THE CLARUS Blog

How COVID-19 has Impacted Customer Loyalty and What You Can Do About It [Infographic]

COVID-19 has changed retail in an unimaginable way.

Loyalty was hard before, but consumer shopping behaviors have changed along with expectations.

If your goal is to continue building loyalty post-pandemic, it’s going to take a new mindset to emerge stronger.

How COVID-19 has Impacted Customer Loyalty and What You Can Do About It

 

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Concerns Over COVID-19 Have Pushed Consumers to Shop Online

E-commerce revenue soared to an unprecedented 71% in the second quarter of 2020 compared to the same period in 2019.

Retailers who haven’t already revamped their online experiences and offerings need to now, especially ahead of the holiday season.

Sixty-three percent of millennials reportedly bought a product over social media since the pandemic’s onset.

Total online spending in May reached $82.5 billion, up 77% year-over-year.

According to our data, it would’ve taken between 4 and 6 years to get to the levels that we saw in May if the growth continued at the same levels it was at for the past few years,” – Vivek Pandya, Adobe’s Digital Insights Manager.

Most categories have seen a 15% to 40% increase in online channel user growth.

For example, online grocery shoppers jumped from 38% in Q4 2019 to 52% during the pandemic.

Looking ahead to the holiday season, 35.1% of shoppers say they’ll shop online more than they did before the pandemic, with just 10.6% of shoppers say they will do less.

Retailers, the message is clear: There has been a dramatic shift to online spending since the pandemic hit.

If you haven’t already, make sure your online channels, capabilities, and loyalty programs engage consumers in a way that will retain them for the long term.

Offer benefits that create emotional connections instead of one-off discounts.

 

With This Shift, Loyalty is Decreasing

Before COVID-19 hit, nearly 2/3 of customers said their loyalty was more difficult for retailers to maintain than ever before.

Since the pandemic began, customer loyalty has been even harder to attain.

Consider that 75% of U.S. consumers have changed their shopping behaviors since March.

According to our CEO, Tom Caporaso, the dramatic shift to online shopping post-COVID has given more consumers the power of virtually infinite choice.

“They can easily find the best price, availability, and shipping speed,” Tom explained. “And they’re realizing how easy it is to shop online for purchases they used to make in-store.”

Since COVID-19, 36.6% of consumers said they now shop with more brands than they did a year ago, and 46.2% said they are less loyal to the brands they love.

Value, availability, and convenience are the top 3 reasons for shopping a new brand.6

Online purchase of grocery, alcohol, personal care products, household supplies, furnishings & appliances, and over-the-counter medicine has increased 30%-49% post-COVID.

Translation?

Retailers must work that much harder to earn customer loyalty.

They need to listen to their customers more and identify customer pain points.

Then, ensure they’re offering valuable benefits in their loyalty programs that create two-relationships and not one-time discounts.

 

Now is the Time to Become Top of Mind with a Premium Loyalty Program

Retailers can earn more customer loyalty with premium programs.

These types of programs allow brands to offer enhanced benefits to their best customers.

Customers pay a membership fee in exchange for benefits like instant discounts every time they shop, free shipping on every order, and exclusive experiences.

Learn more about premium loyalty.

Premium loyalty program enrollment grew 21% year-over-year April-July 2019-2020, according to our own retail partner data here at Clarus.

Eighty-eight percent of consumers are likely to choose a retailer whose premium loyalty program they belong to over a competitor that is offering a lower price.

Nearly 70% of premium loyalty program members will join another premium loyalty program in 2020.

Ninety-four percent of premium loyalty members shop at that program’s retailer at least once a month.

Seventy percent would join a premium loyalty program if their favorite retailer offered one and the benefits were valuable.

As consumers move online and become less loyal to their favorite brands, you need to stay top of mind. The time to differentiate through your loyalty program is now.

Has your brand investigated what a premium loyalty program can do for your customers post-pandemic?

Are You Ready to Go Premium?

If you want to become a 24/7 presence in your best customers' lives, it's time to get started.