Upside has released 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 spans the UK, 27 per cent are based in London and 50 per cent 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 per cent of customers increasing their spend with one individual retailer. However, as the world opens up and consumers have more choice again, we found 41 per cent 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.
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.”
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