Survey: Consumers predominantly like loyalty programs

New York / NY. (nc) Nearly 60 percent of global respondents said that loyalty programs – marketing programs that reward members with purchase incentives – were available where they shopped and of those, 84 percent said they were more likely to visit those retailers, according to a new study by The Nielsen Company, a leading global provider of information and insights into what consumers watch and buy.

«While the concept of loyalty is nothing new, we are seeing a significant surge in retailers – and particularly those in developing economies – investing in loyalty programs that give them valuable insight into how to better meet customer needs», said Julie Currie, senior vice president, Global Loyalty, Nielsen. «Savvy retailers are mining the data and looking for new and innovative ways to achieve the benefits most important to their customers».

The Nielsen Global Survey of Loyalty Sentiment polled more than 29’000 Internet respondents in 58 countries to evaluate consumer views on loyalty levels across 16 categories including fast-moving consumer goods, technology products and retail establishments. Nielsen found that, on average, more respondents claimed to be not loyal than completely loyal to brands, service providers and retailers. Most respondents said they were mostly loyal or unlikely to switch brands or providers without significant incentives.

Loyalty Program Benefits

According to Nielsen´s survey, three-quarters (75 percent) of global respondents said that discounted or free products was the most valuable loyalty program benefit. Enhanced customer service and free shipping incentives were important to 44 percent and 42 percent of global respondents, respectively.

Good customer service was important to more than half of respondents in Latin America (59 percent) and Asia-Pacific (53 percent). Exclusive deals (41 percent) and special shopping hours (36 percent) mattered most among loyalty program participants in Asia-Pacific. Free shipping incentives were important for 46 percent of North Americans.

«In markets where loyalty programs are long established, customers tend to be savvy about copy-cat promotional offerings that do not offer unique advantages», said Currie. «Particularly in developed loyalty markets, retailers and manufacturers need to work together to offer exclusive awards that cut through the clutter. New and innovative concepts, especially in the online space, that connect with how consumers want to shop are proving to be most effective».

Loyalty Sentiment Highest for Mobile Phones; Lowest for Food/Beverages

Nielsen information shows that nearly one-quarter (24 percent) of global respondents claimed complete loyalty to mobile phone brands, mobile service providers and financial institutions, the highest percentages reported globally across the 16 categories measured.

Global respondents reported the lowest levels of loyalty to food and beverage categories measured and online retailers. Approximately 40 percent of global consumers surveyed said they were not loyal and likely to switch brands in the alcoholic beverages (43 percent), snacks (39 percent), carbonated beverages (38 percent) and cereal (37 percent) categories. Thirty-nine percent of global respondents said they were not loyal to online retailers.

«There is a strong link between the way consumers describe their loyalty habits and the way they subsequently buy – so even comparatively small shifts in what consumers say can manifest in big changes in what they do», said Currie. «While there is some consistency around the world in loyalty sentiment within categories and across retailers and service providers, there are also notable differences – especially for consumable products and in the online retailing space, where the likelihood to switch is greater».

Loyalty Differences by Region

According to Nielsen´s survey, respondents in the Middle East / Africa showed the highest percentage of complete loyalty for mobile phone brands (35 percent) and mobile service providers (28 percent), exceeding the global average. They were also most loyal to snack brands (21 percent) and cereal brands (21 percent), compared to other regions. Other Nielsen studies indicate that while availability and choice may be contributing factors for this level of loyalty, loyal brand patronage is highly correlated with consumers in this region.

«In developing economies, we see evidence of highly price-sensitive consumers choosing brands that are not always the lowest-price alternative», said Currie. «Making a switch from a tried-and-true product to something new can represent a trade-off that consumers with little discretionary income are not willing to make. On the flip side, the cachet of new brands can be appealing options for consumers with rising upward mobility status».

For food and beverage products, regional non-loyalty levels were highest in Europe, where 46 percent of respondents said they were not loyal to snack brands, 43 percent said they were not loyal to carbonated beverage brands and 42 percent were likely to switch cereal brands.

«High levels of promotions offered in snack and beverage categories, particularly in Europe, condition consumers to shop around for deals», said Currie. «Retailers can reverse the impact of falling basket values and lower trip frequencies by better connecting with the unique needs of their shoppers».

North Americans surveyed reported higher levels of loyalty for financial service providers (29 percent) and carbonated beverages (23 percent), compared to other regions. Latin American respondents reported the highest percentages of loyalty to over-the-counter health and medicine products (26 percent) and personal beauty products (25 percent).

Incentives to Switch

According to Nielsen´s survey, 41 percent of global respondents said getting a better price would encourage them to switch brands, service providers or retailers, followed by better quality (26 percent), a better service agreement (15 percent), better selection (10 percent) and better features (eight percent).

«While good prices may initially offer consumers enough motivation to change allegiance to a new product, it will not keep consumers for long if the product does not deliver on its promise», said Currie. «Getting the price/value equation right, having products in stock and offering a satisfying shopping experience are vital ways to build long-lasting customer loyalty».