Skip to main content

CPG Growth Hampered by Loyalty Erosion

That total revenues of the top 100 brands in the nationwide Catalina Network of grocery, drug and mass merchant stores grew by just 0.7 percent during a 12-month period ending in early July.

That’s according to new research conducted by Catalina, whose report also shows that brand defections and reduced share among previously highly loyal consumers represent a major drag on individual brand performance.

“The 2011 Mid-Year Performance Review is a strong argument for making loyalty a more significant part of brand strategy,” said Todd Morris, Catalina executive VP for brand development. “Staying close and in touch with the changing needs and purchase behaviors of your brand’s most valuable consumers is the best way to retain loyal customers and grow revenue.”

The average brand in the top 100 grew revenues 2.2 percent during the past 12 months. However, the average brand also experienced a lost opportunity equal to 8.5 percent of revenues due to defections and reduced share among shoppers who had been highly loyal buyers a year earlier. For the average brand, 46 percent of previously highly loyal consumers either completely left the brand (20 percent) or reduced their loyalty (26 percent).

The study also shows that the fastest-growing brands tended to hold onto more of their loyal consumers, while large revenue decliners tended to lose more loyal consumers. On average, the lost opportunity due to loyalty erosion equaled 11.1 percent of revenues for the five largest revenue decliners in the top 100, versus 6 percent for the top gainers.

Brand defection often occurs suddenly, according to the study. One out of three shoppers who were 100 percent loyal to a brand in the first year of the study completely abandoned the brand for the next year after just one competitive purchase.

The 2011 Mid-Year Performance Review is based on sales and individual consumer purchasing behavior observed across 21,000 U.S. grocery, drug and mass merchant stores during the 12 months ending in early July 2011 among consumers who were highly loyal to top 100 brands during the previous 12-month period.

St. Petersburg, Fla.-based Catalina Marketing leverages the world’s largest transaction-level shopper-data warehouse to develop, deliver and measure shopper and patient-driven engagements to approximately 90 million households annually.
 

X
This ad will auto-close in 10 seconds