- As household income rises, shoppers tend to shop around
- Lower income consumers are more likely to be Loyalists
- Mid- to upper-income consumers are influenced by getting a good value
- Amazon, Walmart and Target were the top three retailers for all income groups
As a retailer, you may think of consumer household income as it relates to your product selection, branding, marketing and possibly store layout. But did you know that affluence also affects customer loyalty? In fact, affluence affects a consumer’s “shopping personality,” determining whether they are more likely to shop around before making a purchase versus remaining loyal to a retailer that meets their needs.
This is among the key findings from customer.com’s breakthrough Retail Customer Loyalty Study, which offers never-before-published insights into customer loyalty and retention statics. Here, we take a closer look at the ways consumer income influences the factors most likely to build brand loyalty among your customer base.
Three Consumer Shopping Personalities
Customer loyalty is not dead and the idea that all consumers shop around all the time is a myth. Our customer.com research shows that more than one-third of consumers prefer to consistently shop with the same retailer for particular needs.
In fact, our Retail Customer Loyalty Study identified three primary shopping personalities, with the most loyal consumers making up the largest group:
- 37% are Loyalists who find a go-to retailer for their needs and stick with them
- 33% are Roamers who always shop around before making a purchase
- 30% are Neutrals who tend to have some go-to retailers for particular purchases, but at other times prefer to shop around
Consumer Income Strongly Influences Shopping Personality
Not surprisingly, demographics — especially household income — play a role in determining an individual’s shopping personality. What is surprising is that as household income rises, consumers report that they prefer to shop around more. In other words, the higher the household income, the more likely a consumer will be a Roamer.
This is counterintuitive. One might assume that consumers on slimmer budgets might shop around more to find the best deals. But the Customer Loyalty Study data was very clear and indicated a correlation between higher household income and the desire to shop around before making a purchase.
Conversely, the lower the income, the more likely the consumer will be a Loyalist, tending to find a go-to retailer for their needs and sticking with them.
Our Loyalty Study also identified two main categories of loyalty factors:
- Passion Factors, which are more intangible, such as trust, status symbol or perception of a caring staff
- Practical Factors, which tend to be more tangible, such as ability to look up past transactions, make an easy purchase or easy returns
In general, lower income consumers, as Loyalists, tended to put more preference toward Passion Factors. Higher income consumers, as Roamers, leaned more heavily toward Practical Factors.
Consumer Income Affects Primary Brand Loyalty Factors
Overall, factors like good value for the money, easy to make purchases, convenient shopping experience, lowest price and quality of products were most frequently reported by consumers as important to engendering their loyalty. However, when household income is taken into consideration, a different picture emerges.
For instance, lower income consumers — those with household incomes under $50,000 — are more likely than the general population and especially more affluent consumers to list lowest price as a primary loyalty factor. Consumers with household incomes under $25,000 are more likely to list fair treatment and one and a half times more likely to list caring staff as top factors driving their loyalty.
Middle-class consumers are more likely to list convenient shopping experience and VIP benefits and experience as important to their loyalty.
More affluent consumers, those with incomes $125,000 or above, are much more likely to indicate unique products and trust, and twice as likely to list shopping the retailer is a status symbol as loyalty drivers. Interestingly, this group was also more likely than the general population to list receive incentives to shop with retailer and VIP benefits and experience as important drivers. Retailers who tend to serve more affluent consumers would be mistaken in thinking that providing incentives and benefits to this group is not an effective strategy to drive traffic, sales and loyalty.
After consumers identified their most important loyalty drivers, they were asked to rank those factors. Less affluent consumers placed lowest price at the top, while respondents from household incomes greater than $50,000 ranked good value for the money as their number one loyalty driver.
Consumer Income Impact When All Things Are Equal
Many retailers today find themselves in a market environment with little differentiation from competitors. The study asked respondents which factors would prompt them to select one retailer over another if both offered identical products, prices and access. Once again, consumer response on which factors would drive loyalty, “all things being equal,” varied depending on the affluence of the respondent.
For instance, consumers in lower income households were more likely to list fair treatment, status and trust as “tie-breaking” factors that would induce loyalty. Middle-class consumers reported receive incentives to shop with retailer as an important “tie-breaker.” In general, the greater the affluence, the more likely the respondent would list VIP benefits and experiences as an important determining factor if two retailers offered the same products at the same price and with the same access.
Consumer Income Affects Retailer Preference
Survey respondents were asked to name the retailers that they exclusively shopped for particular needs. Surprisingly, many of the retailers listed were the same across multiple income groups. For instance, Walmart, Amazon and Target were listed as the top three retailers across all income groups.
Walmart holds the number one spot for consumers with household incomes less than $125,000. To put that into perspective, that is 74% of the U.S. population. Amazon holds the top spot for households with incomes greater than $125,000 — or the 26% of the population with the greatest disposable income.
In the less than $25,000 income group, Dollar General, Family Dollar and Dollar Store were among the top 10 retailers. Costco made the top 10 among households with incomes of $50,000 or more, while JCPenney made the top 10 among consumers in households with incomes $100,000 or less.
What These Customer Loyalty Statistics Mean for Retailers
Our Retail Customer Loyalty Study revealed interesting and sometimes unexpected relationships between consumer income and brand loyalty. For instance, we learned that:
- Lower income consumers were more likely to be Loyalists and that they value low price, fair treatment and caring staff.
- Middle-class consumers value a convenient shopping experience as well as VIP benefits.
- More affluent households tend to be Roamers and look for unique products, status, incentives and VIP benefits.
Understanding how income affects the factors that drive consumer loyalty and engagement can help guide your customer retention strategies. Just remember that implementing any strategies tied to these factors isn’t only a marketing initiative. You’ll need to take an enterprise-wide approach to gain the greatest impact — and the most customer loyalty.
For more details on factors driving customer loyalty, get a free download of customer.com’s 2019 Retail Customer Loyalty Study.
We’re excited to share results from our latest Retail Customer Loyalty Study. However, helping retailers build customer loyalty is nothing new to us. At CCG, our guiding mission is to help our clients build longer, stronger, more profitable customer relationships. Whether your goal is to build a loyalty program, crunch data to better understand your audience, develop compelling creative or find innovative ways to drive retention and revenue, we have retail marketing solutions to fit your needs. Schedule a free meeting with one of our retail marketing consultants today to learn more or call us at 303.986.3000.