Why Customer Loyalty As We Know It Is A Myth

Simon Hathaway is Group Managing Director, EMEA, at Outform—the award-winning global innovation agency.

In the ever-evolving landscape of retail, shopper behavior is changing rapidly. No matter what your understanding of loyalty in the past, the chances are your customer has other ideas.

The modern shopper, identified by McKinsey as a “zero consumer,” has zero patience, zero boundaries and zero loyalty. This new type of consumer shops across multiple channels, challenging traditional notions of brand loyalty as they go.

So how does this redefine customer loyalty as we know it? And how can businesses learn to adapt to these zero consumers?

Unpacking The Ambiguity Of Loyalty

The concept of loyalty in itself is subject to debate. Almost every one of us will have a certain number of brands we feel define us, whether that’s a favorite sneaker logo, a go-to perfume or a heritage watch brand. But does that count as brand loyalty or is it merely a status play?

In the consumer goods industry, businesses have traditionally relied on brand portfolios to create loyalty and discounted at the point of sale to draw shoppers in. The ultimate aim and sign of loyalty for any consumer goods brand would be to consistently appear on a shopping list. But when you write your grocery shopping list, it’s more likely to include a product type or category rather than a specific brand name.

The advertising industry, too, has leaned heavily into the idea of “loyalty to a brand” in campaign creation, yet I think the reality is quite different.

Loyalty Is Value

In the retail sector, consumers are loyal to value rather than a brand, and this translates into an eagle-eyed focus on financial discounts.

We’re seeing this play out even more clearly as consumers rein in spending during the cost of living crisis. Some 61% of U.K. consumers feel less loyal to a brand now than they did a year ago as they hunt around for the best deals.

Where it gets interesting is that consumers have become skilled at playing the loyalty game, recognizing the value of their personal transactions with a brand. Savvy shoppers know to leave items in a wishlist or basket to trigger a discount before they close the deal. Or to shop for branded products at a previously unknown online retailer so they can take advantage of a first-order discount offered in exchange for signing up to a mailing list.

In reality, loyalty as we know it is primarily a financial discounting model, and I believe that the pursuit of long-term brand loyalty, as we might have previously understood it, will be increasingly elusive.

Meeting The Needs Of The Zero Consumer: A Loyalty Reset

If established loyalty strategies are failing to keep customers on your side, then it might be time to consider a different approach. This is where I think delivering utility is key and where brands and retailers can address the three critical shopper budgets of time, money and frustration.

Retailers are well-versed in using loyalty programs to offer financial incentives, but they often overlook the value consumers place on convenience if it saves them time and reduces frustrations.

For the zero consumer, queues are wasted time. Even fast check-outs, which are often under-resourced, have become a source of frustration—along with clunky apps and disconnected systems.

To tackle these issues, I encourage retailers to embrace digital tools and technology to boost convenience. Seamless apps, useful QR codes and informative digital screens can all smooth the path to purchase and encourage shoppers to stay on your side.

Sometimes, the clear time or frustration benefit doesn’t have to be explicit. In fact, the more seamless the experience, the more likely you are to deliver on consumer expectations around time and frustration with customers barely noticing.

I think companies like British Airways are a prime example of this. They allow loyal customers to skip queues and board planes first, offering travelers a clearly defined, but unspoken, benefit that ticks the boxes for time and frustration. Of course, when they get it wrong and they do, the frustration is far greater as they fail to meet expectations of the value of loyalty.

Brands and retailers would be wise to remember that loyalty is no longer about the lifetime value of the customer, but the value a brand delivers to the life of its customer.

Value will always be a crucial part of the loyalty equation but what it means isn’t solely a discount. By balancing price and delivering convenience, brands and retailers can not only reset loyalty by catering to the needs of the zero consumer, but put themselves in a stronger position to fend off potential disruptors.

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