KNO has this cool consumer sentiment metric that we built alongside Common Thread Collective. To build this, we blend anonymized shopper surveys about economic sentiment and spending patterns with consumer spending and advertising data.
The result is a pretty amazing look at how what people say translates into what they do and how much brands need to spend to acquire them as a result. The short version of it goes like this (and it’s what you might expect): when people feel good about their financial situation, brands spend less to acquire them; but when people feel nervous or uncertain about their financial situation, brands spend more.
One thing we haven’t looked at with CTC, though, is how consumer sentiment impacts retention. And with a record-high level of consumers saying they “loved the feeling of having money in the bank,” I’d like for us to start looking at that.
It’s not so much to find a datapoint to support the old “retention is more profitable than acquisition” argument; rather, it’s to help folks understand how that consumer sentiment impacts relationships with brands who they already have relationships with.
While we don’t yet have that data collected and analyzed, I did find interesting data that showed loyalty program membership and usage growing significantly after the economic uncertainty during COVID.
In 2019, the average US consumer had 14.8 loyalty program memberships and participated in 6.7 of them (about 45%). In 2023, those figures grew to 17.9 program memberships with consumers participating in 9 of them (about 50%).
The biggest pops came in 2021, the year after economic scares from COVID, suggesting that consumer sought out loyalty programs as a way to save money during times of economic uncertainty. And the behavior stuck—consumers are using more loyalty programs than ever.
I’ve seen other datapoints that show consumers believe loyalty programs encourage them to spend more (so they maximize benefits) and that loyalty programs can encourage consumers to switch brands (presumably because the benefits are better).
This, I think, is an interesting component.
The risk here is competing for retention on the backs of ever-richer rewards. But that’s a recipe for eroding margin. Instead the piece here is communicating value.
Loyalty, and retention more generally, requires merchandising that becomes blended with elements of product, content and rewards—made relevant by behavioral data and self-reported customer insights.
To me, this is exciting. While consumers may be less optimistic about the economy (or, at least, their personal finances), I couldn’t be more optimistic about how brands can begin responding to this.
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