With a crumbling consumer confidence, stubbornly strong inflation and rising interest rates, the Australian economy and consumers’ expenditure plans are on a rapid downward spiral. The cost of living is leaving consumers in a dire situation, with Generation Z and Millennials being hit particularly hard.

Many are being impacted by the expensive rental market, depleting their savings and ability to spend money on necessities such as groceries and petrol. With a looming tax season approaching faster than ever, there are real concerns that disheartened consumers and decreased spending patterns may trigger a deep recession.  

New research from SAP Emarsys’ Customer Loyalty Index 2022 Australia, reveals that 61% of global consumers have left behind brands that they were previously loyal to in order to save money. However, 77% of shoppers around the world agreed if a brand they felt loyal to continued to engage with them positively during an economic downturn, they would likely return to buying their products sooner. So, how can businesses support disheartened consumers to encourage loyalty?  

The strength of loyalty between consumers and brands can be affected by different economic and personal factors, but it can also be determined by the industry. According to the Emarsys Consumer Index, the top three sectors retaining the highest level of consumer loyalty are: clothing and fashion (55%), food (55%), and beauty and skincare (37%). To improve these statistics, it is key for retailers to strive for true and committed loyalty, which requires them to be more proactive in their marketing strategies and focus on delivering an intuitive and personalised experience.

Loyalty can be categorised in five ways that point to the type of strategy that marketers can use to keep their customers buying: incentivised loyalty (discounts, incentives, and rewards), inherited loyalty (built through association with other brands), silent loyalty (without public advocacy or endorsement), ethical loyalty (founded on emotional connections and shared values) and true loyalty (top tier, unshakable loyalty, true brand love).   

The Mobile Wallet technology is a perfect example of a way that brands can keep customers coming back. Popular surfwear retailer, City Beach Australia, has launched Mobile Wallet technology as a way of providing both active and inactive customers with personalised vouchers and rewards, making saving money and applying discounts easier than ever.

With Mobile Wallet, the brand name is visibile to the customer every time they open their digital wallet, and the retailer benefits by having a deeper understanding of their customer, and the ability to link what’s happening in-store to the online experience.  Even without an app, the retailer is not just continuing to communicate with existing customers, but is also attracting a new generation of shoppers.

The continuation of the economic downturn in Australia is causing consumers to become more strategic and selective in their spending. Shoppers now need more than traditionally successful loyalty tactics to stay committed to a brand. According to the SAP Emarsys survey responses, over the last 12 months, incentivised loyalty, inherited loyalty, and ethical loyalty have decreased in favour with consumers to 13%, 22% and 26% respectively.

Silent loyalty and true loyalty have largely remained the same. The results also highlight the strength of strategies around customer service (36%), good returns policies (32%), personalised shopping experiences (31%) and timely communication (28%), which highlights the importance of customer-centric marketing and the value of personalised messaging in influencing a customer’s choice of whether to stay loyal to a specific brand, or cut ties.

It has never been more important for marketers to develop a customer-centric 1:1 omnichannel marketing strategy that positively impacts customer loyalty and retention rates. ­­Marketers need to create personalised omnichannel experiences for their customers that allow their businesses to better understand their customers.

Personalisation has an important role to play in enhancing the omnichannel customer experience. Though the use of behavioural, zero- and first-party data, and AI, marketers can create comprehensive 360 degree customer profiles that allow brands to speak to consumer behaviour, interests and experiences, that can add real value to the individual experience of each customer

The cost of living is at the forefront of both consumers’ and business’ minds as the economic position in Australia continues to paint a dire picture, as a tax time and the holiday season creep closer. It is important for marketers to put their best foot forward and focus on crafting and executing customer-centric marketing strategies to develop and maintain customer loyalty. By focusing on creating personalised and unique experiences, relationships between consumers and brands can remain strong, and customer loyalty should be able to withstand the unpredictable road ahead of them for the rest of 2023.  

Kristyn Wallace is regional vice president at Emarsys.