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Customers aren’t as loyal as they used to be, but new data hints at what brands can do about it
SAN FRANCISCO – November 19, 2021 – It’s harder than ever for brands to win the loyalty of American shoppers, according to new survey data released today from Formation, the pioneer in machine learning-powered dynamic offer optimization. The new survey looked at what brands can do to create stickier relationships with customers and which brands are currently succeeding at this.
The survey of more than 1,000 U.S. adults, conducted by Propeller Insights on behalf of Formation in September 2021, found that consumer standards for loyalty are changing and brands need to adapt or risk being irrelevant and losing share of wallet.
“Modern shoppers have a wide range of options and expect a seamless, personalized purchase and loyalty experience,” said Christian Selchau-Hansen, co-founder and CEO of Formation. “Brands must foster emotional connections with their customers to create long-term loyalty, and personalized offers are an effective way to do that.”
Customers are not as loyal to brands as they used to be
More than two-thirds (69%) of Americans surveyed either changed brands entirely or branched out to new brands when shopping post-COVID. Shoppers are most easily lured away to a new brand by lower prices (60%), free shipping (50%) and free gifts (39%).
But brands also lose customers to inadequate customer service and impersonal shopping experiences:
- 83% of people have tried or would switch brands because of poor customer service
- 66% would consider trying a new brand because of a poor customer experience
- 42% of people expect in-person shopping experiences to be more personalized after a year of digital shopping
Brands need to personalize their loyalty programs, too
Almost half (48%) of American shoppers agree that having a loyalty membership program increases their overall spend with a brand.
The top three reasons people join loyalty programs include:
- They enjoy receiving special offers (64%)
- They feel the brands they engage with represent their taste (34%)
- They like being part of an exclusive membership group (27%)
On the other hand, they are most likely to unsubscribe from loyalty programs when the offers aren’t relevant (42%), they get too many emails (40%), or when they are offered big but infrequent rewards instead of small, repeated gains and incremental rewards (26%).
Brands that lead the pack on loyalty
When it comes to travel brands that excel at personalized offers and experiences, survey respondents ranked United, Delta and Southwest highest among airlines.
Marriott, Hilton and Holiday Inn were the top three picks for hotel brands.
Among retail brands, Walmart, Amazon and Target had the stickiest loyalty programs.
Kroger, Aldi and Amazon Fresh lead the pack for grocery brands.
And when it comes to quick-serve restaurant brands, McDonald’s, Starbucks and Burger King send their customers the most relevant offers, according to the survey.
“It’s no surprise that a brand like United is already using dynamic offer optimization have top loyalty programs,” added Selchau-Hansen. “Personalization isn’t about making sales. It’s about deeply engaging customers in meaningful ways that foster long-term relationships.”
Formation helps brands build deeper relationships with every customer, beyond the transaction. Our patented Dynamic Offer Optimization Platform leverages brands’ first-party data to automatically generate each customer’s offer with the best action and reward and then manages the deployment, measurement and fulfillment of each offer across the marketing stack. Brands that use Formation see 3X revenue lift, 2X more engagement and 10X faster time to market with their offers. Formation powers offer optimization for some of the world’s largest brands, such as United Airlines, Giant Eagle and Smiles. For more information, visit formation.ai. Formation also supports a community of digital and marketing leaders called Loyalty Innovators. For more information, visit loyaltyinnovators.com.