Recent data is pointing toward an evolving, and perhaps unsettling, trend in the world of
consumer behavior. Brand loyalty seems to be fading, and even more rapidly in the years since
the pandemic. The figure dropped 11% over the previous year alone, decreasing from 79% in
2022 to 68% in 2023, according to loyalty index research.

So, what’s a brand to do? Let’s first look at the underlying dynamics.

What’s Changing Brand Loyalty?

Changes in consumer behavior were widely observed during the pandemic. The dramatic shift
toward online shopping behaviors had a long tail of effects, including a major impact on
consumer loyalty. In a survey by Ketchum three months into the pandemic, 45% of consumers
reported changes to their brand preferences, and the majority of those expected the changes to be permanent. By 2022, McKinsey was calling it the “loyalty shake-up,” with more U.S. consumers switching brands and retailers than 2020 and 2021 – and 90% reporting plans to continue doing so.

As with many of the trends that were “turbocharged” by the pandemic, the shifts in brand loyalty had begun long before. In the past, consumer choice was constrained by simply fewer brands, particularly among those that had enough recognition and reputation to become household
names. Consumers’ ability to research and learn about new brands was much more limited, and
what’s more, the actual process of switching brands was often harder. Particularly when it came
to professional services, customers needed to physically visit a brick-and-mortar building, and
businesses were often able to leverage contracts that could penalize customers for changing
providers.

As we know, things are much different today. In the digital-first world, consumers are spoiled for
choice and have a wealth of information at their fingertips. It’s easier to learn about and try new
products and services – a double-edged sword for brands. High price inflation has complicated
matters further. Instead of sticking with preferred brands, consumers are now more inclined to
make choices that fit with their budget.

It’s Still Possible to Maintain Strong Customer Relationships

Though consumer behaving is changing, hope is not lost for businesses that want to cultivate
lasting relationships. In fact, because of the competitive environment, the investments you make
in building customer trust and loyalty is more important than ever. Here’s how to adapt to the
trends.

Know Your Customers Well. Even if you’ve had the same customer for a decade, they aren’t
the same customer today as they were 10 years ago. Customer profiles are dynamic and should
be constantly updated to reflect changes in customer behavior, preferences, and demographics.
As the world and your customers’ lives change, so should your understanding of their needs
and preferences. Data-driven customer personas can paint a vivid and current view that’s
rooted in today’s realities.

Utilize Data-Driven Insights. Make sure you have access to current, trustable consumer data
about your target audiences. Leverage both first-party data with top-tier third-party data to gain
deeper insights into audience preferences, needs, and behaviors. Use these insights to strengthen emotional connections with customers by aligning with their values, aspirations, and
preferences and deliver exceptional customer service.

Personalize Interactions. Appropriately target your marketing efforts and personalize
interactions to make customers feel valued and understood. This means segmenting your
database, tailoring your communication, offering relevant recommendations, and recognizing
individual preferences.

Make every experience a good one. Customer expectations are high and delivering an
exceptional experience at every touchpoint is essential for building and retaining loyalty. In
addition to using data to create personal interactions, those insights can help you find ways to
go the extra mile and create a lasting impression. If any issues do arise, be sure to resolve them
quickly and efficiently.

Listen, Solicit, and Respond to Feedback. Keep your finger on the pulse of public opinion by
using modern sentiment analysis methods. This allows your business to easily gather and
analyze feelings about your company brand, industry trends, specific products, or relevant
issues. Build upon this by actively seeking feedback and using it to identify areas for
improvement.

Remember, every business is confronting changing consumer behavior and declining loyalty –
but not every business will respond effectively. Make sure to differentiate yourself with a
strategic, data-informed approach and you’ll be rewarded with enduring customer relationships.
If you need help navigating the new waters, reach out to set up a conversation!