Loyal Customers Are Worth 22X More Than Average Customers, According to New Retail Report
Today, intelligent marketing service Upside releases its first industry white paper on retail loyalty, which identifies that the value of one loyal customer is equal to that of twenty-two non-loyal customers. Based on analysis of actual spend data, rather than surveyed data, the white paper offers unique retail insight from open banking data in the ongoing battle for consumers’ time, attention and loyalty.
The first-of-its kind report identifies 13 to be what Upside has coined as the “tipping point of loyalty”, otherwise known as the number of purchases needed to make customers “loyal” to your business. The in-depth and highly detailed analysis provides retailers with invaluable understanding of customers’ total spending behaviour across different retail categories, which is defined in the report as ‘share of wallet’, and how they can look to maximise their customer lifetime value.
‘The Tipping Point of Loyalty’ report uses spend data to understand consumer loyalty which comes from a sample of 7,500 customers, with a total of 15 million open banking transactions from 2019, 2020, and 2021. The selection of customers span the UK, 27% are based in London and 50% of customers are aged between 26 and 42. In an effort to improve on consumer behaviour surveys commonly used to gather spend data, this first-party data access allows Upside to have a highly accurate reflection of individual spending behaviour.
Among the other significant findings from the report, the quantified impact of the pandemic on retail loyalty suggests that customers are now less loyal than before the pandemic. During the pandemic, there was a perceived increase in loyalty, with 38% of customers increasing their spend with one individual retailer. However, as the world opens up and consumers have more choice again, we found 41% of consumers have decreased their loyalty, suggesting that the loyalty increase in 2020 was actually a result of supply chain issues and a lack of options, rather than a conscious choice.
Experts and leaders in the retail industry have provided their thoughts and commentary on the findings within ‘The Tipping Point of Loyalty’ report, including CMO at Boots UK Pete Markey, Retail Expert Tanya Bowen and KPMG’s Paul Martin.
Customers of Upside connect their bank accounts via open banking; this is to enable Upside to automatically pay cashback into an e-wallet as customers spend with retail partners. In addition to future financial transactions, when a bank account is connected, customers provide up to 36 months of historical spend data, enabling Upside to hyper-personalise retail offers.
Upside anonymises the spend data to fully protect the privacy of customers and are able to derive comprehensive and actionable insights pertaining to consumer spending behaviour, whilst ensuring that competition law is fully adhered to. For retail partners, Upside can benchmark them against their competitors and other retailers in their segment on a multitude of dimensions including, but not limited to, average order value, frequency of shop, category and wallet share, in addition to identifying behavioural patterns.
CEO & Founder of Upside, Andries Smit says “Within retail, we all intuitively know that a loyal customer is worth more than a non-loyal one. However, when we actually quantified loyalty in our data I was amazed by just how stark the difference in value was. The findings of this report really proved to me that retailers should be focussing far more on their loyal customers rather than customer acquisition. With one truly loyal customer worth the same as over 20 non-loyal customers, retailers simply can’t afford to ignore these findings.”
Companies In This Post
- Currencycloud Report – Fintech’s Secret Sauce Read more
- OpenWay launches Card- and Wallet-as-a-Service platform for CaaS providers across the globe Read more
- Advanced AI Helps Banks Double APP Scam Detection Read more
- VC Innovations’ Victor Cruz on Fintech Talents and Why “It’s All About the Audience.” Read more
- Lagardére Travel Retail Go Live With ReceiptHero’s Digital Receipt Solution Read more