German loyalty levels fall

25 March 2011

DUSSELDORF: Shoppers in Germany are becoming less loyal to specific brands, a trend fuelled by evolving habits and inconsistency on the part of marketers.

Integrated agency Serviceplan and insights provider GfK reported that manufacturers of "everyday" goods from facial cream to toothpaste and crisps lose 40% of loyal customers a year, up from 32% three years ago.

Haemorrhaging committed buyers is particularly pernicious given this audience – originally attracted by quality, brand image, reputation and similar characteristics – deliver between 60% and 70% of sales.

By contrast, factors linked to sustainability, the provenance of products, research and staffing then generate 30% to 40% of demand.

Having constructed an index assessing the consequences of improving performance, firms boosting loyalty levels among consumers posted 129 points in terms of heightening market share.

This can be measured against only 91 points regarding rivals where affiliation ratings were waning.

Based on analysis of 90 brands, the study argued the most successful operators continued to invest in communications during the downturn, and adopt a multimedia marketing mix.

Consistently running campaigns reinforcing core messages and achieving a meaningful connection with shoppers are also vital drivers.

Emotional, long-term tactics were thus said to increase acceptance and uniqueness, build loyalty, and, therefore, support around 70% of sales.

Short-term, rational strategies like promotions, distribution and innovation yield the 30% of sales not attributable to these areas.

Indeed, one contributor behind declining loyalty may be that half of 100 brands monitored, all among the biggest spenders in Germany, changed advertising slogans and their "face" every two years.

Perhaps more than coincidentally, such an approach is broadly in keeping with the fact chief marketing officers typically boast a tenure lasting approximately 2.5 years.

Elsewhere, the report suggested 71% of new product launches fail in the first year after their official introduction, demonstrating just how challenging it is to crack the FMCG sector.

Data sourced from Serviceplan; additional content by Warc staff