The Four Stages of Loyalty. Alliance Data explores the customer journey

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1 The Four Stages of Loyalty Alliance Data explores the customer journey

2 Melody Gintert Alliance Data s Director of Market & Consumer Insight Understanding Customer Loyalty Whether you re talking marriage, coworkers, or shopping, one thing is universally true: good relationships require loyalty, and loyalty takes work. Loyalty between a brand and a customer doesn t just magically occur it has to be earned and then nurtured. And it s not going to look the same for every customer. Alliance Data s Understanding Customer Loyalty study recently found that there are four potential stages of loyalty: earning, maintaining, losing, and regaining. Each stage has different factors that influence customers and impact their shopping habits. To highlight these stages of loyalty, we ve laid out a hypothetical (but realistic) customer journey; our customer we ll call her Jill brings it to life. Jill s lifestyle and shopping habits are similar to our typical retail cardmember and to the customers surveyed in our study. By understanding the four stages, brands will be better equipped to understand, develop, and maintain their customers loyalty. 2

3 Meet Jill At 38, Jill has a career she enjoys and a family she adores. She and Matt have been married for 12 years. They live in a modest suburban home with their two children, Bella and Charlie, and their dog, Sparky. Together, Jill and Matt make about $80,000 a year. They don t consider themselves financially stable, since most of their disposable income goes into college funds. With more than a decade of parenting experience, Jill s figured out how to balance her work life and family life, and she knows where and how to shop for her family s needs. 3

4 1 Earning loyalty Jill is a loyal customer to at least three brands, which she feels have earned her loyalty. She shops at one big-box merchant, where she can get her family s necessities for the week in just one trip. Like most customers, she keeps coming back for the fair prices and easy shopping experience. 48 % of customers only shop at one bigbox merchant. During her last visit, a store associate shared the benefits of their co-brand credit card and invited Jill to apply. She did, and her spend at the merchant has increased since opening the card. 87 % of customers purchase more often from the retailers they feel loyal to. Bella is always begging to visit her favorite children s clothing store, so they go there often. Jill likes it, too, because she can shop for both kids. 37 % 22 % of customers feel loyal to a children s clothing store. say it s the only place they purchase kids clothing. She even recommended the store to her friend, a first-time mom of a baby girl. 92 % of new parents say friends influence their loyalty to a brand. Jill s all-time favorite place to shop is the women s clothing retailer where she s been a cardmember for years. The brand fits her style and price range, and she always finds something she loves. 32 % of customers feel loyal to a specialty clothing retailer. KEY FACTORS TO EARNING LOYALTY: price, product quality, a great shopping experience, interactions with store associates, a compelling rewards program 4

5 2 Maintaining loyalty As a loyal customer, Jill expects every shopping experience to be positive, and she looks forward to engaging with friendly store associates. Nearly 80 % say that interactions with store associates are important in maintaining loyalty to a brand. A big reason she continues to shop at her preferred big-box retailer is the store s proximity to her home. It s easy to shop there when she s low on time, since she knows where everything in the store is. 45 % of shoppers are loyal because of store convenience. Jill appreciates that the brands where she s a cardmember understand her on a more personal level. They put in more effort to provide a consistent and rewarding experience in every shopping channel, and send her more meaningful offers on the items she loves. 26 % 44 % have at least two retail credit cards. say a rewards program keeps them coming back to one brand over others. KEY FACTORS TO MAINTAINING LOYALTY: fitting into her habits or routines, how the brand aligns with her values, interactions with store associates, a compelling rewards program 5

6 3 Losing loyalty While Jill has her go-to big-box store, she ll shop the competitor if they are offering lower prices or a special deal. 63 % of customers would likely be swayed by lower prices at a competing brand. The last time Jill shopped at Bella s favorite store, she was frustrated by the terrible customer service. She hasn t shopped there since. Bad customer service is nearly 2x more likely than price to cause someone to lose loyalty. 51 % 43 % of customers say that a retailer has lost their loyalty. have lost loyalty to a brand because of a drop in product quality. KEY FACTORS TO LOSING LOYALTY: a bad customer service experience, quality changes, price changes 6

7 4 Regaining loyalty As it turns out, Jill has to return an item to the children s store. She s still upset and hoping for a better experience to change her mind perhaps even a special discount. 24 % want a price adjustment when they have a complaint. 27 % of customers say that once a brand has lost their loyalty, nothing can be done to regain it. Jill makes the trip and has a nice experience. The associates are kind and helpful, and she knows she ll keep shopping there. Eventually, her loyalty will be revived. need a positive interaction to occur before they ll start to 63 % rebuild their loyalty. KEY FACTORS TO REGAINING LOYALTY: apology and correction in service, better prices or discounts, improved product quality 7

8 Making loyalty last Once you ve earned a customer s loyalty (which is hard enough), you ve got to meet their expectations the behaviors that made them loyal to your brand in the first place need to stay consistent. In every stage of loyalty, the customer experience comes first. There are other factors to consider, sure like price, quality, and convenience. But an easy and positive shopping experience will bring customers back again and again. And brands that engage customers in a positive way and simplify their lives will make that loyalty last. 8

9 Alliance Data is a leading provider of tailored marketing and loyalty solutions, building relationships through branded credit programs. We deliver growth for our partners and deliver value to our cardmembers by applying deep analytical insights, staying brand- and customercentric, and always looking ahead to what s next. Based on an Alliance Data proprietary consumer panel of credit cardmembers Alliance Data. KnowMoreSellMore.com

Understanding the Convenience Store Shopper. Excentus Customer Profile Research 2018

Understanding the Convenience Store Shopper Excentus Customer Profile Research 2018 1 Contents 03 Excecutive Summary 04 Introduction 05 C-Store Loyalty 06 The C-Store Loyalty Shopper The Big Story: Loyalty,