Patterns in retailer loyalty & types of brand loyalty

Retailers and brands alike strive to establish, grow and maintain customer loyalty. Customers increasing or decreasing their loyalty is most often a gradual process that occurs over time. At 84.51°, we’ve conducted research into indicators and patterns of changing customer loyalty to Kroger. The patterns identified by this research are believed to be broadly applicable to the topic of retailer loyalty.     It behooves brands to be aware of the patterns behind retailer loyalty, as it could inform their strategies for building and retaining connections with customers. Understanding why customers are loyal to a brand is also key. We will discuss the different types of brand loyalty that are important for every brand to understand.  

Loyalty levels

Customers’ spending patterns can reveal insights about their level of loyalty to inform customer retention strategies and overall customer experience enhancement. We define the three tiers of loyalty to a retailer as: 

• Increasing loyalty: Customers increasing their loyalty over time are usually marked by an expansion in ways they engage with the overall value proposition. This may look like shopping a broader set of categories or departments, participating in additional promotions, redeeming more types of savings and rewards, leveraging more services and most commonly a combination of many of those things. 

• Consistent loyals: Most loyal customers remain loyal from year to year. However, within this large group of shoppers there is certainly variation – some customers increase their spend over baseline from quarter to quarter while some decrease spend minimally enough to remain a loyal shopper. Most maintain a similar spend pattern. These households are likely already shopping across departments and engaging broadly with savings vehicles, rewards, services, private label items, etc.    

• Decreasing loyalty: Decreasing loyalty is most evident over a long time. Loyalty decline is not abrupt for most of the shoppers in this smaller group. Rather, it is a gradual change over time. Among shoppers who became non-loyal throughout a year, the early stage of declining loyalty is marked by slowing growth. Decline in spend compared to baseline comes into play and is pronounced by the end of the analysis period. For loyal households who end up lapsing, this pattern plays out much more quickly. This much smaller set of households experienced substantial declines or fully stopped spending within two-three quarters.  

Different types of brand loyalty

In addition to loyalty to a retailer, customers also exhibit brand loyalty that develops and changes over time. Along with monitoring loyalty levels, it is important for brands to understand why customers are loyal to their brand to develop effective strategies to build and maintain connections with customers.     Brand loyalty is multifaceted, encompassing various types such as behavioral loyalty, attitudinal loyalty and situational loyalty, each reflecting different aspects of a customer's relationship with a brand. Six common types as defined in the Journal of Marketing and the Journal of the Academy of Marketing Science include: 

1. Behavioral loyalty: This type of loyalty is based on repeat purchasing behavior. Customers consistently buy from the same brand, often out of habit or convenience, without necessarily having a strong emotional attachment to the brand. This loyalty is observable through purchase frequency and brand choice consistency.  

2. Attitudinal loyalty: Reflecting a personal connection and positive attitude towards a brand, customers with attitudinal loyalty not only repeatedly purchase but also exhibit strong brand preference, advocacy and low price sensitivity.  

3. Situational loyalty: This form of loyalty is defined by specific circumstances or constraints, such as a lack of alternatives, promotions or convenience. Customers may show loyalty to a brand when it suits their current needs or situations, but this loyalty may not persist if those conditions change. 

4. Cognitive loyalty: Based on the perceived value and benefits of a brand, cognitive loyalty is driven by rational evaluation. Repeat customers that exhibit cognitive loyalty believe the brand offers the best combination of quality, price and features. This type of loyalty is strong as long as the brand continues to meet or exceed expectations. 

5. Affective loyalty: This loyalty is built through positive experiences and brand interactions. Customers engage because they experience satisfaction and pleasure from using the brand, leading to a strong preference and emotional commitment. However, if external factors or minor disappointments accumulate over time without being addressed, these customers might slowly reduce their engagement and spending as their positive feelings wane. 

6. Conative loyalty: This type of loyalty involves a strong intention to continue buying from a brand, often driven by a combination of satisfaction, emotional connection and habitual behavior. When this loyalty type is strong, customers are likely to continue their buying behavior unless they encounter persistent issues. If they do, their loyalty can erode gradually as they begin to consider and eventually switch to alternatives. 

Take action

By recognizing early signs of declining engagement and spending and analyzing the type of loyalty that is at stake, brands can intervene with informed strategies to reinforce customer dedication. For example: 

• Taking a laser-focused approach to improving loyalty by utilizing insights into shopper motivations, attitudes and preferences.   

• Enhancing customer experiences to maintain emotional and affective loyalty. 

• Improving product quality and innovation to uphold cognitive loyalty. 

• Offering personalized incentives to strengthen transactional loyalty. 

• Ensuring consistent product availability and convenience to support behavioral loyalty. 

• Implementing retention strategies for high value households, such as exclusive offers through a loyalty program, personalized communication and addressing specific pain points that may be causing disengagement. 

• Developing a lapsed-household recovery program. This could include win-back campaigns, surveys to understand reasons for leaving and offering significant incentives to re-engage households. 

Flip the script on attrition

A decline in loyalty is intricately connected to the various types of loyalty customers exhibit. Each type influences how and why customers or households might slowly disengage from a brand, highlighting the need for brands to maintain a multifaceted approach in their loyalty strategies. Here are four tips for flipping the script on customer attrition: 

1. Monitor: Continuously monitor spending patterns across different loyalty segments. Early detection of declining spending trends allows for timely interventions. 

2. Engage: Proactively engage with households showing early signs of decline. Regular touchpoints and personalized interactions can help sustain loyalty. 

3. Be relevant: Understand where households are in their loyalty stages and tailor strategies accordingly. Recognize that not all declines in loyalty are equal and require different approaches. 

4. Ask for feedback: Collect and analyze customer feedback to understand underlying issues causing declines in loyalty. Address these issues promptly to prevent further erosion. 

Understanding and managing customer loyalty is crucial for retailers and brands aiming to sustain long-term success. The gradual nature of loyalty shifts, whether increasing or decreasing, underscores the importance of staying close to the customer and identifying patterns that signal changes in loyalty levels. By leveraging insights from spending patterns and categorizing loyalty types, brands can implement informed strategies to nurture and strengthen customer connections, ensuring that they remain competitive in a dynamic marketplace. 

In today’s competitive retail landscape, customer loyalty is not just a measure of success but a critical driver of sustainable growth. By understanding the complexities of loyalty and acting on the insights gained, brands can build lasting relationships with their customers, ensuring long-term growth and resilience. 

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84.51° is a retail data science, insights and media company that can help brands acquire and retain valuable shoppers. Learn more about how we combine cutting-edge research techniques with industry-leading data science to drive results.