It’s no secret that retail in 2022 is a different ball game, and that many old reliable truths are no longer quite as certain.
Among many other changes, massive customer churn in retail has not gone away. According to McKinsey, more than 75% of consumers tried new brands, places to shop, or methods of shopping since the pandemic. More U.S. consumers switched brands in 2022 than in 2021 or 2020; around 90% plan to continue doing so. When asked why, many customers stated that customer experience was a major factor.
Disruption provides opportunity. With customers more willing than ever to break old habits and try new brands, there is a window of opportunity for retail brands to win over new customers and provide experiences that will earn their loyalty.
What is Customer Loyalty in Retail?
‘Customer loyalty’ describes an aspect of the emotional relationship between a brand and its customers. Customer loyalty is demonstrated through a willingness to engage and repeatedly purchase from one brand versus its competitors — and to advocate for that brand publicly, through online reviews and recommendations to friends and family.
While customer loyalty is difficult to measure, it leads to a hard metric that businesses very much care about: customer retention. And they should care — most retail brands need to retain customers for 12-18 months in order to break even on their marketing investments.
Customer loyalty may be more intangible than customer retention, but customer retention metrics often include the ability to track the impact of that loyalty, and the results it has on the bottom line.
What is the Value of Customer Loyalty?
Customer loyalty is valuable. In a poll by Salesforce, 78% of customers agreed that they would forgive a company for a mistake after receiving excellent service.
That’s not all. It’s well known in business that it’s cheaper to keep old customers than find new ones, with the average cost of selling to new customers as much as 5 times the cost of selling to existing ones. In addition, loyal customers tend to buy more items, more often. They also tend to refer other customers to the brand at a higher rate than other customers.
All of these factors add up. While customer loyalty is sometimes intangible, it is valuable and worth cultivating.