The New WFH Approach to Loyalty - An R3 Report

The New WFH Approach to Loyalty An R3 Report

INTRODUCTION The global health pandemic has prompted a surge of new retail activities, with an astonishing 75% of US consumers trying a new shopping behavior in response to economic pressures, store closings, and changing priorities. This general change in behavior has also been reflected in a shattering of brand loyalties, with 36% of consumers trying a new product brand and 25% incorporating a new private-label brand.

Of consumers who have tried different brands, 73% intend to continue to incorporate the new brands into their routine. Gen Z and high earners are most prone to switching brands. Evolving consumer habits, like those that resulted from the pandemic, have highlighted the urgency for brands to rethink their loyalty program offerings.

In this report, we look at the nature of consumer loyalty in a socially distanced world and what marketers need to do to build trust, provide greater value and deepen engagement.

The New WFH Approach to Loyalty

LOYALTY: THEN & NOW Around 40% of US consumers have reduced spending in general, and they expect to continue to cut back on nonessentials specifically. This reality reflects profound discomfort about the state of the economy.

With overall consumer spending declining, intent to spend in essential categories is increasing. Even among those with higher incomes, we see that while essentials show spending momentum, intent to buy discretionary products still lags significantly. As the worst of the crisis abates, we do see online spending in nonessential categories such as apparel and footwear starting to come back. This effect is strongest among high-income earners, consumers in the Northeast, and Gen Z. When consumers do visit stores, they are likely to walk down the aisles with less money, more safety concerns, and their phones at the ready to compare prices.

If brands and retailers are not prepared to respond with unique product offers, experiences, and other incentives to buy, they could lose sales to competitors that can understand and deliver what each shopper wants.

During the peak of the COVID-19 crisis, what have you discovered (or re-discovered) that you are likely to continue?

30%

Purchasing goods online (non-grocery) Purchasing groceries online

21%

Purchasing through smartphone apps

21%

Ordering food for delivery

21%

Ordering goods (non-grocery) online and picking them up in store

12%

Ordering groceries online and picking them up in store

12%

53%

Of consumers discovered at least one form of online shopping during the peak of the outbreak and want to continue doing it.*

Source: Criteo’s Peak to Recovery Survey, Global May 13-29, 2020, n=13,015 *Unduplicated total

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

What inspires loyalty?

Customer loyalty is alive and well but digital disruption and new generational influences show that the nature of loyalty is changing. Overall, only 37% of respondents identified points and rewards as one of the most effective ways to secure their brand loyalty. In almost every country, points and rewards were less likely to earn loyalty than corporate transparency and honesty. Customer loyalty is too critical to be left to a customer loyalty program.

Do their loyalty programs truly reflect what matters most to their customers? The truth about customer loyalty survey, 74% of consumers said product quality inspired loyalty, 66 percent value for money and 56% customer service. Could it be that, as brands and retailers develop their customer loyalty propositions, they are making life too complicated for consumers — and for themselves?

Loyalty Before COVID-19 (2019) Respondents who said these factors were very or extremely important in earning and keeping their loyalty to a brand

66% Value for money

65%

56%

Product consistency (size, taste, quality, etc.)

Customer service

55% Selection/product assortment

55% Easy shopping experience

74% Product Quality

54% Pricing

Source: KPMG, 2019

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The New WFH Approach to Loyalty

The New Priorities of WFH Loyalty

Before WFH

WFH

Product quality

Corporate social responsibility

Value for money

Cares for employees

Product consistency

Customer service

Customer service

Pricing

Easy shopping experience

Safety

Selection/product assortment

Transparency

Pricing

Optimism

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

What makes a brand trustworthy?

Organizations are improvising and making difficult decisions that will ultimately have lasting effects on their brands. When asked what factors make consumers trust brands more, the top three responses focused on the well-being of customers, the well-being of employees, and not taking advantage of the crisis to maximize profits.

What consumers find less impactful are messages of hope, optimism, nostalgia or even statements about strong moral principles. The pragmatic US consumer wants brands to demonstrate leadership and action by taking care of customers and employees. Brands that fail to take these actions put their reputations and trustworthiness at risk.Â

COVID-19 Them US We

Me

Pre COVID-19

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

Case Study: aveda Using B2C Loyalty to Build B2B Loyalty Salons and spas that carry Aveda products are independently owned and are impacted by the pandemic; this includes more than 6,000 small businesses in the United States alone.

People can redeem their Pure Privilege Points (Aveda Loyalty Members only) and turn the points into dollars that will directly be donated to a fund that will support these salons and spas.

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

Case Study: Pedigree Rewards with long-term, personal value Enforced social distancing during COVID-19 has led to an increase in dog adoptions, as people are craving connection and companionship while social distancing. In a 2019 survey from the Human Animal Bond Research Institute and Mars Petcare, 80% of pet owners said their pet makes them feel less lonely.

To help encourage more adoptions, the PEDIGREE brand covered the adoption fees (up to $200 USD) for new pet parents who adopt a dog and purchase two bags of PEDIGREE dog food (15 lbs. or more) between August 1 through October 31, 2020.

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