Price the main factor driving brand loyalty

Card, loyalty programNew research reveals a disconnect between what marketers are doing to encourage brand loyalty and what consumers find important.

Comparing consumers’ shopping habits with the perceptions and practices of marketers, the second annual Salmat Marketing Report found that customer loyalty continues to be a challenge for marketers in Australia.

In a 2017 survey of more than 500 marketing decision-makers and more than 500 Australian consumers, 40 per cent of consumer respondents said they don’t consider brands while shopping and that price is the main factor in driving brand loyalty.

Nearly one in five consumer respondents said they are loyal to only one or two specific brands and two in five said they buy the products they need without taking much notice of the brand.

However, marketers seem to have missed the memo on price.

Nearly half of marketer respondents to the survey said they are focusing on creating loyalty through quality customer service, 45 per cent said they are doing so by offering trust, respect and promise, and 40 per cent said they are doing so by developing quality products.

But according to the research, 85 per cent of consumer respondents look for good value for money and competitive pricing before anything else.

Price sensitivity varies across categories. For pharmacy and healthcare, groceries, and banking and finance, consumers are less likely to switch products if the price increases.

However, in furniture and homewares, toys, hobbies, outdoors and travel categories, consumers are more likely to switch products if the price increases.

Following competitive pricing, consumers said quality of the products (80 per cent) and customer service (76 per cent) are the the most important brand attributes to maintain loyalty. Positive online reviews (61 per cent) and free trials, samples and discounts (48 per cent) were also rated as important factors for maintaining brand loyalty.

Technology challenges

Marketers also noted that while technological advancements are helping them collect better customer insights and customer analytics, more than two-thirds found it challenging to use technology to help create lasting one-on-one relationships with customers.

On the other hand, consumers expect marketers to use the information they have on them to offer a more personalised and one-to-one experience.

Half of respondents stated that they believe the number one reason brands are collecting their personal information is to deliver relevant offers. However marketers are struggling to deliver on this promise and develop long-term relationships with consumers.



  1. Gerald Simenson posted on July 10, 2018

    Your headline - "Price the main factor driving brand loyalty" is a paradox. If the statement is correct, then there is no brand loyalty.

    • Michael Goodhew posted on July 23, 2018

      I agree Gerald, and also the problem here is with market research, not brand loyalty. The conclusions in this article rely on shopper's reported behaviour, which is notoriously poor if you want to understand what humans do and why they do it.

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