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customer loyalty

How Loyal Are Your Customers?

It turns out millennial buyers are politically agnostic when it comes to brand and customer loyalty, wealthy households care less than lower-income households about data breaches, and influencer marketing strategies may not be strong indicators of influencing buying habits.

Brand loyalty indicators are challenging the status-quo as millennials become primary economic purchasers and boomers enter older age categories. In a wide-ranging Cicero Group Brand Loyalty Assessment, 3000 participants provided indications on brand behavior, purchasing decisions, online channel engagement, and content preferences. Even as millennials begin to take over as the largest economic driver, boomers still retain massive influence over traditional approaches to brand marketing. The Brand Loyalty Assessment reveals some consistently understood loyalty indicators, such as robust return policies and free shipping, continue to drive loyalty across all demographics. But new indicators such as data breaches, social media channel usage, product innovation, and political alignment disrupt common conceptions about what drives brand loyalty.

“The drivers of brand loyalty are shifting dramatically,” said Lawrence Cowan, senior partner and lead of the customer insights and analytics practice at Cicero Group. “Brands who choose to focus on legacy preferences might completely miss the overall picture. It takes a broad view, and the capability to derive insights from large data sets to truly understand how to keep customers loyal in a fractured, and competitive, business landscape.”

 

How Loyal are buyers?

Customer experience drives brand loyalty. Prior to digital purchasing habits, a buyer was limited in interactions and information received about a company. Corporate governance, customer support, and pricing were often the most important factor for a business in determining who their ideal customer is and what they intend to purchase. Cicero Group’s research built on the foundations of brand loyalty to consider product innovation, social and political influences, digital marketing and branding, quality and shopping experiences to round out the modern measurement of brand loyalty.

 

• Consumer sensitivity to data breach events at a brand is influenced by household income (HHI) with lower HHI segments indicating heightened scrutiny over these types of events, relative to their higher-earning counterparts.
• Major ethical scandals have the potential to drive significant negative impact to brands as most consumers suggest a good possibility that they would no longer be loyal to a brand that has company leadership involved in a major ethical scandal.
• Lagging frequent product launches (i.e., at least once a year) will likely have more of an impact on millennials while gen-x thinks there is a very low possibility that their loyalty would be affected.
• Gender distinguishes concern over the collection of personal information during shopping, with more women expressing certainty they would no longer be loyal to a brand if their personal and shopping information is being collected.

 

Purchasing Decisions

It’s clear that the “Amazon-Effect” has taken hold to buy decisions across the spectrum. “Free shipping” dominates consumer response to questions surrounding the drivers of purchasing decisions. As digital purchasing channels continue to expand, it will be critical for brands to understand and balance the critical factors influencing these purchase decisions. For example, we uncovered other leading indicators of importance such as price compared to substitute products, online star ratings and the number of reviews. Balancing the focus on these factors will likely determine potential demand for various target segments.

 

• Free shipping may only drive loyalty for specific segments, such as baby boomers, but we less influential for others like millennials.
• Conversely, star ratings are twice as important to millennial buyers vs. boomers. Endorsements by celebrities or social influencers promoting a brand continue to prove successful, but negative opinions from these influencers are less impactful to brand loyalty with most consumers indicating there is only a slight to no chance that negative opinions from influencers affect loyalty.

 

The most engaging channels and topics of interest

Channel engagement continues to shift away from news media outlets as the primary source for information consumption, towards social media where many consumers engage several times per day, even every hour. Second to social media sites are weather sites, with the majority of consumers checking in at least once per day. What is lagging in the digital channel are dating sites such as Tinder, Match or eHarmony, lagging behind 14 other categories.

Of course, we continue to see a strong trajectory for engagement with streaming services, lead out by YouTube.

 

• LinkedIn engagement is driven by higher earning professionals with a majority of consumers making $100,000+ on LinkedIn. In fact, higher income households are two to three times more likely than HHI of <$50,000 per year to be on LinkedIn.
• Age influences Facebook engagement with a majority of consumers older than 26 engaged on Facebook, but 18-25 primarily turn to Instagram.
• Additionally, age impacts streaming music engagement with boomers 11x more likely to listen to Pandora versus Spotify.

 

Considering the charged political environment, it comes as no surprise that news and current events are the most browsed topics online. News and current events are also primarily browsed by boomers, as are travel and leisure websites. Viewing habits vary by age category and HHI.

 

• Family and parenting is one of the least consumed topics and interests (especially when compared to cooking and gourmet).
• Higher income households are more likely to consume news and current events.
• Boomers are twice as likely to consume travel and leisure versus technology.
• Millennials are more likely to consume hunting, fishing, and guns versus boomers.

Lawrence Cowan is the COO at Cicero Group.

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