A research report into UK consumers’ feelings of loyalty towards their favourite brands, and the factors that inspire that loyalty

Inspiring Loyalty

1 September 2007

Sienna, Italy

UK consumers feel a strong sense of loyalty towards their favourite brands
85% of adults say that they are loyal to their chosen brands, with a quarter rating that feeling of loyalty as ten out of ten
The top five ‘loyalty inspiration’ factors were:

Consistently high quality products
Helpful, knowledgeable staff
Easy to contact the company
Every aspect of the brand experience is enjoyable
Customers are recognised and valued when they make an enquiry

Fewer than 10% of consumers consider brand ‘cool’ or peer pressure to have a substantial affect on their brand loyalty
Most people’s favourite brands are in the Retail category, with 3-in-10 favourite brands being in this sector. In particular, supermarkets account for four in every five retail favourite brands.
1-in-5 favourite brands are in the Food & Drink category, and 1-in-8 are Financial Services brands — predominantly Banks

Introduction

Ever since the early 1990s, when loyalty schemes became a mainstream business technique in the UK market, sceptical commentators have had a field day expressing their doubts about their commercial efficacy. Do they work? Do they create a commercial uplift or simply subsidise customers who are not going to defect anyway? Are they just sales promotion in another guise? Indeed, do consumers actually experience this thing we call loyalty? How often do these commentators’ articles start with, “If you want loyalty, buy a dog…”

Interestingly, all this scepticism has in no way dampened the enthusiasm of British businesses in their keenness to set up more and more loyalty schemes. According to one seminal piece of research, the number of schemes has doubled in the last decade¹; this despite some high profile scheme withdrawals in the 1990s (HSBC Gold Card) and more recent defections from the Nectar loyalty consortium (Barclaycard, Debenhams).

Constructive Criticism

Delving deeper into the body of critical commentary on loyalty initiatives, a number of common strands emerge. They may be summarised as follows:

No dialogue. Developing a customer ‘relationship’ requires dialogue, where feedback from the customer is encouraged and acted upon. Most schemes only communicate one way.
Poor data-basis. Schemes gather data (transactional and descriptive) on customers but then do not use it either to make the dialogue with customers more relevant, or to identify additional products or affinity partners in which the customer is likely to be interested.
Channel schizophrenia. Loyalty initiatives are not properly joined-up across all channels to the customer. Channels encompass not only post, phone, email and web, but also face-to-face in-store — the point of contact most highly prized by customers but most often neglected by businesses².
No measurement. Loyalty initiatives need to produce commercial outcomes, but few schemes actively measure results. This is true both in terms of tracking the ‘customer journey’ from one value level to another (preferably higher), and in terms of using mystery shoppers to regularly test and audit the customer experience.
Commoditised rewards. Points-based schemes are often criticised for reducing rewards to some monetary equivalent and therefore taking away from the perceived value. A number of leading practitioners are now using customer insight to target special offers appropriately to each customer segment, often in collaboration with affinity partners who will create exclusive discounts in exchange for the ability to reach the scheme’s audience.

In large part, these criticisms are often found to be valid for a proportion of extant loyalty initiatives. They are important considerations, and provide a useful checklist for any firm running or contemplating a loyalty initiative. On the other hand, such valid points need to be differentiated from those of commentators who claim that there is no such thing as loyalty in the consumer’s mind.

Does Loyalty Exist?

In addressing this issue, arvato loyalty Services was surprised to find no recent studies into the validity of the fundamental concept of loyalty. Do consumers actually feel loyalty towards the brands they buy? If so, which categories are most favoured? In order to redress the balance, arvato loyalty commissioned a representative sample survey of 1,000+ UK consumers, weighted by gender, age and region. The study asked respondents the extent to which they felt ‘loyal’ to their favourite brands, then going on to ask which were their favourite brands.

signing a contract The abundantly clear first finding from the research was that UK consumers definitely do feel strongly towards their favourite brands. 85% of adults say that they are loyal to their chosen brands, with a quarter rating that feeling of loyalty as ten out of ten.

Respondents were also asked to name a second and third favourite brand, but the research findings show that loyalty towards their first mentioned brand is strongly ahead of the brands placed in second and third position.

Inspiring Loyalty

Respondents were then questioned about the aspect of a brand most important to inspiring and securing their loyalty. The top five ‘loyalty inspiration’ factors were:

Consistently high quality products
Helpful, knowledgeable staff
Easy to contact the company
Every aspect of the brand experience is enjoyable
Customers are recognised and valued when they make an enquiry

These results were consistent across both genders and across all age groups, with the exception of 18-24 and thirty-somethings, who consider their fifth most important factor to be how well ‘the brand’s image fits my personality’. These findings tend to scotch elements of received wisdom in brand promotion which focuses on how fashionable a brand is considered to be. Fewer than 10% of respondents to the arvato loyalty survey considered brand ‘cool’ or peer pressure to have a substantial affect on their brand loyalty.

Top Performing Categories

In terms of brand categories, Retail topped the list, with 3-in-10 favourite brands being in this sector. In particular, supermarkets account for four in every five retail favourite brands. This contrasts with Food & Drink, identified by just 1-in-5 as the category of their favourite brand. Surprisingly, Financial Services came in third place, with around 1-in-8 respondents’ favourite brand in this category. Often thought of as more of a distress or necessity choice, our survey strongly suggests that over 12% of consumers consider their Bank or Building Society to have built a satisfying relationship with them that has inspired their brand loyalty.

Conclusion

In conclusion, this study firmly shows that consumers do feel loyalty towards their favourite brands, and that this loyalty is inspired by quality products, knowledgeable and helpful staff, ease of contact, being able to recognise customers and their value, and a brand experience that is enjoyable at every single touchpoint. The Retail sector is clearly most successful at inspiring loyalty, followed by Food & Drink and then — somewhat surprisingly, Financial Services — predominantly banks.

Whilst the basic concept of loyalty and relationship management should evidently not be challenged, best practice to translate loyalty initiatives into commercial success still seems to remain — in the minds of consumers — the province of a handful of leading brands. Companies with loyalty schemes, or contemplating loyalty initiatives, would be well advised to investigate what their customers feel would inspire their loyalty, as the fundamental building block of any such initiative’s commercial success.

Methodology

1010 UK consumers were surveyed through online questionnaire about their feelings of loyalty towards their favourite brands, along with the factors that they felt to most significant in inspiring their loyalty. The research period was June/July 2007. Fieldwork was conducted by Ciao Consumer Surveys, a wholly-owned subsidiary of the Greenfield Online Group (Nasdaq: SRVY).

¹ GI Insight, The Loyalty Index, May 2006

² Arvato Loyalty Services, Valuable Experiences, September 2006