Frequency does not equate to loyalty

25 March 2014
ATLANTA: The traditional view among retailers that their most frequent and high-spending customers are also their most loyal has been challenged by new research, which suggests true store loyalty is much more likely among infrequent shoppers.

Based on analysis of consumer purchase behaviour covering 70% of US households (and 30% of households in the UK), the study was conducted by Cardlytics, a firm which specialises in "card-linked" marketing and analysis of financial transactions.

Its report, "Understanding True Loyalty: Gaining Insight into Customer Loyalty Based on Whole-Wallet Spend", examined five retail categories – restaurants, apparel, gas and convenience, grocery and general retail – and found that, in each case, "light" customers were more loyal than "heavy" customers.

"Light" customers were identified as consumers who make less than one category trip a week, "medium" customers as those who make between one and 2.5 trips a week, while "heavy" customers made a minimum of 2.5 category trips a week.

With a definition of loyalty based on customers who make at least half their category visits to the same business, the study found that in the apparel category this applied to only 15% of "heavy" customers compared to as many as 75% of "light" customers, Marketing Charts reported.

In the restaurant category, only about a quarter (23%) of "heavy" customers went to their favourite restaurant more than half the time compared to over half (57%) of "light" customers.

More than two-thirds (69%) of "light" customers visited the same store in the gas and convenience category for at least half of the time, compared to 39% of "heavy" customers, although the patterns of behaviour were more closely aligned in the grocery and general retail sectors.

A full 86% of "light" customers visited the same grocery store at least half of the time compared with 72% of "heavy" customers while the comparison for the general retail category emerged as 89% and 65% respectively.

Although "heavy" customers remain important because of their higher spend, Cardlytics advised marketers to take a "whole-wallet" view of consumer spending and to tailor their campaigns to each category of consumer.

"Traditionally, customer loyalty has been gauged by how frequently a consumer shops with a business," said Kasey Byrne, CMO at Cardlytics.

"While frequency does play a factor, we must look at where else the consumer is shopping to gain a complete perspective of customer loyalty," she added.

Data sourced from Cardlytics, Marketing Charts; additional content by Warc staff
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