By Daniel Hunter
Companies have made a greater effort to retain customers than they did previously as the economic slowdown of the last few years has dragged on, new research from retail loyalty specialist GI Insight reveals.
The survey of more than 1,000 consumers across Britain shows that 74% have seen firms “wake up to the need to give their customers better, more individual service, attention and offers” as businesses and their clientele have continued to face tough economic conditions in recent years. The survey was representative of Britain by age group, gender, region and social class.
The research, conducted during the first quarter, also shows that firms have maintained their focus on building loyalty even as the UK has moved out of recession, revealing that 58% of consumers say many of the companies they purchase from have been sending a greater number of relevant and personalised communications and offers over the last year.
The research makes clear that companies have made greater efforts to develop stronger relationships between their brands and consumers using data gathered through loyalty schemes and other sources, as 54% of the consumers surveyed say they believe companies they deal with have used their knowledge of their customers’ preferences, tendencies and needs to improve the service they received over the last year.
The survey shows that many companies have relied on loyalty schemes to appeal to customers through the recent difficult economic times with 68% of consumers saying a loyalty programme was a factor in keeping them purchasing from at least one company during the last few years. Indeed, the research revealed the vital role loyalty schemes play in enabling companies to gather the information they need to better target and build relationships with their customers, as 77% of respondents say they don’t like giving personal details to a company unless it is through an established loyalty programme.
The study also reveals that 58% of consumers feel they have received value in return for their loyalty and, as a result, have stayed faithful to certain brands, retailers and suppliers — despite the fact only 40% noticed the schemes they belong to are increasing points, improving rewards or providing more bonus points opportunities.
“These findings confirm that companies are finding that aggressive customer retention strategies supported by strong loyalty programmes are working for them in the current tough economic climate," Andy Wood, Managing Director of GI insight, commented.
“During recessionary times, economic hardship encourages ‘promiscuous’ shopping behaviour among consumers as they seek out the cheapest deals. When budgets are tight and customers more willing to shop around for bargains, companies must decide how best to secure their interests. Is precious budget to be spent protecting existing customers or poaching those of competitors?
“With studies exposing that it costs up to ten times more to generate new custom than to uphold existing relationships, maintaining a pool of current customers and reducing churn is imperative — particularly in a turbulent economic environment. It is telling that our survey reflects the fact that customer retention has clearly been top of the agenda for many businesses over the last few years, with many having realised the importance of loyalty schemes in helping them achieve this.
“Greater efforts have been made to use data — gathered from loyalty programmes and other sources — to strengthen relationships between brands and consumers. In fact, the study shows that even when the outlook appears more positive, firms have not made a marked move from retention to acquisition, with many continuing their focus on building and preserving loyalty.”
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