A new study from the CMO Council and the Pointer Media Network shows that the recession has had a major impact on brand loyalty.
The truth about brand loyalty, and its frequently transient nature, may surprise many seasoned brand marketers and retailers, says the report. Only 48% of the high-loyalty consumers identified in 2007 remained loyal in 2008.
Key findings of the study:
- Loyalty erosion and consumer defection are pervasive and costly problems for CPG brands, and the impact of these factors is increasing dramatically in the current economy.
- For the average brand in this study, 52% of highly loyal consumers in 2007 either reduced loyalty or completely defected from the brand in 2008.
- Only four out of ten brands retained 50% or more of their highly loyal consumers from year to year.
- For the average brand, approximately one-third of all highly loyal consumers in 2007 completely defected to another brand in the same category in 2008.
- The current economic downturn is having a significant impact on brand loyalty. Many leading brands experienced a drop in the total number of highly loyal consumers between 2007 and 2008.
- Loyalty and consumer churn have a huge impact on brand revenue and value. Some major brands could have increased overall revenues by more than 20% in 2008, if they had eliminated churn among high-loyal consumers.
- Precision marketing strategies for engaging loyal and high volume brand buyers are now playing a major role in improving consumer loyalty and value.
For the average brand more than half of the previously did not remain loyal in 2008, and one third completely defected. And if they had engaged their highly-loyal customers some major brands could have increased overall revenues by 20%?
Sounds like engagement should be top of the list for a CPG brand this year.
The challenge is identifying your most valuable consumers, understanding their relationships with your brand and taking the appropriate steps to protect, sustain and build those relationships. Mass media and demographically targeted advertising, or even generalized coupon incentives, do not ensure that you are reaching the right consumers with the right message or offer when those consumers are actually wavering in their loyalty to your brand, says the report.
Have they not seen this video?
Image Credit: David Airey
