Key Research Questions: How loyal are your customers?
A question we’re being asked a lot by our clients this year is how can behavioural science provide the unique insights into customer loyalty that traditional surveys can’t quite reach?
The recent State of the Consumer 2024 report from McKinsey highlights some tough aspects of customer loyalty brands will now have to deal with. Pandemic-era supply chain issues meant that roughly half of consumers switched products or brands and that behavioural change has carried on into a post-pandemic consumption, as 40% of consumers look to switch retailers in search of better prices in the cost of living crisis.
Customer loyalty is becoming more fragmented, and in turn more necessary for brands. Traditional surveys present an added challenge in that customers often don’t remember their own behaviour and find it hard to articulate the reasons why they do things.
While the McKinsey report highlights price, brands can’t place all their customer loyalty eggs in that basket. There are a number of reasons why your customers might defect:
- Are competitors undercutting your prices?
- Do they offer better promotions or coupons?
- Do their new products taste better?
- Do customers think your quality is declining?
- Have competitors opened more stores so the same level of demand is being diluted over more outlets?
- …and many more
In order to really get the truth of these underlying reasons that traditional research can’t reach there are some behavioural tools that allow us to understand these consumer motivations.
A high street casual dining chain recently approached us to help them find out why customers are defecting to competitors, and how to bring them back.
For this project we needed to move the research process into the customer’s real world. Instead of doing focus groups in a viewing facility or even over Zoom, we brought consumers into the high street and inside the restaurant to explore their behaviour in context. In our Narrative Interviews, we asked them to choose which restaurant they’d like to go to, talk us through their reasons and show us what really matters to them. The words they use, even their body language, give away the secrets of what drives their decisions.
Next was a creative ideation workshop where we used behavioural and cognitive frameworks to build new solutions and design new loyalty mechanics.
Finally we tested those out using Behavioural Conjoint – our tool for simulating the real-world choices that consumers make, to test and measure the most powerful drivers of loyalty.
That’s three new ways to use behavioural science to make research more effective, more accurate, more rich – and deliver more business value to our client’s stakeholders.
So what did we find out? Behavioural science helped us discover some key emotional experiences that brands can offer to rebuild loyalty; and some specific pricing mechanics that help to defend market share, which the brand could implement immediately to stop churn.
If customer loyalty is an important question for you, get in touch and we’ll discuss in more detail how we can tackle this key research challenge, and show you the kind of insights we have been finding in these areas.
Drop us a line at hello@irrationalagency.com