What retailers don’t know about customer loyalty

But what happens when retailers structure their loyalty programmes without a true understanding of their customers’ behaviour and preferences?

To illustrate a more accurate picture of consumer perceptions on loyalty, Oracle Retail published Retail 2018: The Loyalty Divide, based on a global research study across retail, hotels and restaurants, which surveyed more than 13,000 consumers and 500 brands across 10 countries.

There is no one-size-fits-all loyalty solution – every distinct personality type breeds a unique style of brand loyalty behaviour

The research found that, although 58% of retailers believe consumers will sign up for every programme on offer, in reality they are more discriminate, with nearly 70% of consumers indicating that they limit their participation, or rarely sign up for offers at all.

What’s more, nearly 60% of retailers believe what they’re sending consumers is relevant, but only 32% of consumers say the same.

This divide calls for retailers to reposition their thinking and develop more engaging programmes, but they first need to understand the mindset that drives these consumer loyalty perceptions.

Successful loyalty programmes aren’t all the same

The research found that there is no one-size-fits-all loyalty solution – every distinct personality type breeds a unique style of brand loyalty behaviour.

Four distinct typologies were identified:

1. First is the ‘broadcaster’, who may flit between brands but, regardless of their experience (good or bad), shouts it from the rooftops.
2. The ‘seeker’ is a consumer who shops around for the best deal and holds little to no affinity with brands, with 66% of consumers saying they choose retailers based on their competitive pricing and promotions.
3. There is the ‘enthusiast’ – an engaged retail brand follower who’s fiercely loyal, but not at all vocal about their brand experience.
4. Lastly, the ‘lazy loyal’ is an unengaged consumer who tends to be brand loyal simply because it is easier.

Of these consumers questioned, 60% say conveniently located stores are the most important factor when shopping, and 72% desire an effortless loyalty programme where rewards are automatically redeemed.

When taking these patterns into consideration, it is important to know that consumers don’t always follow just one typology.

The future of loyalty will rely heavily on a deep understanding of consumer behaviours

It is possible that a millennial living in New York City may be a broadcaster with apparel brands, always sharing their experiences on social media, but a lazy loyal to their local grocery store simply because it requires the shortest commute.

Loyalty fit for the future

The future of loyalty will rely heavily on a deep understanding of consumer behaviours combined with advanced retail science and technology solutions that allow companies to make better decisions, predict consumer typologies and deliver relevant and memorable experiences.

When this approach is applied correctly, it yields an impressive set of business outcomes and will allow us to return retailing back to what it has always been – one of the most compelling and fulfilling parts of our lives as consumers and individuals.