Customer experience is critical to loyalty, and many executives miss the mark

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.

When loyalty is won isn’t when you think…

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.

Quality of the product or service is the primary driver of loyalty across industries

What keeps customers coming back?

There appears to be consensus on the top drivers of brand loyalty. Getting a good value for the price and quality, reliability and consistency are the most cited concerns by both executives and customers by a large margin.

That said, executives overestimate how much consumers value most secondary drivers by a good 10-18 percentage points. For example, only 8% of consumers say they keep buying from a brand because of a personalized experience, yet 26% of executives think of that as a key loyalty driver.

These drivers still matter to customers, but to varying degrees among demographics. Baby boomers are more likely to value friendly customer service and getting the most value for their money, while Gen Z and millennials are more likely to favor fast service or find it too complicated to switch to other brands.

What you can do

• Prioritize your product. Provide high-quality customer service, but confirm that the thing you're selling — be it a physical product or general service — is something your customers are likely willing to buy again and again.
  
• Pick your battles. Identify your core audiences for growth and develop a winning strategy specifically around them. Strengthen first-party data capture to help drive growth and monetization while activating user personalization.
  
• Maintain a healthy digital presence. Skip the meme posts. Focus on making your company easily searchable and reachable online, so that when customers research your field, they can find you first.
  
• Make working with you a seamless experience. Eighty-seven percent of executives and 51% of consumers agree that an online shopping experience can negatively impact loyalty if it isn’t as easy or enjoyable as shopping in person. Building a resilient, consistent and intuitive customer experience is still one of the most effective ways to secure your client base.
  
• Stay on target. Allocate resources where they can be of most use according to your industry and demographics, but remember to offer a breadth of experiential options and benefits to suit a diverse customer base. Look into initiatives — like affiliations, co-branded credit cards and subscriptions — that complement your existing offerings and build on them.