No Match Found
In our PwC Customer Loyalty Executive Survey 2023, 63% of executives told us that their companies increased loyalty budgets during the last planning cycle. On average, that was about 5% of total revenue. Depending on your company’s size, that could be between $5 million and $250 million annually. Wouldn’t you like to be more certain you’re getting your money’s worth?
Compared to what consumers told us, many businesses misunderstand consumer behavior in three key areas of the customer experience: how they define loyalty, when it’s won and where it’s lost.
Executives define loyalty much more broadly than consumers. Fifty percent of executives think subscribing to a product or service is indicative of brand loyalty, but just one consumer in five thinks that’s the case. Meanwhile, 43% of executives report using customer satisfaction scores as a measure of loyalty, but only a quarter of customers say providing feedback is a show of loyalty.
There is some alignment, however. Just over half of both groups (52%) agree that recommending a brand to their family or friends is a sure sign of loyalty.
“Consumers today are thinking much more about the choices they have and they choose to do business with brands whose values align with them.”
Executives underestimate how much the quality of their offerings foster customer loyalty — estimating it at just 23%. They also overestimate how much good customer service factors into that equation, as well as several other key points in their relationships with customers.
Customers, however, tell us that their loyalty is won in the early stages of a relationship. Nearly half (46%) point to when they use a product or service and like the quality. Another 20% say it’s during online or in-person shopping and 5% more say it happens as early as when they start researching products — that’s a quarter of customers making a decision before even purchasing a product.
There’s also a disconnect on why brands lose customers, revealing what we call the “price-experience gap.” Executives think the top reasons they lose customers are price-related — prices went up or discounts ended (37% of respondents) or another brand offered lower prices (33%). Compare that to just 17% and 11% of consumers.
Instead, a consumer’s top reason for leaving a brand is typically related to experience — 37% say it’s because they had a bad experience with the product or service itself (compared to only 26% of executives) and that number is even higher among younger generations.
But don’t start pivoting to social media just yet. Seventeen percent of executives think a friend or social media recommendation would sway customers to different brands, but just 2% of consumers say that affects their loyalty. Meanwhile, nearly a fifth of consumers (18%) are willing to stop buying from a brand as part of a boycott or to support a social issue they feel strongly about, but only 11% of executives think of it as a loss leader.
There appears to be consensus on the top drivers of brand loyalty. Getting a good value for the price and quality, reliability and consistency are the most cited concerns by both executives and customers by a large margin.
That said, executives overestimate how much consumers value most secondary drivers by a good 10-18 percentage points. For example, only 8% of consumers say they keep buying from a brand because of a personalized experience, yet 26% of executives think of that as a key loyalty driver.
These drivers still matter to customers, but to varying degrees among demographics. Baby boomers are more likely to value friendly customer service and getting the most value for their money, while Gen Z and millennials are more likely to favor fast service or find it too complicated to switch to other brands.
Top suggestions from executives were adding more discounts or rewards and improving user experience or flexibility. While many executives expressed confidence in their existing loyalty programs, only about 8% said they wouldn't or couldn’t think of something they’d want to improve.
Don’t miss an opportunity to help drive incremental growth. Other industry leading loyalty programs are likely doubling down on their own strategies, meaning if you’re not investing, you could be falling behind.