Customers more loyal to retailers over products

Customers more loyal to retailers over products

11-Dec-2013
A report from the market research organisation, the Nielsen Global Survey of Loyalty Sentiment, has examined the reasons why consumers switch brands, service providers or retailers.


The Nielsen Global Survey of Loyalty Sentiment polled more than 29,000 Internet respondents in 58 countries to evaluate consumer views on loyalty levels across 16 categories that ranged from fast-moving consumer goods staples to technology products to retail establishments. It found that, on average, more respondents professed to be ‘not loyal’ than completely loyal. Most respondents fell somewhere in the middle, claiming they were unlikely to switch brands or providers without a significant incentive.


Loyalty in food and beverage brands is low


Nielsen said its findings suggest a direct link between the frequency of purchase and the level of loyalty to that category. For everyday use products, ongoing decision-making often changes the relationship. Food and beverages categories reviewed showed the lowest levels of loyalty on a global scale (respondents said they were not loyal and likely to switch). Four in ten (43 per cent) of consumers said they were likely to switch between alcoholic beverages, 39 per cent for snack brands, 38 per cent for carbonated beverages and 37 per cent for cereal brands.


For food and beverage products, regional non-loyalty levels were highest in Europe, where 46 per cent of respondents said they were not faithful to snack brands such as candy, cookies, chips and sweets (only 10 per cent claimed complete loyalty). This was markedly lower than other regions. In the Asia-Pacific region, 37 per cent of respondents said they were not loyal to snack brands.


Forty-two per cent of respondents in Europe also said they were likely to switch cereal brands, and 43 per cent claimed disloyalty to carbonated-beverage brands.


“High levels of promotion offered in snacks and beverage categories, particularly in Europe, condition consumers to shop around for deals,” said Julie Currie, Senior Vice President Global Loyalty, Nielsen. “Retailers can reverse the impact of falling basket values and lower trip frequencies by better connecting with the unique needs of their shoppers,” she said.


Loyalty levels for retailers is higher


Importantly, Nielsen said the relationship between the provider and the brands they sell could be quite different. In the grocery sector, respondents expressed more loyalty to the retailer (globally, 74 per cent said they were loyal to a grocery retailer) than they did to brands (an average of 61 per cent loyalty across the categories surveyed). By contrast, 76 per cent of all respondents professed loyalty to a mobile phone provider, which was aligned with 75 per cent who also said they were loyal to mobile phone brands. For online retailers, global switching sentiment was higher (39 per cent claimed non-loyalty) than for other retailers and service providers measured.


Nielsen said its report “identifies the loyalty program attributes that potentially have the most staying power”.


Australian Food News reported earlier in November that loyalty programs run by  Australian supermarket groups Woolworths and Coles now have nearly 10 million members.


Loyalty can ‘make or break’ a brand or store


Earning customer devotion to a brand or store takes more than just offering a good product, according to Nielsen. Price, packaging, customer service and reputation are just some of the factors involved in a consumer’s decision-making process. But getting to the heart of what makes a consumer stick or switch can be the difference between flourishing and fading.


“There is a strong link between the way consumers describe their loyalty habits and the way they subsequently buy — so even comparatively small shifts in what consumers say can manifest in big changes in what they do,” Ms Currie said. “While there is some consistency around the world in loyalty sentiment within categories, across retailers and service providers, there are also notable differences — especially for consumable products and in the online retailing space, where the likelihood to switch is great,” she said.


Other findings include:

- Incentives that stimulate switching behavior.

- Loyalty program prevalence and patronage go hand in hand.

- Loyalty program benefits that matter most.

For the original article from Australian Food News click here.