Brand loyalty has always been important to businesses as a way of ensuring sales and making money; for many, retaining customers is a priority over finding new ones, as it costs five times as much to attract a new customer as to keep an old one. But there are suggestions that brand loyalty is in decline...with many blaming this decline on millennials.
There is evidence to support the idea that brand loyalty is decline. According to Access, in 2016 37% of customers made repeat purchases and were considered brand loyal, while in 2017 only 13% of customers are loyalists who don’t shop around. This would imply, therefore, that customers are becoming less loyal to specific brands and increasingly shifting between different providers, whatever the service or product they require.
Is it fair to put this down to millennials? An article by Civic Science claims that millennials ‘opt for “new” over “known”’, and this attitude can be found in many other places, but how much weight is there to it? In 2016 64% of millennials considered themselves brand loyal, and this is no small percentage, suggesting that brand loyalty does still exist. But when this is compared to other statistics, it is hard to deny that loyalty appears to be decreasing. For instance, in 2014, the percentage of millennials who considered themselves brand loyal was at a much higher 84%, showing a clear drop over the course of two years. Additionally, 74% of millennials would switch providers if there was poor customer service, which again demonstrates a marked lack of brand loyalty. An example of millennials’ lack of brand loyalty in favour of other values can be seen in the reaction to Pepsi’s recent ad with Kendall Jenner, which was widely mocked on the internet and condemned by many as being out of touch and exploitative, leading to the ad ultimately being pulled.
But is this decrease in brand loyalty specific to millennials or is it present in older generations too? Well statistics suggest that, contrary to popular opinion, older generations may actually be less loyal than millennials. While 74% of millennials would switch brands based on bad customer service, among Generation X the percentage is in fact higher, with 86% saying they would switch immediately if customer service was poor. As for loyalty schemes with various brands, 41% of Generation X engaged with these compared to 55% of millennials, suggesting more loyalty among millennials.
ne thing is clear; whatever generation it’s down to, brand loyalty overall is in decline. So the question becomes, is this necessarily a bad thing? On the one hand, brands can stand to lose out financially given the higher costs of attracting new customers than retaining old ones. But arguably, if less and less people are inherently sticking with a chosen brand, surely that means there are more and more opportunities for brands to attract new customers to replace old ones?
Ultimately, it all comes down to brands making the best of the situation and using the opportunities that declining brand loyalty creates to attract new customers.