Frequent shoppers aren’t necessarily loyal
Through a special arrangement, presented here for discussion is a summary of a current article from MarketingCharts, a Watershed Publishing publication providing up-to-to-minute data and research to marketers.
A frequent customer is not always a loyal one. That a conclusion of a new study from Cardlytics based on a "whole-wallet" analysis of transaction records held by banks for nearly 70 percent of U.S. households. The research indicates that customers who frequently visit specific retailers tend to be heavy "category spenders", meaning that they also frequently visit other retailers in the same channel. Instead, true loyalty is often the domain of "light customers" who make fewer trips to stores but typically shop at the same ones.
The analysis looked at five retailer channels: restaurants; apparel; gas and convenience; grocery; and general retail. Rather than simply analyze how often customers of these channels visit specific stores (which might be how the stores themselves determine loyalty), the whole-wallet approach based on transaction records looks at how often customers visit stores as a percentage of their total channel visits.
Looking at how customer loyalty differs among restaurants, apparel and grocery:
- For restaurants, 44 percent of customers dine at the same one for more than half of their dining trips out;
- For apparel, 53 percent shop at the same store the majority of the time;
- For grocery, 81 percent visit the same store most of the time.
On the surface, that shows a significant degree of loyalty to favorite stores.
But a deeper analysis indicates that loyalty (defined here as at least 50 percent of category trips made to the same store) is much more prevalent among infrequent than frequent customers of each channel.
In each case, "light" customers (fewer than 52 trips a year) were more loyal than "heavy" customers (130 or more trips). Here’s how those comparisons broke out at the extremes by channel:
- The gap was more severe in apparel, where just 15 percent of "heavy" customers made more than half of their trips to their favorite store, compared to 75 percent of "light" customers;
- The gap was much narrower in grocery, where 86 percent of "light" customers visited their favorite store at least half of the time versus 72 percent of "heavy" customers; and
- A similar pattern was apparent for general retail, where 89 percent of "light" customers visited the same store the majority of the time versus 65 percent of "heavy" customers.
Obviously, heavy visitors to a channel are going to account for more dollar sales than light visitors — even to particular stores. And in general, the top 20 percent of customers accounted for a greater share of spending in each category (63-69 percent) than share of trips (56-60 percent).
- Retail Transaction Data Suggests Frequent Shoppers Aren’t Necessarily Loyal Ones – MarketingCharts
- Understanding True Loyalty – Cardlytics
Is the frequency of shopping visits a flawed metric in determining customer loyalty? Should stores be exploring ways to tap into the infrequent yet seemingly loyal customer?