More UK consumers (72%) than Europeans (61%) say loyalty schemes – marketing programmes that reward members with purchase incentives – are prevalent where they shop. But proportionally fewer of these UK consumers say they are more likely to visit those retailers (68% versus 72%) – according to a new study by Nielsen, a leading global provider of information and insights into what consumers watch and buy.
The survey also revealed savvy UK shoppers are somewhat fickle when it comes to loyalty schemes, with 50% stating that they are willing to discard or not join a scheme if the benefits are not strong enough to encourage them to earn the rewards (compared to 42% across Europe).
Shoppers in the UK and Ireland are the most likely in Europe to be encouraged by a better price to switch brand, service or retailer. Some 67% said a better price would be the one attribute that would encourage them to switch, compared to only 54% of respondents across all of Europe who said it would. Better quality was more important to them.
“While the concept of loyalty is nothing new, we are seeing a significant surge in retailers investing in loyalty programmes that give them valuable insight into how to better meet customer needs,” said Nielsen loyalty director Adrian Baker. “Savvy retailers are mining the data and looking for new and innovative ways to achieve the benefits most important to their customers.”
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 including fast-moving consumer goods, technology products and retail establishments. Nielsen found that, on average around the world, more respondents claimed to be not loyal than completely loyal to brands, service providers and retailers. Most respondents said they were mostly loyal, or unlikely to switch brands or providers without significant incentives.
Loyalty programme benefits in UK
According to Nielsen’s survey, 80% of UK respondents said that ‘discounted or free products’ was the most valuable loyalty programme benefit. Free shipping, exclusive products or events, and enhanced customer service were important to 33%, 24% and 19% of UK respondents, respectively.
Chart: What loyalty programme benefits matter most to you? (% of UK respondents)
(Source: Nielsen Global Survey of Loyalty Sentiment, 2013)
“In markets where loyalty programmes are long established, customers tend to be savvy about copy-cat promotional offerings that don’t offer unique advantages,” said Baker. “Particularly in developed loyalty markets, like the UK, retailers and manufacturers need to work together to offer exclusive awards that cut through the clutter. New and innovative concepts, especially in the online space, that connect with how consumers want to shop are proving to be most effective.”
Loyalty sentiment highest for financial institutions; lowest for FMCG snack brands
Nielsen information shows that 20% of UK respondents claimed complete loyalty to financial institutions, and 17% to both mobile service providers and mobile phone brands.
From the 16 categories covered, UK respondents reported the lowest levels of loyalty to snack brands and home appliance brands, where 54% said they were not loyal and likely to switch brands in both these categories. In addition, 44% of UK respondents said they were not loyal to online retailers.
Baker said: “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. While there is some consistency around the world in loyalty sentiment within categories and 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 greater.”
Loyalty in Europe
For food and beverage products, non-loyalty levels were higher in Europe than in any other region in the world: 46% of respondents said they were not loyal to snack brands, 43% said they were not loyal to carbonated beverage brands and 42% were likely to switch cereal brands.
“High levels of promotions offered in snack and beverage categories, particularly in Europe, can condition consumers to shop around for deals,” said Baker. “Retailers can reverse the impact of falling basket values and lower trip frequencies by better connecting with the unique needs of their shoppers.”
Incentives to switch
According to Nielsen’s survey, 67% of UK respondents (compared to just 41% globally) said getting a better price would encourage them to switch brands, service providers or retailers, followed by better quality (14%), a better service agreement (9%), better selection (8%) and better features (2%).
“While good prices may initially offer consumers enough motivation to change allegiance to a new product, it won’t keep consumers for long if the product doesn’t deliver on its promise,” said Baker. “Getting the price/value equation right, having products in stock, and offering a satisfying shopping experience are vital ways to build long-lasting customer loyalty.”