CX Prediction 2022.1 — Brand Loyalty Rebooted

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This is part 1 in a 5-part series. Please download our CX Predictions for 2022 ebook for our full report.

COVID killed brand loyalty. How will we bring the mojo back in 2022?

Brand loyalty took a nosedive during the pandemic with 75% of consumers trying a new shopping behavior since COVID started. This includes trying new brands, new retailers, and new generics.

During the pandemic, consumers vented their need for novelty by ordering new toothpaste, a different cereal, or engaging in a fully new routine. When consumers couldn’t browse grocery store aisles, getting new products delivered scratched the itch for something outside the routine.

But the great brand realignment isn’t over. McKinsey reports that consumers intend to continue these new habits after pandemic restrictions ease. Eighty percent of consumers intend to continue use of private labels and almost as many intend to continue using new brands (73%) and new retailers (79%).

Image courtesy of McKinsey

Why Loyalty Matters

Smart marketers know that a 5% increase in customer retention can increase company revenue by 25-95%. In short, it can be easier and more profitable to keep customers you have than attract net-new customers. Loyalty matters because regular customers tend to be your best customers.

If consumers tried new or private labels during the pandemic, it should then come as no surprise that Forrester reports that loyalty and retention marketing budgets increased by 30% in 2021. CMOs are attempting to shore up loyalty by putting the customer at the center of everything they do. Expect to see customer experience and marketing grow ever closer in 2022. These leaders bet that customer loyalty (and the repeat purchases it drives) is well worth the marketing investment.

Why Consumers Switch

The pandemic forced consumers to change behavior, but that isn’t the full story around consumers’ lack of loyalty. It’s simply easier these days to produce products, purchase advertising, and find a receptive audience. This speed to market is part of the reason there are so many small direct-to-consumer brands appearing recently.

Established brands are competing against nimble, upstart competitors leaning into the technology and business trends shaping our post-pandemic world. There are fewer barriers than ever to anyone with a product and the appetite for customer acquisition. Jess Huang, Partner at McKinsey in Silicon Valley, says that:

“[I]t’s not that consumers are necessarily becoming less loyal, it’s just so much easier to access them and so much easier for them to try something new. Brands are really trying to figure out a way to develop and maintain that relationship with the consumer.”

The relationship between consumer and brand is the key element. But the quick decline in brand loyalty may indicate that our relationships with those customers wasn’t as strong as we thought going into the pandemic.

How to Earn Back Wandering Consumers

Some experts encourage a return to marketing basics to improve brand-customer relationships. Other experts like the idea of paid loyalty programs offering high-value rewards.

At Alchemer, we recommend making that brand-customer relationship your highest goal. Growing relationships takes effort, but we’ve found that our best relationships typically lead to our best growth opportunities.

Our recommendation to business leaders is to become customer-obsessed in 2022. It’s a huge task to orient away from a product-first or company-first mentality. But shifting to a customer-first mentality makes all the difference.

Learn how to focus on customer relationships and become a customer-centric company using our five steps to transform your company.

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