SAP Emarsys surveyed more than 10,000 respondents worldwide for its annual ‘Customer Loyalty Index’ to show how consumers engage with brands during 2023.
Customer loyalty was at its highest levels during the COVID-19 pandemic, when the world was in lockdown. But the economic environment has changed in a post-COVID world. Now, brand loyalty is on the decline.
Brand loyalty’s downward trend
Even incentivized loyalty has plummeted by a whopping 36% – from 76% to 49% in 2022. Coupled with the threat of recession and reduced consumer confidence, brand loyalty dropped significantly in 2023.
Out of the 10,000 respondents surveyed, 20% said brands need to do more to retain their loyalty. This is a significant increase compared to 2022, when only 13% of respondents demanded due diligence.
What can brands do to navigate the changing landscape of customer loyalty?
Customer loyalty types
A thorough understanding of the five types of brand loyalty is a good place to start. The loyalty types are:
1. Incentivized loyalty is when customers get something valuable in return for their time, attention, and the money they are willing to spend. It’s a vital cog in building loyalty since incentives create memories for shoppers.
During 2023, only 48% of consumers said they are “more loyal to retailers that offer me discounts, incentives, and rewards.” Compared to the 2022 loyalty index, this is a drastic decline of 14% from 56%.
2. Inherited loyalty is steeped in tradition. It’s easier to achieve because customers need less incentive. However, it only lasts as long as your brand is relevant.
Last year, 23% of consumers said they “were more loyal to a specific brand” than the stores that stock those brands. This is a slight increase from the 21% of respondents who agreed with the statement in 2022.
3. Ethical loyalty is trickier to achieve since a company’s core values must align with a customer’s ethics. It’s a delicate balance between integrity, responsibility, honesty, and accountability.
Approximately 28% of those surveyed say the brands they support “have strong moral or ethical values” – this is an increase of 8% from the previous year.
4. Silent loyalty plays on consumers’ guilty pleasures since it occurs when a shopper continues to support a brand they would not endorse publicly. There are many reasons why shoppers would prefer to remain silent, and these reasons might have nothing to do with your brand’s values.
A whopping 56% of respondents say they are loyal to brands they “wouldn’t necessarily recommend to friends or family.”
5. True loyalty is the goal – consumers remain loyal despite circumstances when they know a brand has their best interest at heart.
During 2023, 31% of respondents said they were truly loyal to a brand, compared to the 29% who agreed with this statement in 2022. The SAP Emarsys report shows this type of loyalty is growing yearly.
Brand loyalty: Retaining customers
One of the easiest ways to turn a regular customer into a loyal one, according to the Customer Index, is to offer a wide range of products. This practice was supported by a 7% increase from 2022.
In addition, “discounts and incentives can still drive repeat business for a brand,” the team at SAP Emarsys says. In fact, brands that offered discounts and incentives received 15% more support in 2023.
It goes without saying that excellent customer service is another notable factor. In 2023, 44% of respondents cited service as their reason for sticking with a brand. This is an increase of 22% from the previous year.
Other factors that could impact loyalty include the brand’s longevity (45%), consistency in branding (29%), steering clear of political issues (29%), building an iconic brand (27%), and being a dominant market leader (23%).
The data thus shows a clear link between how a brand presents itself and the number of customers who choose to remain loyal.
On a final note, consumers would like to see less of the following in 2024:
- The sale of poor quality products.
- Price increases while quality is lowered.
- Increasing prices in general.
- Poor treatment of customers.
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About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
