Brand loyalty declines in US

08 September 2011

NEW YORK: Almost half of US shoppers have become less loyal to leading consumer packaged goods brands, a new study has revealed.

Catalina Marketing, the marketing services firm, drew on loyalty card data covering the top 100 CPG brands from 21,000 food, drug and mass retail stores over the year ending July 3, 2011.

The revenues generated by this group rose by 0.7% on an annual basis, hitting $44bn, with the sales of 43 brands falling by an average of $23.6m, and 57 of their counterparts seeing an average lift of $23.3m.

More specifically, 46% of "highly loyal" customers - making 70% of their category purchases with a single brand - had changed behaviour, as 20% "defected" entirely and 26% at least occasionally bought other lines.

Some 32% of shoppers who had stayed completely loyal to a brand for 52 weeks abandoned it after trying a rival offering just once.

Elsewhere, the report suggested the loss of once-loyal customers exerted a major impact on the overall growth rate of the Top 100 brands, which would have reached 8.5% if retention levels had been maximised.

The cost of haemorrhaging buyers was felt most heavily in the ice cream category, where the revenue loss stood at 16.8%, or $15.8m per brand, totals standing at 7.4%, or $42.3m, for snack brands.

By sector, the three confectionery brands assessed lost 79% of their highly loyal customers, a figure coming in at 57% for the five bakery lines monitored, 53% for nine snack products, and 50% for four alcoholic drinks brands.

Scores fell to 37% when discussing the 14 soft drinks analysed, meaning manufacturers had done a relatively good job of engaging their target audiences.

Previous Catalina research showed 2.5% of shoppers contribute around 80% of volume sales for consumer packaged goods brands, and Todd Morris, the firm's EVP, brand development, said this cannot be ignored.

"This data would indicate we would be better suited to move toward looking at customer lifetime value and that real revenue growth could be found in small groups of consumers who offer infinitely higher revenue potential," he argued.

Data sourced from Catalina Marketing/AdAge; additional content by Warc staff