It’s no secret that consumers have been selecting store-brand consumer packaged goods (CPG) from retailer shelves. Brand marketers have been losing their share of casual buyers, but it's the defection of loyalists that is really hurting the bottom line. Taking steps to secure loyalty with marketing campaigns will go a long way towards increasing brand revenue.
To understand the impact of revenue loss when brand loyalists defect, Catalina Marketing carried out a study on consumer behavior with respect to 100 top CPG brands. The good news is that the top 100 brands in this study had a growth rate of 2.2% in the past year. But top-level findings suggest that major brands lost the opportunity to generate 8.5% more revenue because of brand defection. Further, during the study period, the average brand saw 20% of its highly loyal customers defect completely and another 26% showed reduced loyalty.
In another finding, the research shows that brand defection happens quickly. Here are the number of purchases that can be made over a one year period before a highly loyal customer shifts completely to a competitive brand:
- 1 purchase: 32% (brand abandonment)
- 2 purchases: 40%
- 3 purchases: 44%
- 4 purchases: 46%
Brand abandonment also varies by category. During this specific study period, the following categories experienced the highest defection rates which was measured as complete abandonment or reduced loyalty:
- Candy 79%
- Bakery 57%
- Snacks 53%
- Alcohol 50%
- Refrigerated goods 49%
Todd Morris, executive vice president, brand development, for Catalina, remarks that “The 2011 Mid-Year Performance Review is a strong argument for making loyalty a more significant part of brand strategy.” Every marketer likely has an idea of the best way to improve brand loyalty and given the current state of affairs, they need to employ these strategies as soon as possible.[Source: CPG Brands Grow Slightly. Catalina.com. 7 Sept. 2011. Web. 15 Sept. 2011]