Consumer brand loyalty at record low
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Global loyalty-marketing agency ICLP has found that consumer brand loyalty to retailers has dropped to a record low in Hong Kong.
A mere 1 per cent are “devoted” to their preferred retail brands, an ICLP survey shows.
The company surveyed 750 consumers in Hong Kong to rate their relationship experiences with friends, loved ones and brands using seven core criteria: recognition, rewards, reciprocity, reliability, respect, trust and communication.
ICLP partnered with a global authority on relationship dynamics, Professor Ron Rogge of the University of Rochester in the US, to create a model based on Sternberg’s Triangular Theory of Love which focusses on three key components of a relationship: intimacy (willingness to share information with a retailer), passion (brand enthusiasm) and commitment (loyalty). When incorporated into a retail context, these components become tools for brands to foster devoted relationships with consumers.
Relationships range from empty (the least desirable) through liking, casual, romantic and companionate to devoted (the most desirable). All customers in the devoted group would recommend a brand, demonstrating the value of a devoted consumer base for word-of-mouth business.
Significant variation
Levels of advocacy vary significantly in the other five relationship groups. Only 6 per cent of customers in a “liking” relationship would recommend a retailer to others, with 26 per cent in an “empty” relationship, 21 per cent in a “casual” relationship and 50 per cent in a “companionate” relationship.
“Romantic” relationships, which Sternberg says are characterised by high levels of passion and intimacy, have a 74 per cent inclination to recommend brands.
But as only 1 per cent of customers are at devoted level, retailers need to develop a deeper relationship with customers, says the study.
It says loyalty programs are a major factor in driving spending, with 75 per cent of consumers surveyed saying they would shop more often with brands that have a loyalty program.
Loyalty programs are more significant than traditional points-based reward programs, says the survey, which offers advice for retailers to help them inspire more “devoted” customer relationships…
Foster brand advocacy: All “devoted” customers would recommend a retailer to others.
Create stronger rewards programs: Consumers in “empty”, “liking” and “casual” relationships may have lower expectations about reward programs, but 75 per cent of survey respondents say they would buy more if they were better rewarded.
““Romantic” relationships, which Sternberg says are characterised by high levels of passion and intimacy, have a 74 per cent inclination to recommend brands.”
Take time to understand customer needs: If retailers use their data to better understand individual shoppers’ needs, 69 per cent of those surveyed say they would buy more.
Build respect and trust among consumers: If treated with more respect, 63 per cent of respondents say they would buy more, while 55 per cent would also buy more if they had better trust of brands.
Improve communication with customers: With better communication from brands, 60 per cent of respondents say they would buy more.
“Buy with hearts”
“ICLP’s study is ground-breaking in understanding the key components of brand loyalty,” says Professor Rogge. “Interestingly, most of the respondents approached their relationships with favourite brands in a similar way to their personal relationships.
It seems that developing a strong and devoted relationship with a brand might not be so different from developing a strong and caring bond with another person.
“This suggests that people might buy with their ‘hearts’.
“This is exciting work, as it allows us to better understand and track the various types of brand loyalty and, at the same time, provide retailers with critical insights into targeting the needs and desires of consumers to promote greater loyalty.”
ICLP GM Mary English says brands are finding it hard to connect with their customers in a meaningful way. “The unprecedented level of choice available today has become a distraction for the consumer. Our research shows that consumers want the same from a brand as they do from their friends and loved ones- they want to build an emotional connection.”
English says that retailers seeking to build and maintain “devoted” customer relationships should begin to truly understand the emotional factors that drive consumer loyalty.
Questions & Answers
Q.What percentage of consumers are considered 'devoted' to their preferred retail brands in Hong Kong?
What percentage of consumers are considered 'devoted' to their preferred retail brands in Hong Kong?
Only one per cent of consumers surveyed in Hong Kong are considered "devoted" to their preferred retail brands. This low figure indicates a record low for consumer brand loyalty in the region, according to ICLP's findings.
Q.How did ICLP measure consumer loyalty, and what model did they use?
How did ICLP measure consumer loyalty, and what model did they use?
ICLP measured consumer loyalty by surveying 750 Hong Kong consumers on their relationship experiences with friends, loved ones, and brands. They used a model created with Professor Ron Rogge, based on Sternberg’s Triangular Theory of Love, adapted for a retail context.
Q.Which relationship groups are most likely to recommend a brand to others?
Which relationship groups are most likely to recommend a brand to others?
All devoted customers would recommend a brand, and 74 per cent of those in a "romantic" relationship would also do so. Even 50 per cent of customers in a "companionate" relationship would recommend a retailer.
Q.What is the most significant factor in driving spending, according to the survey?
What is the most significant factor in driving spending, according to the survey?
Loyalty programmes are identified as the most significant factor, with 75 per cent of consumers saying they would shop more often with brands that have such a programme. This factor is deemed more impactful than traditional points-based reward programmes.
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