Navigating loyalty in a shifting consumer landscape
Simply put, loyal customers are valuable to brands because they generate ongoing revenue, provide referrals and cost less to retain compared to acquiring new customers.
Given these compelling statistics, it’s clear that loyal customers are crucial for brands. However, the only constant is change, and consumer behaviors are continually shifting. To keep your loyal customers returning, you must stay ahead of these changes and understand what drives their purchase decisions.
Customer loyalty is undoubtedly a top priority, and for good reason. Consider this:
- Despite a turbulent economy, 63% of consumers are willing to pay more to shop with the brands they’re loyal to.3
- A company’s biggest fans purchase more and spend more — $132 per month on average vs. $71 for non-fans.4
- A 5% increase in customer loyalty increases profits 25% to 95%.5
Saving motivators for consumers worldwide
seek lower prices
switch products/brand
reduce overall spending
switch stores
switch size
prioritize needs
Source: NIQ, “2024 consumer outlook.”
Loyalty and shifting shopper dynamics
Consumers continue to face economic challenges as wage growth is anticipated to lag behind consumer price inflation in most markets, including France, Japan, Germany, the U.S. and Spain. However, Italy and the U.K. show a more optimistic outlook, with wage growth expected to outpace inflation rates. Let’s explore how economic challenges and other external factors are shaping trends in consumer behavior and loyalty.
Trend 1 Consumers are buying less
Rising inflation and economic uncertainty are prompting consumers to become more price-conscious and reduce their spending. Many are managing their finances by relying more on credit cards or tapping into their savings. However, as these savings dwindle, their spending power will diminish, leading to a focus on essential purchases.
Tip: Enhance your return policy for a better customer experience. Offer a seamless and generous return policy to address financial pressures. Making it free and fast will provide shoppers with much-needed flexibility during the cost-of-living crisis. This approach not only supports customers in their time of need but also enhances loyalty by showing that your brand understands and responds to their challenges.
Trend 2 Customer loyalty is decreasing
Maintaining customer loyalty will continue to be a challenge due to global cost-of-living pressures. Shoppers are turning to private label and challenger brands for better pricing and availability, even if it means compromising on quality or innovation.
Tip: Leverage specialized contact center agents to enhance customer loyalty. Retail brands understand the crucial role of contact center agents in shaping customer loyalty. Partnering with a leading CX BPO provider ensures access to the best agents, specially trained to be brand ambassadors. These agents can offer personalized interactions that boost satisfaction, loyalty and customer lifetime value.
Trend 3 As consumer loyalty wanes, strategic partnerships grow
Shoppers are choosing companies and products that align with their personal values and needs. To retain customers, retailers are innovating their offerings and building advocacy through partnerships with other brands. These collaborations help to differentiate a brand while also providing better shopping experiences.
Tip: Focus on finding the right partners to enhance your brand’s value proposition. Identify brands that share your target audience but offer non-competing products. Develop co-branded marketing campaigns and joint promotions that highlight the benefits of the collaboration, thereby attracting and retaining customers.
Trend 4 Further merging of the physical and digital
Cutting-edge technologies like GenAI, AR, and VR are further merging physical and digital shopping experiences. Consumers now transition seamlessly between in-store and online experiences, using digital kiosks, self-checkout, mobile apps, digital payments and curbside pickups. This shift is driven by a tech-savvy generation that values innovative shopping experiences and expects seamless integration of traditional channels with everyday tech, especially smartphones.
Tip: Expand your omnichannel presence for greater availability and convenience. Ensure your products are accessible across various channels — online, in-store and through mobile apps. Implement and manage a robust omnichannel strategy, meeting customers wherever they prefer to shop and enhancing their overall experience.
Key takeaways
Expand and optimize omnichannel presence. Implement and manage a robust omnichannel strategy to ensure your products and support are available across various channels — online, in-store and through mobile apps — to meet customers where they prefer to shop.
Empower contact center agents to be effective brand ambassadors. Provide thorough training and development to ensure they deliver personalized, empathetic service that enhances customer satisfaction and loyalty. This investment will boost customer lifetime value and strengthen your brand’s overall CX.
Develop strategic partnerships and embrace technology. Form strategic partnerships and integrate technologies like AR, VR and GenAI to further merge physical and digital experiences. These efforts will help you provide seamless and personalized customer interactions, ensuring a cohesive and enriched shopping experience across multiple channels.
3 Marigold, “2024 global consumer trends index,” meetmarigold.com.
4 Bain & Company, “Happier shoppers, higher spending.” bain.com.
5 Capital One Shopping Research, “Brand loyalty statistics,” capitaloneshopping.com.