The State of a Loyalty Consumer Tracking Study from Bond Brand Loyalty
By Nicole Jarrett
The COVID-19 global pandemic has intrinsically affected the way that people are going about their everyday lives. In order to reduce the spread of this virus, people must stay home, which ultimately impacts the way that consumers shop and interact with brands. Bond Brand Loyalty (Bond) has insight into how the pandemic is affecting the way businesses should be operating in this new normal and how loyalty programs can support retailers.
Bond has captured regular snapshots of what’s changing and what to prepare for in order to ensure that companies are ready for the new normal going forward. A survey was fielded on March 16th (Wave 1) to understand the initial impact of consumer behaviour due to stay home measures. A second, third and fourth survey were fielded on March 20th (Wave 2), April 22nd (Wave 3) and May 8th (Wave 4) to evaluate the quickly changing situation.
Waves 1 and 2 assessed how consumer attitudes, behaviors and needs evolved as the crisis developed. We saw people tightening their wallets, planning to spend less while shifting their spending more online rather than in physical locations. A shift to e-commerce found greater demand for grocery and restaurant delivery as people were forced to adjust to new means of purchasing behaviour. This included an increase in the appeal for contactless payments and moving away from the physical exchange of cash and point of sale terminals. Consumers demonstrated a growing concern for health and safety protocols in physical store locations while a stronger affinity towards loyalty programs has raised expectations for the brand and the loyalty program to execute strong pandemic response strategies. Now as we prepare for recovery, Wave 3 reports that there remains a crisis of confidence returning to many sectors while Wave 4 discusses the precautionary measures that will rebuild confidence.
Overall there was an increase in Canadians who reported they would be decreasing their spending due to the pandemic. From Wave 1 to Wave 2 there was a significant increase of 13% in the number of Canadians planning to spend less money in the next 3 months, and this continued to increase by an additional 3% into the Wave 3 report. There was also a greater shift to online shopping and the demand for contactless delivery increased. As the situation progressed between all fielding periods, we also saw that travel plans were increasingly disrupted.
Graphics from Wave 1 / Wave 2
Graphics from Wave 3
When consumers were asked if they were considering other loyalty programs during the pre-COVID state, 11% of consumers agreed. In Wave 1, when asked this same question only 6% of consumers agreed, and by Wave 2 it had significantly increased to 8%. This tells us that during the COVID-19 situation, affinity for loyalty programs is stronger than ever before, however, affinity is difficult to sustain without adjusting for customer relevance. When asked about their satisfaction on loyalty program response strategies, consumers reported a significant increase from Wave 1 to Wave 2 from 19% to 26%. By Wave 3 this significantly dropped lower than ever before to 15%; whereas, in the pre- COVID-19 world, satisfaction with loyalty programs was at 33%. This tells us that consumers are expecting more from their loyalty programs and that programs need to focus on their response strategies.
Graphic from Wave 3
We analyzed a number of COVID-19 response strategies such as taking extra measures to ensure the health and safety of physical locations, reinforcing that the brand is still open for business, and tracking and complying with evolving regulatory guidelines. Almost all studied strategies saw increased importance in the eyes of consumers between Wave 1 and Wave 2. When compared to consumer satisfaction with how programs were performing on delivering these strategies, complying with regulatory guidelines, ensuring health and safety in physical locations and supporting local communities were all underperforming. Meanwhile, reinforcing that the brand is still open and asking for understanding while program employees take leave were variables that were performing well. As the crisis evolved, loyalty programs went to many familiar places in their response strategies like communicating the stability of points and policies and protection of status and benefits. At this time, what remains top of mind for members were safety and security, compliance and community support, suggesting the opportunity areas that loyalty programs should focus on.
Graphic from Wave 1 / Wave 2
In Wave 3, we saw that credit card reward programs were falling behind on their response strategies as compared to non-payment loyalty programs. Loyalty programs performed significantly higher on sending relevant communications, offering relevant rewards/benefits and staying connected. Wave 3 also reported that while the value exchange had grown increasingly important, programs can look beyond saving customers money in order to gain their loyalty. Now more than ever, consumers are seeking great service and security when it comes to their brand relations. Consumers also indicated that they are more comfortable with the idea of returning to banks and specialty retailers in the next month while more than half of consumers were not comfortable with returning to other sectors like restaurants and airlines at all in the next month. Younger consumers aged 18-34 are more comfortable than other consumers with returning to other categories like Gyms and Fitness Studios, Taxi/Uber/Lyft and Airbnb.
It is important to keep in mind that although more younger consumers are comfortable with returning to sharing services like Uber, Lyft and Airbnb, the level of comfort with returning to the sharing economy is lower than almost all other sectors. Before the pandemic outbreak, these brands were gaining momentum and disrupting traditional sectors of hospitality and automobility, however, given the lack of comfort there may not be a return to pre-COVID-19 levels of sharing economy usage anytime soon. This could benefit Hotel and Automotive brands greatly – two sectors where customers reported that they were far more comfortable returning to because of the active measures brands in those sectors are taking now to build trust.
In Wave 4, measures like providing handwashing stations and facilitating social distancing were deemed the most important to consumers purchasing from grocery stores, gas stations, and pharmacies. Females and individuals aged 55 and older tend to over-index on the importance of many measures while Ontario and Quebec residents – the provinces hit most heavily – reported curbside pickup and delivery options to be significantly more important measures than other provinces.
Pharmacies and grocers were found to be the locations for which consumers considered precautionary measures to be most important, while gas and convenience locations experienced lower expectations. In addition, consumers found that gas and convenience locations were falling short of their expectations when it came to the additional precautions taken while pharmacies and grocers were meeting expectations well. Specifically, Metro, Pharmasave, and CO-OP are the brands perceived to have the best precautions within their respective sectors while Real Canadian Superstore, Shoppers Drug Mart and Ultramar reported below average within each sector. Among low performing brands, opportunities to improve precautionary measures include offering shopping appointments, improving delivery offerings and social distancing efforts, thermal imaging cameras, catering to loyal customers, and contactless payment. For many brands, there is an opportunity to improve their basic response strategies by focusing on these important measures. For all brands, there is a need to evolve customer experience strategies and the role of loyalty as we enter a new normal.
Graphics from Wave 4
Due to the ever-changing nature of the pandemic situation, it should be noted that this data reflects attitudes and behaviours during March, April and May 2020. There will be more insights to come on this topic, as Bond Brand Loyalty will be conducting future waves of COVID-19 research in order to understand how the situation continues to develop and how it affects businesses.
Source: Data provided from the Bond Data Lake, including data collected from three Waves of Bond’s (COVID-19) State of Consumer Loyalty Tracking Survey. March 16 (n=1,509); March 20 (n=1,514); April 22 (n=1,533); May 8 (n=1520)
Author: Nicole Jarrett is a Research Analyst at Bond Brand Loyalty.
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