Three is the magic number

Looking at loyalty another way, we can quantify a “loyalty driver”; this is the number of times more retailers need to get a customer to engage, either through increased transactions or increased spend, per year to turn them from a “not loyal” customer into a “loyal” customer (To move a customer from the “not loyal” level (spending up to 25% of their wallet for that category with a retailer) to the “loyal” level (spending 26% or more of their wallet for that category with a retailer).

Whilst the loyalty driver differs across different categories, the overall number is three i.e. retailers need to get a customer to make three times as many purchases, or spend three times as much money, in a year to promote and drive them to the next loyalty level.

Considering the number 3 as the ‘loyalty driver’, Pete Markey, CMO at Boots UK, commented that this was particularly interesting as he has not seen the number 3 associated with this measurement before. He added, “Intuitively this makes sense. If I think about it, it comes down to the muscle memory that customers build up. I definitely buy into this logic.”

When assessing the practical implications of these numbers Pete said “Being able to give a CRM team a clear objective of securing 3 or more visits - now that is really powerful”.

If you would like to read more about our insights on customer loyalty, read our white paper ‘The Tipping Point of Loyalty’.