Report highlights lack of brand loyalty

Three in every four people do not have very strong feelings of loyalty towards their favourite brands, finds the latest research from customer management expert Arvato Loyalty Services.

Consumers in Tyneside and Teeside, Wales, Yorkshire the South Coast counties feel more loyal towards their favourite brands than the national average.

This is in marked contrast to more cynical and difficult-to-engage consumers in London, Scotland and East Anglia.

These are the findings of the latest research from customer management expert Arvato Loyalty Services.

The research, which interviewed a representative UK sample of over 1,000 people, provides UK plc with a stark warning to concentrate on increasing customer satisfaction and engagement at a time when lacklustre Christmas sales and profits, as well as a variety of gloomy predictions for the 2008 economic outlook are being reported.

Companies wishing to buck the expected business slowdown trend this year need to ensure that they minimise customer defection by keeping closely in touch with customers, and providing them with the quality, service and added value they really appreciate.

Whilst this research showed that a quarter of people do feel strongly loyal towards their favourite brands, conversely, three-quarters do not have such strongly loyal feelings.

In a year where most pundits are currently predicting an economic slowdown, these findings show the importance of reaching the two-thirds of consumers with ambivalent feelings of loyalty, and creating personalised, added-value initiatives and dialogue that keep customers engaged with the brand.

People living in the Tyne Tees area top the bill for feelings of brand loyalty, with over 33 per cent describing themselves as 'extremely loyal' towards their favourite brands.

The Welsh come a close second with over 30 per cent 'extremely loyal' consumers.

On average, across the nation, around 25 per cent of people are strongly loyal to their favoured brands.

However, sophisticated Londoners, with their high exposure to a wide range of product choice, come in well below the average at just over 20 per cent.

Nevertheless, cynicism is not the preserve of the capital.

The Scots (20 per cent) and - even more so - inhabitants of East Anglia (16 per cent) are even less inclined to have strong feelings of loyalty towards their favourite brands.

Graham Ede, Managing Director, Arvato Loyalty Services, commented: "Innate brand loyalty, which as we can see from this research sits around the 25 per cent mark, is by no means enough to ensure effective business performance - especially in what looks like being a tight year in the UK.

"This year is going to be a year of winners and losers, and the winners will be those who take the trouble to understand their customers, then deliver products, services, communications and added-value activities that really appeal to those customers on an individual basis".

Loyalty initiatives do work, when they are well designed and executed.

The number of extant schemes has doubled in the last decade, and that wouldn't have happened if there had been no return on investment.

On the other hand, the loyalty bar has been raised.

And there is much more to loyalty initiatives nowadays than simply setting up a card-and-points scheme.

Firms are now mounting special events for their customers, or setting up special interest clubs, or getting together with affinity brands to deliver exclusive offers or privileges.

It has been recognised that effective loyalty initiatives depend on basic customer service standards being high.

And access to the company needs to be through whichever combination of channels (store, phone, email, web, text, etc) that customers prefer.

Any company wishing to buck the predicted economic gloom of 2008 needs to exhibit excellence in all these areas.

"Nor can firms situated in high-loyalty regions afford to sit back and relax: the overall majority of people do not feel highly loyal even to their favourite brands", said Ede.

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