We live in an age where the ‘Consumer is King’ and as such we hold all the power when it comes to the kind of products, services and brands we choose.  But has this always been the case? When did the direction of a business ultimately become determined by its customers?

The digital age had a lot to do with it.  The advent of online retailing meant businesses could benefit from a cheaper way of selling their products, allowing them to pass these savings onto their customer.  Consumers were afforded a much greater freedom of choice as we became empowered to conveniently ‘shop around’ at the click of a button.  This in turn, encouraged greater competition with businesses vying to provide customers the best offers, savings, service etc.

When the recession hit the public’s number one priority was how to save money, and the notion of brand loyalty was getting lost in the shadow of own brands, online savings and multipack offers.  But did brand loyalty survive the ashes of the recession?

Brand, or customer loyalty has long been recognised as the magic ingredient in the recipe for business success.  Since it is cheaper and easier to sell more to existing customers than to pursue new ones, many businesses have invested heavily in loyalty schemes that reward customers who make repeat purchases with points and vouchers that they can redeem for additional goods and services.  This has been a major tactic of businesses to help cultivate and keep brand loyalty alive, particularly since the recession, which has made a lasting impression on people’s purchasing habits. But are loyalty programmes actually encouraging customers to stay loyal to certain brands?

According to Rachel Barton, managing director, advanced customer strategy at Accenture Strategy, “Customer loyalty as we know it today is dead.” Its latest report, Seeing Beyond the Loyalty Illusion: It’s Time You Invest More Wisely states that 83% of UK consumers are retracting loyalty at profit-crushing rates, despite an estimated 92% of UK adults have at least one loyalty card, according to YouGov.

Barton continues: “Traditionally, the drivers of customer loyalty were product, price and service. But they are no longer differentiators in our fast-moving digital world. Consumers are moving away from transactional-based reward schemes to a much more experiential type of loyalty where they want to engage with a brand and form a relationship.”

Key findings of the research show that:

  • 54% of UK consumers feel loyal to brands that present them with small tokens of affection, such as personalised discounts, gift cards and special offers.
  • 44% stick with brands that interact with them through their preferred channels of communication.
  • 34% were faithful to brands that offer them the opportunity to personalise products.
  • 37% of UK consumers are loyal to brands that actively engage them to help design or co-create products or services.
  • 35% are committed to brands that actively support shared causes, such as charities or public campaigns.
  • 19% follow brands that partner with celebrities.

So, how do businesses move forwards given the high expectations of today’s consumer? How do they keep up with the changing views and expectations of what a brand experience should feel like?

Barton advises: “Rewards alone are never going to make you the brand of choice,” she says. “So, start to think about how the reward element can layer into a broader engaged relationship. How can you create a set of experiences, a set of surprises and a set of tokens of appreciation that make the consumer feel as though they are genuinely valued in all parts of their relationship with you, rather than just at the point when they make a transaction?”

This research should certainly provide businesses with food for thought when planning their marketing and communications strategies.  We live in an age of daily change where nothing stays the same for long, including customers’ needs and wants.  Nowadays, brand loyalty can be achieved but the question is how long can it be held for? Social media can play a vital role in creating this personalised brand experience, allowing businesses a way to listen to their customer and creating tailored offerings to show that they are valued.  However, adaptability is key to ensuring a healthy and enduring customer relationship – businesses need to continually re-evaluate their approach in order to enjoy repeat custom in the future.

If you’re looking at ways to manage PR in a changing manage PR in a changing retail environment contact The Tonic Communications here.