Past purchases are no indication of current or future brand loyalty
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.”
- Why the future of loyalty is built on good habits – Econsultancy
- How Low Will Brand Loyalty Go? – Winsight Grocery
- The pandemic has destroyed customer loyalty – MarketingTech
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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29 Comments on "Past purchases are no indication of current or future brand loyalty"
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Principal, Retailing In Focus LLC
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.
Founding Partner, Merchandising Metrics
Sometimes insights are best expressed in the wisdom handed down from ancient philosophers. In this case Tom Cruise gave us, “Show me the money!”
Chief Accelerant at Incendio & Forbes Contributing Writer
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.
Lead, Kearney Consumer Institute
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.
President, The Ian Percy Corporation
You are so so right Katie! Brilliant comment.
Managing Partner Cambridge Retail Advisors
Founding Partner, Merchandising Metrics
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.
CEO, Currency Alliance
Chief Strategy Officer, Hoobil8
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?
Director, Retail Market Insights, Aptos
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.
Principal, KIZER & BENDER Speaking
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.
Managing Partner, Advanced Simulations
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?
Strategy & Operations Transformation Leader
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.
SVP Global Marketing, Fluent Commerce
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.
President, The Ian Percy Corporation
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.
President, Global Collaborations, Inc.
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.
Chief Amazement Officer, Shepard Presentations, LLC
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.
Founder, CEO, Black Monk Consulting
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.
Vice President, Research at IDC
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.
Contributing Editor, RetailWire; Founder and CEO, Vision First
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.
Chief Data Officer, CaringBridge
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.
President, Rubinson Partners, Inc.
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.
CFO, Weisner Steel
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.
Co-Founder & Partner, Ascendant Loyalty
Retail Industry Thought Leader
Chief Executive Officer, Quotient
Founder & CEO, HotWax Commerce
I agree that repeat purchases are becoming a less significant determiner of brand loyalty. Customers mostly purchase from the same brand because they have got acquainted with how the brand’s going to serve and the experience over time seems predictable. They will switch the moment they find another brand offering something similar with a better experience.
So to determine the accurate value of brand loyalty, brands here should focus on two elements: customer engagement and advocacy. Customers don’t like disconnected experiences and want brands to engage with them on a daily basis. Again, brands can’t solely depend on email or social media campaigns to drive engagement. They would need to find the right KPIs for customer engagement and spread awareness without being spooky. Secondly, customers always look for peer reviews and word of mouth. Which calls for brands to build boost brand advocacy. They should leverage micro-influencers and build trust among customers.