Brand Loyalty: A Consumer Characteristic?

Posted by Oliver Koll on Mar 16, 2020

Any brand has some buyers that are more loyal than others. High behavioural loyalty (often measured by the share-of-wallet a brand commands within a buyer’s total category purchases) can result from habitual choices (“I choose what I know”), actual preference (“I like this brand better”), or be a statistical artefact caused by low frequency (a single purchase in a category will result in 100% share-of-wallet). We add a slightly different perspective to this discussion by investigating consumers’ loyalty proneness (a term to our knowledge first coined in 1956 by Cunningham**) irrespective of the brand and category involved.

Towards this end we looked at the degree to which more than 8,000 consumers exhibit brand loyalty across five frequently purchased categories. To avoid the issues resulting from a low number of purchases, a minimum number of five purchases in each category was required. These are the findings:

  • Shopper loyalty levels across categories are related: Controlling for purchase frequency, higher loyalty in a category is positively related to higher loyalty in other categories.
  • We find a much larger than expected number of people that show loyalty levels above the category average in all categories. But we also find a much larger group that are consistently low loyal. In other words, much more polarity than expected.
  • People who are very loyal in all categories tend to live in smaller households, are older and are also more loyal to their preferred retailer. They show no substantial differences regarding income and social class.

These results may form the basis for a new segmentation logic. Consumer groups based on their degree of loyalty proneness pose segment-specific challenges: Consumers with high loyalty proneness are likely more difficult to convert, but less difficult to keep, whereas the opposite holds for members of the low loyalty segment.