the transaction hard I don’t go back, and I am going to guess that I am not alone.

Dr. Stephen Needel
BrainTrust

No – not in the brick and mortar world. This might only apply to e-commerce. And advocacy is just a ridiculous measure of anything – haven’t we learned this lesson from NPS measures?

Brandon Rael
BrainTrust

The purchase and customer journey path has become more fragmented and dynamic than ever. Every customer engagement and touchpoint has become a crucial part of the journey and enabler of customer loyalty. Brand engagement spans native apps, TikTok, Instagram, and other platforms in our digital-first world.

Customers are overwhelmed with brand engagement across physical and digital channels. Brands and retailers have to factor it into their strategies. The paradox of choice stipulates that we might believe that being presented with multiple options makes it easier to choose one with which we are happy and leads to increased consumer satisfaction. Having an abundance of options requires more effort to decide and can leave us feeling unsatisfied with our choice.

This is where an outstanding customer experience could lead to brand loyalty and repeat purchases, as customers are overwhelmed with choices.

Nicola Kinsella
BrainTrust

Engagement and advocacy measure a lot of things – like who your top influencers are – but just because someone doesn’t engage does not mean they’re not loyal. Advocacy is probably a better measurement of whether your customers are extroverts or introverts. A lot of other factors drive loyalty too. Like ordering and delivery/pickup experiences that meet or exceed customer expectations.

Ian Percy
BrainTrust

I’m with Katie’s comment that “loyalty” is totally the wrong word. It seems that retail can be a little too needy, longing for relationships. But it’s looking for love in all the wrong places. A purchase is not a sign of a relationship. We have enduring relationships with people, not with things. I am loyal to the woman who cuts my hair and if she went to another chain, I’d go with her. If sales people would recognize that how they personally serve and relate to customers is what generates actual loyalty and not the stuff on the shelves — it’d be a game-changer.

Camille P. Schuster, PhD.
BrainTrust

Habitual and loyal behavior are not the same. Habitual behavior is done without much thinking. Loyal behavior is an active choice. If we don’t know the distinction we are not asking the right questions to obtain data that creates understanding or helps us identify what influences the behavior.

Shep Hyken
BrainTrust

Our research is not far off from this. Loyalty is up for grabs. We asked how likely someone would be to switch from a company or brand they were loyal to after different types of experiences. Over 70 percent said rudeness, inconsistent information or the inability to connect with someone for support would cause them to leave. Tolerance of bad service is low. Even to the customers/consumers you think are loyal to you.

Ryan Mathews
BrainTrust

Habitual purchases are — well — manifestations of repetitive behavior and nothing more. A brand is a promise and the products that represent a brand are artifacts of that promise that either affirm it refute it. Ours is not a time when consumers or anyone else are bullish on promises or trust. Brand managers like to use proxies for loyalty because it keeps them from taking a hard look at how fragile their brands really are.

Ananda Chakravarty
BrainTrust

Loyalty is broader than just repeat purchases, but repeat purchasing does play a part. More importantly, loyalty is dynamic and can change based on new situations. Without other information, repeat purchasing can indicate some level of loyalty. However whether repeat purchasing has been surpassed by engagement or advocacy (or other factors) still needs validation. Buying an Apple iPhone may still be tied to comfort with the ecosystem and use of the phone. Buying cleaning solvent for the dishes may be different. Regardless, repeat purchases do impact brand loyalty positively – whether other factors outweigh it depends on so many other parameters for the consumer.

Patricia Vekich Waldron
Staff

The many data sources and new analytics techniques absolutely provide much better insight into the psychology – the “why” – of why consumers are loyal. Past purchases are just one data point.

RandyDandy
Guest
6 months 1 day ago
Brand loyalty, when it has to do with specific products, is surely a “thing.” (As long as that item, or group of items, remains consistently about the quality and cost that brought one to buy them in the first place.) Loyal shopping, when it has to do with a specific place, as in an actual, single store, is something, too. And it’s definitely something a shopkeeper—even a chain operation that can personalize individual locations (with, at the very least, consistent merchandising and staffing)—could and should want to capitalize on. Because constancy of transactions, by a loyal group, is fundamental for any and all businesses. Yes, some foundation is key. However, once you get really big, you tend to view your customers as cogs. In turn, they view you merely as a means to an end, and will look for others to get what they want if using you is no longer convenient—or in fashion. But fear not for them. They can afford putting in place algorithms to track who and what’s on track, or who… Read more »
Mark Price
BrainTrust

I am not sure that habitual purchases have ever been a reliable indicator of brand loyalty. Retailers are now suffering the consequences of years of treating customers like they were simply transactions, not people with specific needs that could be addressed on an individual or group basis. After treating customers like they are generics, retailer should not be surprised that the customers are treating them the same. The key to building real loyalty is to provide consumers with a sense that they matter as individuals, that they would be missed if they were not there, and that the company can provide them with specific resources and products to address their specific needs.

Joel Rubinson
BrainTrust

As soon as I see a survey is used to measure a behavioral concept when behavioral tracking is readily available, I get off the bus. What behavior modeling tells us (easily observable in CPG, but generalizable in principle) is that past purchasing is actually the best predictor of what someone will buy on an upcoming purchase. In fact, any A/B test that does not control for prior brand choice is practically useless.

I would reject this study. Repeat buying is highly predictable from prior behaviors that might not be interpreted by a consumer as “loyalty” but it is certainly influenced by habitual behaviors and what behavioral economists call non-compensatory decision making.

Craig Sundstrom
Guest

I disagree with the title: they’re not a guarantee, but certainly they’re an indicator of the likelihood of future purchases. So I guess we have an issue of semantics, and in that the pessimism is probably warranted. Few retail purchases are done out of “loyalty” … these are commercial transactions, not a personal relationship. A person may develop a relationship with a store’s employee(s), or like something about the building, or appreciate some facet of the business, but it’s strictly transitory. I wouldn’t call it loyalty.

David Slavick
BrainTrust
I honestly don’t know where to begin with both the “study” and the question posed. But let’s start here — RFM and LTV (Lifetime Value) are indicators or customer or member “worth” to the business entity. Repeat purchase is not in and of itself an indicator of loyalty, affinity or NPS. For sure, understanding and capturing “big data” through all aspects of social engagement, influence metrics, referrals, product reviews, community, social sharing and so much more DO tell us that the brand matters to the customer/program member. However, and this is important people not all companies have the budget, infrastructure nor commitment to engage with fully “on” digital dialogue and measurement. Should they? Yes, ideally. But product, price, promotion, service, supply, omnichannel access is important as well. If you ask a customer, would you like the brands or services that you buy from to demonstrate appreciation for you and your unique needs, wants and desires PLUS “interact” optimally of course they will say yes and % reported in the research will reflect this obvious point.… Read more »