Does “Loyalty” Drive Repurchase Behavior?
Data on individuals’ purchasing behavior has become more widely available over the past decade.
This individual-level data has provided many analytic opportunities to further explore consumer behavior. Tying insights on consumer behavior to aggregate sales outcomes will allow marketers to better understand both short-term and long-term effects of marketing.
One key factor that impacts the long-term effects of marketing is the degree of loyalty that consumers exhibit: how much do consumers tend to repurchase the same brand as opposed to going astray and switching between brands? However, simply quantifying repurchase and switching percentages may not be sufficient to guide a marketing strategy.
It’s important to identify what factors are driving consumers to repurchase a particular brand if the goal is to disrupt the market and change that behavior (get consumers to switch to your brand) or to preserve that behavior in a shifting marketplace (keep consumers purchasing your brand). The first step is to acknowledge that “loyalty” may result from a range of consumer behaviors and mindsets, which are not always related to a consumers’ love or affinity for a particular brand.
Below is a list of various factors that may drive repurchase behavior in a market:
1. Inertia – defaulting to a brand out of habit. Day-to-day consumers are faced with many decisions, but everyone has limited time and energy to apply cognitive effort to choose. So often times, consumers take the decision-making shortcut of simply following a routine and taking the path they usually do.
2. Awareness – buying a brand due to the absence of alternatives in mind. In some cases, consumers may simply take path because they do not know of any other way.
3. Pricing – choosing the lowest cost alternative. Many consumers are hunting for the best deal and may choose the most competitively priced option.
4. Perception – staying loyal to a brand that is held in high regard. Consumers may continue to buy a brand because they think it is the best of the alternatives available.
Clearly, there may be much more to “consumer loyalty” than warm and fuzzy feelings about a brand. Perhaps it is human nature that makes many gravitate toward the fourth factor in the list. Most dog owners would hope that their beloved animals find their way home each day out of love as opposed to out of laziness, convenience, or simply because there is no other option. Some brand managers may hold to the same hope about consumers who do not stray from their brand. However, acknowledging that in reality consumer “loyalty” is driven by a range of factors that may constantly evolve in a dynamic market will allow a marketer to succeed in a competitive environment.