Brand loyalty has declined since 2022
Brand loyalty is like gravity in the business world, it’s invisible, but powerful, until it weakens. The data shows that consumer loyalty isn’t what it used to be. In 2022, 80% of people in the U.S. claimed they stuck with specific brands, but that number dropped to 70% in 2023. This is a signal. Consumers are becoming more deliberate about their choices, influenced by the pressure of rising living costs, a wider array of options, and higher expectations for quality and service.
Loyalty, at its core, is about trust. And trust today has more dimensions (beyond products and prices) and involves values, experiences, and the emotional connection a brand can create. Companies that once relied on loyalty as a default need to rethink their strategies. The key takeaway is that retaining loyalty means showing your customers that sticking with your brand delivers more value than they can find elsewhere.
Price remains the leading factor in brand-switching decisions
When it comes to keeping customers, price still rules. It’s simple: people want to feel they’re getting a fair deal, especially when economic uncertainty looms large. Over 60% of consumers say they’ll leave a brand if it costs too much. But the catch is that price alone won’t guarantee loyalty.
Value matters even more. If your product or service feels overpriced compared to the quality or experience delivered, customers will walk. It’s about balance. Yes, your prices must be competitive, but they should also match the perceived worth of what you’re offering. Brands that can strike this balance (offering fair prices without sacrificing quality or service) will keep their customers coming back, even when competitors try to undercut them.
Personalized experiences lead to deeper customer loyalty
Loyalty is no longer built around collecting points or redeeming discounts, it’s about feeling valued. Personalized experiences tap into this sentiment by making every customer interaction feel unique. When a company remembers your preferences, anticipates your needs, and delivers tailored solutions, it signals respect for your time and individuality.
Take PetSmart, for example. Their loyalty program rewards purchases and uses data to offer customized advice based on your pet’s needs. In a similar fashion, Lowe’s takes personalization further by providing maintenance tips and product recommendations based on what customers recently bought. These are small touches with a big impact.
Data backs this up too, as 70% of consumers say rewards drive app usage, but personalization keeps them engaged. Brands that understand this shift and invest in data-driven personalization will cultivate a level of loyalty that can’t be easily disrupted by competitors.
Younger consumers seek brand engagement beyond traditional incentives
For younger generations, loyalty goes far beyond points and discounts. These consumers are driven by a different set of values, with experiences, authenticity, and sustainability top their list. Boredom with uninspired brands or dissatisfaction with a company’s lack of environmental responsibility often prompts them to explore alternatives. They want to connect with brands that stand for something, brands that reflect their identity and values.
This shift requires companies to rethink how they engage. A loyalty program that simply offers “spend X, get Y” won’t resonate. Younger consumers crave dynamic interactions, like exclusive content, engaging events, or partnerships with causes they care about. Ignoring this shift is risky. To earn their loyalty, brands need to be more than just service providers; they must become relatable and inspiring entities that actively address societal and environmental issues.
Data from Qualtrics XM Institute reinforces this as over half of customers cut back on spending after a bad experience. For younger generations, such negative interactions are even more likely to result in complete disengagement, particularly if the brand fails to meet their ethical and social expectations.
Exclusive rewards and early access drive loyalty program success
Exclusivity makes people feel valued, and in the world of loyalty programs, that’s a game-changer. When customers are offered something unique (like early access to sales, VIP events, or limited-edition products) they feel a sense of privilege. It’s about being part of something special.
Ulta Beauty is a prime example. Through offering personalized incentives and exclusive perks, the company grew its loyalty program to an impressive 44.4 million active members in Q3 2024. This approach builds up both retention and advocacy, as loyal customers often become vocal champions of the brand.
A Snappy survey highlights why exclusivity works: consumers highly value rewards that feel tailored to them, such as special discounts and unique merchandise. The message for brands is clear—make your loyalty program more than a transaction. Offer exclusive opportunities, and you’ll create a sense of belonging and elevate the overall customer experience, making loyalty a core driver of your business growth.
Final thoughts and key takeaways for leaders
Loyalty in today’s market is more complex than ever and has a strong focus on emotional connections and shared values. This requires a shift in strategy, from transactional to relational. Emotional loyalty, built on trust, shared purpose, and memorable interactions, is far more durable than purely transactional loyalty based on discounts or incentives.
To achieve this, brands need to harness the power of technology. Tools like AI and data analytics enable businesses to gain deep insights into consumer behavior, preferences, and needs. With these insights, companies can deliver highly personalized and timely experiences, whether through tailored loyalty programs or dynamic app interactions. Apps, in particular, are a powerful tool for fostering engagement. They provide a direct line to customers and serve as a platform for delivering rewards, personalized content, and real-time updates.
In the end, building up loyalty requires creating a relationship where customers feel recognized, valued, and connected. Brands that can master this balance will retain their customers and turn them into lifelong advocates.
Here are the key takeaways for leaders and decision-makers:
- Brand loyalty is declining: Brand loyalty dropped from 80% in 2022 to 70% in 2023, signaling a shift in consumer behavior. Leaders should focus on retention strategies that address changing expectations, such as improved value and personalized experiences.
- Price sensitivity drives brand switching: Sixty percent of consumers cited price as the primary reason for leaving a brand. Companies must ensure their pricing aligns with perceived value while maintaining quality and service standards.
- Personalized experiences boost retention: Tailored interactions, such as custom recommendations or targeted rewards, are critical for fostering loyalty. Investing in data-driven personalization can create deeper emotional connections and reduce churn.
- Younger consumers demand values alignment: Younger generations prioritize sustainability and authenticity over traditional rewards. Brands should integrate meaningful, value-based initiatives to remain relevant and competitive.
