Types of customer loyalty: What drives consumers to keep buying
Research from SAP Emarsys reveals the different kinds of customer loyalty drivers and how they're changing.
It’s hard to overlook the latest statistics. With some studies showing more than one in three customers are easily swayed by price or changing expectations, some companies are ready to pull the proverbial plug on building brand-based customer relationships.
Research by SAP Emarsys supports those concerns, showing that US brands witnessed a whopping 14% decline in customer loyalty between 2022 and 2023.
But even with this apparent decline, experts believe that brand loyalty hasn’t disappeared; rather, it’s just evolved.
“Consumers overall appear to be more willing to shop around than previously thought. This doesn’t necessarily mean that repeat customers and clients cannot be earned,” said David Villa, author and CEO of IPD marketing agency. “It does, however, indicate that gaining and retaining customers is more difficult and less common now than ever before.”
As brands grapple with this challenge, the question is: How can they carve a path toward building customer loyalty that lasts?
Beyond discounts: Rebuilding customer loyalty programs
One key strategy for building customer loyalty involves experiential loyalty platforms. These modern platforms encompass a suite of capabilities that go beyond the traditional loyalty programs of the past. Brands must recognize that consumers now expect more than just discounts – they crave experiences.
Key features of these advanced customer loyalty platforms include:
- Personalization: Tailoring experiences based on individual preferences is essential for engaging today’s customer. Using data-driven insights, brands can curate personalized offers and recommendations that resonate with each customer, on their preferred channels.
- Gamification: Infusing gamification adds a layer of fun and excitement to the customer journey. One study found that brands using gamification in their loyalty programs saw a 47% increase in client engagement, a 22% increase in brand loyalty, and a 15% increase in brand awareness. Points, badges, and challenges can transform mundane transactions into engaging experiences.
- Communication + engagement: Brands that want to build loyalty need a communication strategy that extends beyond transactional interactions. Engaging content, timely updates, and personalized messages contribute to a brand’s overall appeal.
- Feedback + surveys: Actively seeking and valuing customer feedback fosters a sense of involvement. Brands can leverage surveys to understand customer sentiments and preferences, driving continuous improvement.
- Data-driven insights: Brands that can derive actionable insights from customer data gain a competitive edge, allowing for more informed decision-making.
- Integration + convenience: Seamlessly integrating loyalty platforms with existing systems ensures a hassle-free experience for both customers and businesses. Convenience is key to sustaining customer interest.
Building loyalty via personalized, omnichannel customer engagement
In the information age, personalized, omnichannel engagement is a gamechanger for driving loyalty. Artificial intelligence, fueled by data from various customer touchpoints and the enterprise, plays a core role in this. Retailers can leverage technologies, such as cloud, AI, robotics, IoT, and VR/AR, to provide shopping experiences that customers will love.
For instance, generative AI presents a huge opportunity to fundamentally change the way businesses run by providing personalized customer-centric outreach that is accessible 24/7 and in the preferred form the customer wants to engage.
Advanced technology solutions infused with the power of business AI are opening up a realm of smart possibilities like predicting optimal product assortments, delivering seamless personalization in-store and online, anticipating demand across the supply chain, optimizing order fulfillment, and minimizing the cost of returns.
The mantra here is delivering the right message, on the right platform, to the right customer, at the right time. Brands that master this art create a customer experience that feels tailor-made, strengthening their bond with consumers.
In fact, some studies found that up to 80% of consumers will likely support a brand that offers a personalized experience.
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Standing out with sustainability
Retailers can build customer loyalty and see real business impact by integrating sustainability into their processes.
Research shows that almost 80% of consumers feel sustainability is an important part of considering a brand, and around 55% of those buyers are willing to pay more for eco-friendly brands.
Sustainability has long since moved beyond a buzzword to a significant factor influencing purchasing decisions.
Brands embracing eco-friendly practices, ethical sourcing, and community engagement not only contribute to a better world but also earn the loyalty of conscious consumers.
At SAP, we believe improved supply chain planning is a strategic part of expanding sustainability initiatives. SAP is introducing a predictive demand planning solution and store replenishment capability as part of our next-generation cloud suite of integrated solutions for retailers designed to increase service levels, profitability, sustainability, and margin.
Meeting new expectations head on
While diminishing customer loyalty may present hurdles, the evolution of customer expectations provides a fertile ground for innovation. Brands with a strategic vision can navigate these changes effectively.
The ability to adapt to evolving customer dynamics isn’t merely a response to challenges; it’s an opportunity for brands to redefine their relationships with customers and create lasting impressions in a hyper-competitive, constantly changing market.
