Brand Loyalty: how big is it and how does it link with purchase frequency?
One of the most established measures to capture brand loyalty, share-of-wallet, shows how much of their category spend the average brand buyer allocates to this brand
Loyalty slightly up and frequency down over the past ten years
The average buyer of the average Top 10 brand allocates about half of their category spend to this brand. The average share-of-wallet has increased by about 2% (from 51% to 53%) over the past ten years with half of that increase happening during Covid-19 – when a decline in category purchase frequency provided fewer opportunities to also buy other brands. The table illustrates the important role of category frequency for brand loyalty: In countries with a drop in shopping frequency for the average category brand loyalty levels mostly increase – and vice versa.
Higher country shopping frequency means lower brand loyalty
The more often a category is purchased the more opportunities shoppers have to choose a different brand. One occasion in a category must logically result in a share-of-wallet of 100%. Across our 23 countries we confirm this pattern: In the eight countries where the average category frequency is below 5, average brand loyalty is 63%. In the eight countries where the average category frequency is between 5 and 7, average brand loyalty is 51%. Finally, in the seven countries where the average category frequency is above 7, average brand loyalty is 47%. Evaluate loyalty levels across countries in light of the respective shopping frequency!
Category frequency and brand loyalty are strongly linked
The variation in shopping frequency across categories is much more pronounced than the variation in average category frequency across countries. The impact of category purchase frequency on the average brand’s share-of-wallet is therefore substantial: In categories that are purchased more than 10 times per year, loyalty is less than half the level of categories that are purchased less than 5 times (28% vs 66%). Opportunity fosters promiscuity. Next week we will look at the relationship of loyalty with brand size and price.