Top Factors Influencing Retail Customer Loyalty

October 31, 2018CCG Retail Marketing Blog

We uncover traits and features that can help build long-term customer relationships and differentiate your store in today’s highly competitive retail environment.

U.S. consumers enjoy the most retailed environment in the world. According to Credit Suisse, the United States boasts 21,528 square feet of retail space per 1,000 people, far surpassing second-place Norway (9,967 square feet) and third-place Sweden (4,672 ), as well as Spain and Italy (2,637 and 2,454 square feet, respectively).

What equals abundance for customers, though, means fierce competition for U.S. retailers. Go a level deeper, and many retailers competing in the same category are struggling to differentiate themselves from one another in a compelling way. If that sounds painfully familiar, the big question you’re probably asking is, “How can we make that happen — and build the kind of customer loyalty that drives long-term profits?”

The answer lies in understanding the most important factors influencing customer loyalty today. With customer.com’s groundbreaking 2018 Retail Customer Loyalty Study, we identified those factors and learned which retailer traits work best to motivate customers — and specific groups of customers — to choose one shop over another. Here are some key insights from the study.

Universal Differentiating Factors

In the study, we asked consumers: If two retailers offered identical products and services, and you had identical access to both, which factors would encourage you to select one over the other?

We found that some universal “deciding” factors came up again and again, appealing to most, if not all study respondents.

Source: 2018 Retail Customer Loyalty Study, CCG

While these results weren’t surprising, we didn’t expect the diversity of responses we saw based on demographics, consumer shopping personalities and individual retailers. In the rest of this article, we’ll explore those findings.

How Demographics Affect Loyalty Drivers

It’s no surprise that demographics play a role in which factors influence a customer’s shopping decision when two retailers offered identical product, access and price.

  • Men tended to cite status symbol, fair treatment, trust and caring staff as important deciding factors.
  • Women were more likely to cite easy returns, incentives to shop and feel retailer is socially responsible as their deciding factors.
  • Households with kids at home were much more likely to indicate that incentives to shop, status symbol and ability to look up past purchases would lead them to select one retailer over another.
  • Households without children at home were more likely to list fair treatment, customer service, trust and caring staff as factors they would consider most important in selecting between two nearly identical retailers.

The most influential loyalty factors also varied depending on the respondent’s age. For instance:

  • Consumers aged 13 to 24 were three times as likely to list status symbol as a “tie-breaking” factor that would induce loyalty.
  • Consumers aged 45 and over cited customer service more often.
  • Consumers aged 44 and under were more likely to choose feel retailer is socially responsible
Age affects customer loyalty drivers
Age affects customer loyalty drivers

Factors Vary by Consumer Shopping Personalities

The 2018 Retail Consumer Loyalty Study identified three customer shopping styles or personalities:

  • 35 percent ­– Loyalists, who find a go-to retailer for their needs and stick with them
  • 35 percent ­– Roamers, who always shop around before making a purchase
  • 30 percent – Neutrals, who tend to have some go-to retailers for particular purchases, but at other times prefer to shop around

For Loyalists, some distinct elements came into play, with a preference toward more intangible or “passion-oriented” factors like fair treatment, trust and caring staff. The other two shopping personalities were more likely to prefer more pragmatic, or “practical,” factors such as ease of shopping.

Loyalists

Roamers & Neutrals

Deciding Loyalty Factors for Different Retailers

In aggregate, many of these deciding loyalty factors were the same regardless of retailer, but there were some interesting differences. For instance, Macy’s customers were more than twice as likely as Walmart customers to list VIP benefits as a deciding loyalty factor. Macy’s customers also are four times more likely than Walmart customers to cite feel the retailer is socially responsible as an important decision-maker.

Meanwhile, Walmart customers are almost twice as likely as Target customers to cite fair treatment as a deciding loyalty factor. And Target customers were more than one and a half times as likely as Macy’s customers to list easy to make returns as a deciding factor.

Here is an in-depth comparison between deciding loyalty factors for Macy’s versus Walmart customers.

Key Takeaways

  • The specific factors that influence customer loyalty evolve over time and are affected by children, age and other demographics.
  • These deciding loyalty factors also vary by a consumer’s shopping personality (e.g., Loyalist versus Roamer).
  • Factors driving loyalty can vary vastly among customers who shop the same retailer and can vary between retailers, even those in the same category.

While the United States retail environment “suffers” from abundance, retailers face intense competition. It’s crucial to understand which factors sway a customer’s choice when product, price and access are identical. That’s especially crucial for retailers in highly competitive categories. With this information, you can more effectively target messaging, offers and other marketing tactics to different customer groups — and do a better job of winning customers for the long-haul.

If you’re interested in finding ways to apply these loyalty stats and facts in your organization, or you want to dig deeper into the characteristics of your unique customer base, our CRM agency can help. CCG’s retail marketing consultants have spent more than 40 years helping retailers across North America turn data insights into actionable strategy — and stronger, more profitable customer relationships. Click below to schedule a free consultation or call 800.525.0313.