In our PwC Customer Loyalty Executive Survey 2023, 63% of executives told us that their companies increased loyalty budgets during the last planning cycle. On average, that was about 5% of total revenue. Depending on your company’s size, that could be between $5 million and $250 million annually. Wouldn’t you like to be more certain you’re getting your money’s worth?
Compared to what consumers told us, many businesses misunderstand consumer behavior in three key areas of the customer experience: how they define loyalty, when it’s won and where it’s lost.
Q: To what extent is your company prioritizing each of the following to activate customer loyalty? (Response to ‘High priority’.)
Source: PwC Customer Loyalty Executive Survey 2023: base of 410
Executives define loyalty much more broadly than consumers. Fifty percent of executives think subscribing to a product or service is indicative of brand loyalty, but just one consumer in five thinks that’s the case. Meanwhile, 43% of executives report using customer satisfaction scores as a measure of loyalty, but only a quarter of customers say providing feedback is a show of loyalty. There is some alignment, however. Just over half of both groups (52%) agree that recommending a brand to their family or friends is a sure sign of loyalty.
“Consumers today are thinking much more about the choices they have and they choose to do business with brands whose values align with them.” Luc Bondar, VP Marketing & Loyalty, President Mileageplus at United Airlines
Note: Showing seven choices from a list of 12 options.
Q: When you think about customers buying from your company, how do you define customer loyalty? Customers who … (Select all that apply.)
Source: PwC Customer Loyalty Executive Survey 2023: base of 410
Q: Which of the following, if any, are ways you show loyalty to a company or brand? (Select all that apply.)
Source: PwC Customer Loyalty Survey 2022: base of 4,036
Executives underestimate how much the quality of their offerings foster customer loyalty — estimating it at just 23%. They also overestimate how much good customer service factors into that equation, as well as several other key points in their relationships with customers. Customers, however, tell us that their loyalty is won in the early stages of a relationship. Nearly half (46%) point to when they use a product or service and like the quality. Another 20% say it’s during online or in-person shopping and 5% more say it happens as early as when they start researching products — that’s a quarter of customers making a decision before even purchasing a product.
Q: Continue to think about your experiences with [brand] (selected from previous question). When did you decide you would keep using or buying from that brand? (Response to ‘When I used the product/service and liked the quality’.)
Source: PwC Customer Loyalty Survey 2022: base of 4,036
There’s also a disconnect on why brands lose customers, revealing what we call the “price-experience gap.” Executives think the top reasons they lose customers are price-related — prices went up or discounts ended (37% of respondents) or another brand offered lower prices (33%). Compare that to just 17% and 11% of consumers. Instead, a consumer’s top reason for leaving a brand is typically related to experience — 37% say it’s because they had a bad experience with the product or service itself (compared to only 26% of executives) and that number is even higher among younger generations. But don’t start pivoting to social media just yet. Seventeen percent of executives think a friend or social media recommendation would sway customers to different brands, but just 2% of consumers say that affects their loyalty. Meanwhile, nearly a fifth of consumers (18%) are willing to stop buying from a brand as part of a boycott or to support a social issue they feel strongly about, but only 11% of executives think of it as a loss leader.