The Science of Loyalty: How Brands Can Keep Customers Coming Back
Brand loyalty is a universal currency. It’s the thread that binds relationships, the foundation of trust, and, in the world of e-commerce, the key to repeat business. For years, UK consumers prided themselves on their consumer loyalty towards brands, with 64% considering themselves loyal in a 2023 study. However, in just one year, that figure dropped by 7%, signalling a growing shift in brand loyalty trends.
Recent surveys reveal that 83% of UK consumers now feel undervalued by brands. The cost-of-living crisis has tightened budgets on both sides, leaving businesses and consumers alike searching for the best value. While brands continue to offer hefty promotions, these discounts eat into profits, making them an unsustainable strategy in the long run.
The Evolution of Loyalty: From Points to Partnerships
Traditionally, brands have “bought” customer loyalty through well-known tactics:
- Points-based loyalty programmes (like Tesco Clubcard and Boots Advantage Card)
- Tiered membership schemes (offering increasing benefits over time)
- Stamp collecting and punch cards (the classic “buy 9, get 1 free” approach)
Among these, Tesco and Boots stand out as industry leaders because their brand loyalty schemes provide tangible savings, something consumers genuinely appreciate. But even these once-unshakable giants aren’t immune to change. With customer churn at an all-time high, businesses are rethinking their approach to building brand loyalty.
A Smarter Loyalty Model: Rewarding Without Losing Margins
The reality is stark: acquiring a new customer costs five times more than retaining an existing one. That is why more brands are shifting towards reward programmes powered by brand partnerships, a model that delivers value without cutting into margins.
Companies like EE, Plusnet, and Pets at Home have embraced this strategy, offering in-app rewards via Tyviso. Unlike traditional brand loyalty models, these rewards don’t cost the host brand a penny, yet they increase customer loyalty and retention.
The results speak for themselves:
- Plusnet reduced churn by 5% after implementing the same strategy.
- EE saw a 35% drop in churn within just six months of launching its brand loyalty programme.
Can Brands Afford More Price Cuts? Or Is It Time for a Smarter Approach?
With 64% of UK shoppers citing affordability as the biggest factor in their purchasing decisions, brands face a tough question: Can they keep reducing prices, or is there a better way to increase brand awareness and loyalty?
The answer may lie in adding value rather than cutting prices. Brand partnerships create a ‘triple win’ scenario:
- Businesses retain more customers and grow revenue.
- Advertisers drive sales by offering exclusive promotions.
- Consumers enjoy extra perks without spending more.
In challenging times, collaboration is king. The brands that recognise this shift, and quickly adapt, are the ones most likely to build lasting, loyal relationships with their customers.
Maria Covlea
Marketing @ Tyviso
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