In the digital world, your consumers can’t help but shop around.
Regrettable, but true… loyalty is down, but not out.
The past few years have seen exponential growth in tools that have made researching and purchasing products online vastly easier. We’ve seen an explosion of mobile shopping apps that showcase options, simplify pricing, compare product specifications, and facilitate peer reviews that make switching brands easier. It’s now possible to size up brands effortlessly. Additionally, social media now lets consumers know exactly what their friends are buying and what they like and don’t like about those brands. The sheer weight of all this knowledge encourages even your best consumers to shop around and changes our marketing paradigm away from just encouraging loyalty to thinking about every consumer as a potentially “new’ buyer (see my series on Byron Sharp’s work).
Recent work by Mckinsey illustrates this point. The research covers more than 125,000 consumers, shopping for more than 350 brands.
The numbers tell a startling story. Of the 30 categories McKinsey researched, only 3 were loyalty driven, with consumers predominantly making the same brand choices from one purchase to the next rather than shopping around- mobile carriers, car insurance, and Investment companies. In the other 27 categories, consumers exhibited strong shopping tendencies.
What surprised McKinsey was not only how ephemeral loyalty is, but also how often consumers switched brands once they decided to shop. They obviously had avoided reading Byron Sharp’s work!
In the categories where they examined purchase behaviour, only 13 percent of consumers were loyalists. 87% of consumers were shopping around.
A portion of this group—McKinsey called them the vulnerable re-purchasers (29% of buyers) —ultimately didn’t change brands. But the remainder, comprising 58%, became switchers.
Incumbent brands retained buyers 42 percent of the time- which is not bad, but significantly down- but had to work had to keep these numbers.
Ok, McKinsey has painted the picture we all see everyday… What’s their response?
Admittedly this advice is free, and they are trying to get you to buy their advice, but this superficial advice is basically useless.
The positive about this report is it reinforces what we know, buyers are decreasingly loyal, and increasingly searching for options. And what we do is simple work to increase penetration amongst consumers, don’t focus on just loyalty… create an expectation, deliver an experience, and get out the message more widely.