What brand loyalty looks like in 2023
The pandemic shifted the mindset of manufacturers towards ecommerce as digital adoption became a lifeline for brands who had never set up an online store before.
Direct-to-consumer (D2C) strategies were already warming up in the years leading up to Covid-19. Lockdowns, store closures and stay-at-home orders accelerated that trend.
Between 2019 and 2022, the share of consumers who regularly made purchases from D2Cs increased from 49% to 64%. And within the next couple of years, more than 80% of consumers will make at least one purchase from a D2C.
This movement has made D2C mainstream. Today, they find themselves in a vibrant yet intense digital commerce space, competing with the more digitally established B2C brands when it comes to winning over and maintaining customers.
To complicate things further, multiple forces are sweeping through the business landscape that are forcing businesses to do more with less. Economic downturn, inflation, and supply chain disruptions have darkened the clouds over businesses.
Fortunately, there are strategies that brands can implement to help them navigate through these weeds of uncertainty towards a brighter economic outlook. One of the most important is building brand loyalty.
The current state of brand loyalty
Cultivating close connections with customers is a top priority for businesses looking to improve customer retention, increase customer lifetime value (LTV) and forge a competitive advantage. It also takes time. Almost 9-in-10 customers say that it takes at least 3 purchases to build brand loyalty.
In general, the pandemic weakened the bonds between brand and customer, as shoppers started to look around for new opportunities, new brands that offered not only better products but better services and experiences. This was particularly true for younger generations, who are less loyal to brands than older age categories.
To better understand the current consumer mindset, we partnered with the global logistics leader DHL to survey more than 1,500 people on what’s most important to them while shopping online, their attitude towards D2Cs, and what brands can do to earn their loyalty. Read the full Consumer Insight Report here.
Among the insights we found, there is a clear trend towards building loyalty by delivering better value. Not just on prices, but across the whole customer experience – from the convenience of online to the sense of community.
Special offers, great customer service, convenience, personalisation, and community. These are the current building blocks of brand loyalty. If businesses can implement these strategies, they will have access to a large pool of potential customers – those that have weakened their ties with competitor brands since the pandemic.
Many of these building blocks are made with AI and personalisation capabilities. For example, special birthday discounts or accurate product recommendations require tailored digital experiences. And to do that, you need a good supply of data.
Data is the key ingredient for loyalty
Personalised experiences are driven by data. It is the digital lifeblood of organisations. It’s what helps them understand their customers, their behaviour, and their preferences.
The advantage that D2C manufacturers have over their non-digital competitors is that by going direct, they have a greater supply and control over data to leverage in how they interact with customers. Having access to valuable data such as customer demographics, purchase history and preferences can be shaped into personalised digital experiences – from offering relevant product recommendations and discounts on significant days to special offers when a certain milestone is reached, like being a member for one year.
Data also powers business strategies to increase brand loyalty through specific programmes and schemes that give customers VIP experiences.
Levels of brand loyalty
Loyalty experiences speak to the positive feelings and emotions that consumers hold towards a particular brand, which are shaped by their previous experiences and interactions. These range from providing top-quality products to exceptional customer service, operating consistently to elevate brand reputation.
Loyalty strategies should have the brand’s DNA interwoven with the experience. They give you the opportunity to give customers the VIP treatment.
Loyalty programmes, reward schemes and memberships are great strategies to develop brand loyalty. They’re not just about spending to earn points. Of course, this is still important. Our survey found that it’s the number one feature of loyalty programmes that encourages customers to sign up. But it’s much more important than that. How would your loyalty scheme be any different if it was just built on earning points from purchases?
Almost 6-in-10 consumers will sign up to a loyalty programme if they receive exclusive benefits. Early access to sales and new products are other considerations. While invites to in-person events ranks lower (9%), physical interactions are packed full of potential for deepening connections between company and customer. Cultivating a brand community, which brings together digital spaces like forums and social media with real-world events.
Cultivating a brand community that marries the digital world (social media, website, forums) with the physical world (in-person events) provides consumers with omnichannel experiences. This can be the key differentiator between you and the competition.
Examples of brand loyalty experiences
The women’s activewear brand Sweaty Betty has a loyalty programme, Insiders. Customers are rewarded with early access to sales, permanent free shipping and exclusive offers such as birthday gifts. Members can even get access to attend workout classes.
Penfolds, one of Australia’s most well-known wine producers, has nurtured a community around its Kalimna Club. It offers members exclusive benefits that are scaled across its three-tiered system. These include invitations to winemaker dinners, exclusive experiences, and early access to new products and releases.
Whittard of Chelsea serves up exclusivity for its Top Taster community. Its VIP club members get access to free store samples, priority for new products, exclusive tasting events. They can even help shape future products blends.
Loyalty also lies in longevity. R.M.Williams ensures that its quality footwear literally lasts a lifetime through its boot repair service. By resoling, resizing and reshaping customers’ much-loved pair of boots, the brand builds loyalty through its exceptional service. Customers keep their boots; R.M.Williams keeps its customers.
The iconic department store Liberty hosts its Liberty Collective loyalty programme. Its members get access to a host of benefits, such as reward vouchers, exclusive content and unique community events and experiences like beauty masterclasses.
In addition to its programme, Liberty has its beauty box subscription service. Subscribers receive four boxes of beauty products per year along with benefits such as access to exclusive products and product launches. They also receive expert knowledge on how to use the products and insight into the brands behind the products. That is how you can drive loyalty in the luxury space.
The most effective loyalty experience is based on what your customers value. Build on valuable consumer data with getting their insight and feedback on what they value and care about most. This may include the ability for customers to donate a percentage of their earned credit to charities or nonprofit organisations – connecting customers with what they care most about.
For D2Cs, the ecommerce imperative presents a strategic opportunity to hold greater control over key factors in the customer experience. With a more direct relationship, brands and manufacturers can deepen brand loyalty by holding their consumer data in their own hands and use it to power the next step in their brand experience.
Discover key consumer insights from our ConsumerDirect report and find out how shoppers behaviour has changed post pandemic.
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