Some 68% of customers can be convinced to purchase a competitor’s brand.
Maritz Motivation Solutions, a provider of loyalty programs to U.S. and global companies, and The Wise Marketer have released a new report, “From Transient to Resolute: How Deep Does Loyalty Go?” providing insights on the depth of brand loyalty.
According to the Maritz-Wise Marketer report, based on data from a study of more than 2,000 U.S. consumers, 68% of consumers identify as “transient” loyalists, saying they can be convinced to buy a competitor’s brand. Just 29% of consumers identify as “resolute” loyalists who buy only their favorite brands. Three percent say they are “detached,” not loyal to brands at all.
“There is profound disruption in all verticals today, and this disruption includes how consumers are interacting with brands. This can create confusion, even paralysis, but it also presents opportunity. This new data reveals significantly more customer lifetime value is up for grabs than not. With so many consumers identifying as Transients, it’s critical that brands find a way to stand out, especially when service, quality and price are perceived as equal. The right loyalty strategy can break that tie,” said Barry Kirk, vice president of loyalty for Maritz Motivation Solutions.
When asked what types of brand incentives consumers would prefer in exchange for maintaining their loyalty, discounts, promotions and rebates were viewed as the strongest incentives and were far more preferred by those consumers whose loyalty is the most susceptible to disruption (65% for Transients, but only 48% for Resolutes). Resolute loyalists felt a stronger attraction to great products and consumer experiences (40%) than their Transient counterparts. (31%). When asked their primary reason for switching brands in a category, price was cited by only 41% of Resolutes, but by 57% of Transients.
“What we see in this data is a clear message that loyalty is no longer a simple binary consideration. It’s not just a matter of being loyal or not loyal, but how loyal. And for brands that develop strategies to shift their transient loyalist to being resolutely loyal, there are huge benefits to be enjoyed,” said Kirk.
The report is based on research that was conducted in 2017, both online and via panels, with a sample of 2,093 consumers aged 18 and up. Respondents were purchase decision-makers or key buying influencers in banking and credit card services, hotels, airlines, restaurants and specialty retail.
Other insights from the study include:
- Both consumer groups disengage from loyalty programs because of “program benefits being too difficult to earn” or they “took too long to earn.” Unappealing rewards and benefits is the number two reason, followed by the communications and offers are perceived not to be relevant (#3), and the program rules are confusing or unclear (#4). Resolutes specifically express the desire for the program to be exciting, fresh and evolutionary, and for more frequent program communications.
- The desire to earn rewards is ranked consistently in the top three reasons to join a loyalty program by both consumer segments. Resolutes also mention as motivators, identifying with the sponsoring company’s purpose and values, feeling part of a connected community, and the referring influence of friends and family.
- Fifty-two percent of Transients show a preference for cash-like rewards compared to 15% of Resolutes, implying that Transients will switch in an instant if a competitive brand offers a better deal. Experiential rewards and soft rewards benefits resonate most with Resolutes.
Based on these findings, the study recommends that brands realign their loyalty value proposition by:
- Elevating the customer experience through hyper-relevance and artificial intelligence (AI).
- Adapting their platforms to foster trust and commitment, not just drive transactions.
- Creating more meaningful ways to recognize and reward best customers.
“We’re very proud of this collaborative effort and the insights it has produced. As loyalty marketing becomes more complex it is critically important for brands and practitioners to lean on solid data and solid conclusions from that data, to strengthen their customer bonds. This study demonstrates the value of our partnership and is but the first of many we will produce together with the bright minds at Maritz,” said Bill Hanifin of The Wise Marketer.