A new customer loyalty study defines consumers as three types: Loyalists, Roamers and Neutrals. Loyalists (35%) find a go-to retailer for their needs and stick with them; Roamers (35%) always tend to shop around prior to making a purchase; and Neutrals (30%) have some go-to retailers for particular purchases but also shop around, according to the 2018 consumer survey conducted by customer.com, a division of Customer Communications Group.
To maximize customer loyalty, retailers need first to understand what elements of their current shopper experience appeals to each group. Beyond the convenience that is valued by all shopper types, Loyalists are more motivated by “Passion Factors” such as trust, fair treatment and a caring staff. In contrast, Roamers can be convinced to consolidate their purchases with a single retailer by stressing more practical elements, such as ease of purchase and returns, customer service and incentive offers. Additionally, all retailers should involve the entire enterprise in their customer loyalty efforts.
Two of the world’s most successful retailers, Amazon and Walmart, are adept at attracting consumers across the full spectrum, said Sandra Gudat, President, Customer Communications Group in an interview with Retail TouchPoints.
“For all age ranges, Amazon and Walmart come up either first or second among the list of retailers people are loyal to,” Gudat said. “Even among younger consumers aged 13 to 24 they top the list. Additionally, these two retailers are getting loyalty even from consumers who otherwise shop around. They’re successful in getting customers to consolidate their category purchases with them.”
According to the survey, the top 10 retailers most often listed when consumers were asked where they shopped exclusively to meet particular needs are:
8. Costco Wholesale
9. Best Buy
Both of the top two retailers have strategies in place that promote customer loyalty. Amazon has its 100-million-member Prime program, while Walmart has the advantage of a huge brick-and-mortar footprint: more than 5,000 stores in the U.S. (including Sam’s Club locations).
Loyalty Behavior Shifts With Life Stages
While other retailers may lack the resources available to Walmart and Amazon, they should still seek ways to acquire and retain their own group of Loyalists, while getting at least some of the Neutrals’ and Roamers’ business. But building — and maintaining — customer loyalty isn’t simple for any retailer, large or small.
One complication is that shoppers can be Loyalists for one product category and Roamers for another. Additionally, individuals will shift from Loyalist to Roamer behavior based on multiple factors, including their current life stage and the presence of children in the household.
“Customers actually move back and forth on the shopping personalities spectrum several times during their lifetime,” wrote Gudat in the report, titled: Consumer Shopping Personalities And Their Impact On Customer Brand Loyalty. “For instance, very young consumers and those aged 35 to 44 are most likely to be Roamers, while Millennials and roughly half of consumers 75+ tend to be Loyalists.”
Families with children at home are more likely to shop around before making purchases, while those without kids tend to be Loyalists. “When you become more budget-conscious, you become more of a Roamer,” said Gudat. In the report she wrote that “even though parents are often time-strapped, they appear to be more status-driven and willing to shop around for incentives.”
Recommendations For Retailers
Even though gaining customer loyalty can be complicated, it’s achievable — and critical for a retailer’s success. “The capability of creating a loyal customer is still there, despite all the distractions and the commoditization in retail,” said Gudat. “Even the people we classify as Roamers have retailers they are loyal to.”
Gudat identified several steps retailers can take to improve their customer loyalty capabilities:
• Get the entire enterprise involved: “Every piece of the organization needs to be involved in loyalty, not just those directly managing a loyalty program,” said Gudat. “Most retailers know that, but there are still a few that don’t.”
• Focus on convenience: “Retailers need to ask themselves what they are doing to create a convenient shopping experience,” she said. “Otherwise they risk losing customers along the shopping journey by not paying attention to potential friction points.”
• Determine where you are on the passion-practicality spectrum: “A retailer should know what factors are driving loyalty among their customers, and they should also know the same information about their competitors,” Gudat noted.
‘Passion Factors’ Drive Loyalists
It’s notable that the highly valued Loyalist shoppers are not motivated solely by practical concerns. To win this group’s loyalty, retailers need to score high on Passion Factors — often subjective or less tangible elements such as trust, fair treatment, a caring staff, status and the retailer’s social responsibility profile.
In contrast, Roamers are more influenced by the Practicality Dynamic. They cite receiving incentives to shop as a top motivator, and identify ease of making purchases, returns and customer service as factors that cause them to select one retailer over another.
“Among all respondents, the ability of a retailer to create a convenient shopping experience is number one in terms of determining choice,” said Gudat. “Getting these and other practical factors right is really table stakes today, but loyalty is driven not just by the practical but also by the passion factors.”
Retailers also need to be strategic with their loyalty-building efforts. “In the work we’ve done with retailers over the years, it’s been pretty consistent that the top 25% of customers account for 67% of sales, margins and profitability,” said Gudat. “Obviously retailers need to know who that 25% is and do everything they can to retain them. However, I also encourage them to look at the customers that are likely to become those valuable shoppers.” By analyzing the characteristics of these prospects, including their demographics, psychographics and purchase patterns, retailers can strengthen their overall loyalty profile.
Less valuable customers, including the “cherry pickers” who are attracted by factors like deep discounts, don’t merit as much attention. “If they don’t come into the store, I’m not going to cry,” said Gudat.
The survey collected responses from 1,027 consumers who are members of a national consumer panel during March 2018. Data was collected by Davis Research LLC of Calabasas, Calif., and respondents were asked about their loyalty to retailers and which factors drive them to shop exclusively with any given brand. Customer.com collected data on more than 300 retailers for the survey.