When it comes to brand loyalty in a down economy, consumers are more fickle than devoted. For the average packaged goods brand, less than half of loyal consumers, or 48 percent, remained loyal from 2007 to 2008, according to a new study released Monday (June 22) by Catalina Marketing in conjunction with the CMO Council.
The study, conducted by Catalina’s Pointer Media Network analyzed the household consumer shopping behavior of 32 million consumers across 685 leading CPG brands.
Only four of of ten brands retained 50 percent or more of their highly loyal customers, such as Coca-Cola Classic (75.3 percent) and Thomas’ English Muffins (76.3 percent). But other brands retained less than half of their customers, such as Cheerios (34.6 percent) and Tylenol (34.9 percent).
“The common belief is that loyalty stays high in an economic downturn. The fact is that loyalty is fleeting and it’s up for grabs,” said Todd Morris, senior vp of Catalina Marketing.
For brands, the cost of loyalty erosion can be high. Tide’s loyal listeners spent 6 percent less on the brand, costing Tide 5 percent of its revenue. Wisk’s loyal listeners spent 38 percent less with the brand costing Wisk 25 percent of its revenue.
While consumers may be changing the way they spend their dollars because of the recession, that doesn’t mean their old behavior will return with better times.
“People are clipping coupons or trying a private label brand. It doesn’t take long to change peoples’ behavior. It’s going to be a different shopper that emerges out of this,” said Ken Featherston, managing director for OgilvyAction’s Chicago office.
If anything, the Catalina study may serve as a wake-up call to marketers to think beyond the quick sale.
“We’ve continued to see private label inch its way up. And with budget cuts and flat growth, going after valuable customers will become a higher priority,” said Tanya Collins, director of insight and planning for OgilvyAction in Chicago. “Discounting and couponing won’t build brand value, so the question for brands is how do you do both, how do you reframe the value equation beyond price.”