Customer Loyalty Elusive, but More Important Than Ever

Customer loyalty is becoming harder for retailers to earn, and even harder to keep. 


An Accenture survey of more than 5,800 consumers in 17 countries about their experiences with 10 industries found that only 20% of consumers feel loyal to the retailers they do business with. Overall, satisfaction was down in each of the 11 different categories of service that consumers were asked about in the Accenture Global Consumer Survey. From the innovation of technology to the volatility in prices to the evolution of store format, the challenges are building but show the immediate need for retailers to transform loyalty from beyond just rewards to a customized, two-way dialogue that reaches all parts of the customer experience. 


Retailers and consumer goods companies start off at a disadvantage, as consumers find it inherently easier to switch stores and brands than to switch other service providers, such as insurers, banks or wireless companies. In fact, retailers experienced the highest rate of switching among service providers last year, with 17% of consumers saying they stopped doing business with a retailer altogether and switched to another.


While it is easy for customers to switch from one store or brand to another, retailers have historically experienced more success than other industries leveraging loyalty programs. The survey showed that participation in retail loyalty programs grew from 45% in 2009 to 52% in 2010, and the percentage of retail customers who were persuaded to remain a customer as a result of loyalty programs increased from 49% in 2009 to 54% in 2010.


Loyalty programs have become an essential tool for building and retaining consumer engagement with retailers. However, you cannot rely on loyalty programs alone. Loyalty is an outcome achieved when retailers deliver against customer expectations at each and every customer experience touchpoint; it’s not simply about the program. 


The survey research and industry experience indicates > that retailers must address the issue of customer loyalty on three fronts simultaneously: 


1. Obtain deeper insight into customer thinking. Through effective analytics, retailers can gain a better understanding of what matters most to customers in their purchase and research decisions. This knowledge can be used to help meet the needs of different types of customers and forge stronger relationships.


2. Make better use of technology. Retailers can still do more to improve the coordination and effectiveness of their email advertisements, online banners, online ordering and personalized offers. More than three-quarters of consumers (77%) say that the increased use of technology has improved their experience in choosing providers, but consumers want the digital experience and the in-store experience to be consistent.


3. Increase customer satisfaction levels. Many store chains need to increase their investment in employee training, as customers are most satisfied with being able to deal with employees who are polite, friendly and knowledgeable, and also do not want to wait to be served. 


While price will always be an issue, consumers’ low satisfaction levels give retailers an important opportunity to differentiate themselves from their competitors. They can do this by improving service, making better use of technology, creating and maintaining effective loyalty programs, and getting “inside the customer’s head” to identify the best ways to build loyalty, increase engagement and turn satisfied customers into active advocates for their stores.


Chris Donnelly is a senior executive in Accenture’s Retail practice and the management consulting lead for retail in North America. Dawn Palmer is a senior executive in Accenture’s Customer Relationship Management practice who focuses on solutions for the retail industry. Accenture is a global management consulting, technology services and outsourcing company.