By Daniel Hunter

New research into UK customer loyalty in 2012 has revealed that, while banks top the list for customer loyalty, supermarkets are not far behind, opening the potential for loyal banking with supermarkets.

66 per cent consumers surveyed were loyal to their bank, while 62 per cent feel loyal to supermarkets. With Tesco launching a mortgage service in August, and the recent announcement of Sainsbury’s and Lloyds launching two credit cards for Sainsbury’s bank, there is a suggestion that supermarkets are gaining a significant foothold in the personal finance market.

While the research shows that more customers feel loyal to banks than supermarkets, this is not reflected in their loyalty scheme participation with these organisations. 68 per cent of supermarket customers are part of a loyalty scheme, whereas only 16 per cent of bank customers are part of a loyalty scheme.

This gap is widened further amongst respondents who stated specifically that they are loyal to their supermarket or bank. Of those who feel loyal to their supermarket, 48 per cent are part of a supermarket loyalty scheme, compared to only 14 per cent of those who feel loyal to their bank being part of a bank loyalty scheme. Although undoubtedly explained in part by the proliferation of available supermarket schemes and the rarity of banking schemes, it leaves the question, can supermarkets leverage the information they have on their customers to improve their banking offer?

Sponsored by European customer interactions solutions specialist — The Logic Group, the independent research was conducted by leading market researcher, Ipsos MORI among 2,018 UK customers in 2012.

“From loyalty schemes, supermarkets have a wealth of customer information including their spending habits, which can be an invaluable asset in finance management," Jon Worley, Director of Customer Interactions at The Logic group commented.

"Sainsbury’s and Tesco already offer bank services, which are seeing a great amount of traction, suggesting consumer familiarity with the brand is impacting on their banking choices. Partnering with known high street banks also adds credibility to their banking services.”

Trust: Loyalty does not mean protection

Due to the sensitive nature of banking, it is important that consumers feel like they can trust supermarkets with their money. The findings from the report suggest that habit and trust are the two key reasons consumers are loyal to their bank. While habit is a factor in supermarket loyalty, the research findings suggest that joining a loyalty scheme does not necessarily lead to customers trusting an organisation, with under half (46 per cent) of respondents saying they trust companies running loyalty schemes to keep their details safe.

“For supermarkets to offer an independent banking service to rival high street banks, they need to ensure customers feel they can trust them," Worley continues.

"Customer insight is a double edged sword. While supermarket banks can use their insight to advise customers on their spending and offer them rewards/promotions based on their habits, a potential barrier to consumers choosing to bank with a supermarket may be that they feel the supermarkets have too much information about them, or that their data could be compromised through a security breach.”

Social Grade: Supermarkets surpassing banks

The report also found that when measuring feelings of loyalty amongst respondents in the social grade category D-E (semi and unskilled workers and those with state pensions), supermarkets draw level with banks, with 63 per cent of respondents feeling loyal to their supermarket, compared to 62 per cent feeling loyal to their bank.

“This insight into the D-E loyalty is interesting as these respondents have ‘less to lose’ in terms of perceived valuable assets and may have a more turbulent relationship with their bank. Due to their lower income, they may be more reliant on offers and rewards offered by supermarkets. In the scenario of banking with a supermarket, this group may be more receptive to such a scheme as they have a positive relationship with their supermarket” Worley comments.

Convenience: One card

Just under half of all respondents (48 per cent) would like the convenience of using one card for their banking and loyalty schemes (just under three times the proportion who say they wouldn’t).

The more affluent the respondent, the more open they were to using one card for all transactions, with 56 per cent of those social grade AB agreeing they would like to use their credit/debit card as their loyalty card, rather than having lots of loyalty cards (15 per cent disagree). Furthermore, 59 per cent of those who are members of loyalty schemes with their banks would like the convenience of one card (14 per cent disagreed with the statement).

“It is clear that one card for all transactions is appealing to consumers. This could be viewed by banks and supermarkets as linking a customer’s existing bank card to their supermarket loyalty scheme, but it could also suggest that potential exists for supermarkets to launch one branded ‘super card’.

“The more affluent respondents wanting to use their debit card does not necessarily mean they would leave their bank to join a supermarket bank, but does highlight the demand for convenience in loyalty schemes amongst consumers. The consumers who are members of bank loyalty schemes are the keenest group to use their credit/debit card with loyalty schemes, further suggesting that consumers would like to streamline their loyalty schemes and somehow link them to reap the rewards,” says Worley

Potential for supermarket/mobile superbanks

Out of all UK sectors covered by the research, mobile network operators rank third overall for customers feeling loyal — just behind banks/building societies and supermarkets. When broken down by age, the 15-24 year old category are just as loyal to their mobile operators (51 per cent) as their supermarkets (50 per cent).

Furthermore, when measuring customer satisfaction amongst loyalty schemes, mobile operators offer greater satisfaction with 31 per cent of members satisfied compared to 27 per cent for supermarkets and just 25 per cent for banks.

Worley concludes, “If we are future-gazing, the loyalty between the ‘next generation’ of consumer bankers suggests they will have a solid relationship with mobile operators. Mobile operators having a high level of customer satisfaction amongst their loyalty scheme members coupled with the expanding opportunities for mobile payments could provide a strong partnership for supermarkets looking to move into banking."

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