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Factors Affecting Customer Loyalty and Brand Loyalty in 2021

By May 18, 2021 July 13th, 2021 CCG Retail Marketing Blog

Our fourth annual Retail Customer Brand Loyalty Study reveals how consumer shopping behavior and preferences have changed since 2020.

Article Highlights

  • Retail customer loyalty took a slight step back in 2021, with fewer customers reporting that they prefer to consistently shop with the same retailer.
  • While price is an important factor affecting customer loyalty, receiving a good value and ease in making purchases actually have greater impact for the majority of consumers.
  • As the pandemic appears more under control, customers indicated that their spending habits are now swinging closer to “not changed at all” and are more balanced between “buying essentials only” and “buying whatever I want.”

This past January, we conducted the 2021 Retail Customer Brand Loyalty Study to discover new insights about factors affecting customer loyalty. It’s no surprise that the customer.com study showed customer brand loyalty taking a slight step back.

In 2021, the percentage of Loyalists — consumers who consistently shop the same retailer — dropped to 2018 levels, settling at 35%. In prior years, the percentage of Loyalists had grown consistently year over year. Meanwhile, the study also showed an increase in the number of Roamers — consumers who prefer to shop around

How else did brand loyalty shift since last year? Read on for more study highlights, including an overview of factors influencing brand loyalty.

Background on the 2021 Retail Customer Brand Loyalty Study

To gather the 2021 customer loyalty statistics, our survey probed 1,040 consumers about their loyalty to retailers and the factors that influence brand loyalty. It addressed these critical questions:

  • When all things are equal, which factors drive customers to shop exclusively with a particular retailer?
  • Which factors are most important to “super loyal” customers versus consumers who always shop around?
  • How has the COVID-19 pandemic affected customer brand loyalty and spending habits?
  • Which factors influence a non-loyal customer to shop exclusively at a particular retailer — in other words, what would make them more loyal?
  • Do consumers show tendencies to be more or less loyal based on demographics?
  • Which retailers make loyal customers out of customers whose style it is to shop around?

Customer Brand Loyalty Takes a Step Back

Retail customer loyalty took a slight step back in 2021, with Loyalists dipping from 39% in January 2020 to 35% in January 2021.

On the bright side, the composition of the top 50 most frequently named retailers — those that respondents indicated as their go-to stores — remained relatively the same as prior years. However, some retailers moved up or down in the rankings. With data collected on over 600 retailers, customers emphasized some of the big names you might expect: Walmart continued to top the list of retailers named most frequently and, in fact, significantly increased its lead over next-closest retailers Amazon, Target and Kohl’s.

Factors Affecting Customer Loyalty

Looking across shopping personalities, we discovered specific factors that influence customer loyalty, driving consumers to shop exclusively with certain retailers. Understanding these loyalty factors can give you crucial insights into how to position your organization in relation to those global competitors like Walmart and Amazon, as well as in relation to direct competitors. They can help your organization determine how best to target and prioritize resources and budget. And, of course, they can give you important information to guide your customer retention and loyalty efforts.

According to the loyalty statistics from our study, the factors influencing customer loyalty among different shopping personalities are broad and encompass the entire retail enterprise. Loyalty factors listed by consumers ranged from the tangible, such as receiving incentives to shop, to the intangible, like trust or viewing shopping a particular retailer as a status symbol.

And our study clearly demonstrates again this year that while lowest price is a factor that influences brand loyalty, receiving a good value and ease in making purchases actually have greater impact for the majority of consumers. In fact, in 2021, lowest price dropped from fourth to sixth place of most frequently listed loyalty factors. And there are even more intangible factors that have a significant impact like positive shopping experience, which ranked higher than price.

When respondents were asked which factors would encourage them to select one retailer over another if price, access and product were identical, the respondents’ top answers shed greater detail on what was important to them.

In 2021, top factors affecting customer loyalty — when price, product and access were considered equal — remained similar to factors listed in 2020. However, convenient shopping experience increased this year, while easy to make returns rose to the top five factors this year.

Interestingly, the factors that affect customer loyalty and drive engagement show variations across the three shopping personalities as well as across demographics.

Spending Habits Beginning to Return to Normal

Our longitudinal study is fielded in January each year. But when the pandemic hit, we felt compelled in April of 2020 to begin gauging its impact on consumer spending habits. When we fielded our loyalty study in January of 2021, we incorporated questioning around consumer spending habits and how they had changed due to the pandemic.

The good news is that customers indicated their spending habits are now swinging closer to “not changed at all” and are more balanced between “buying essentials only” and “buying whatever I want.” This contrasts with their response in April 2020, when they reported their spending had “changed drastically” and they were “buying essentials only.”

Interestingly, we also saw notable variances from different demographic groups. For example:

  • In the $25,000 – $49,999 income bracket, the spending habits of respondents aged 18 to 24 changed the most.
  • In the $100,000 to $124,999 income bracket, the spending habits of respondents aged 55 to 64 changed the least.

Response also varied based on which retailer the consumer most liked to shop. Macy’s customers were more likely to report that their spending habits changed drastically over the past year, while The Home Depot and Kroger consumers tended to report that their spending habits had not changed as much. Costco and eBay customers skewed toward “I purchase whatever I want,” while ALDI customers leaned toward “I buy only essentials.”

Factors Affecting Customer Loyalty Matter to the Entire Organization

One critical point that our customer loyalty study drives home is this: While retail loyalty programs influence retention, there are many other compelling factors that influence customer loyalty to particular stores. Much to the dismay of retail organizations struggling with customer retention, loyalty programs alone cannot fix sales and traffic issues related to a poor product offering, customer experience or any other of myriad business issues.

Building customer brand loyalty requires that you understand and act on influential loyalty factors in a way that will resonate with all shopping personalities. This requires enterprise-wide support from all aspects of your business — from customer-facing personnel and technologies to the back-office people and processes that support them. A broad-based effort like this is absolutely key to meeting your retail loyalty and retention goals

For deeper insights and year-over-year comparisons on the factors influencing customer loyalty, get a free download of customer.com’s 2021 Retail Customer Brand Loyalty Study.

Digging into the “why behind the buy” and creating strategies to build and maintain customer loyalty is what we’ve been doing at CCG for the past 40 years. Learn more about the retail marketing solutions we offer and how our retail marketing consultants can help you reach your goals. Schedule a free consultation today or call us at 303.986.3000.

Sandra Gudat

Author Sandra Gudat

Sandra Gudat is CCG’s president & CEO. Considered a pioneer in the field of customer marketing, she has a diverse background in consulting, database marketing, advertising, retail and business management. She is a frequent speaker on customer loyalty marketing and developing customer-centric policies

More posts by Sandra Gudat

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