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Online shopping erodes brand loyalty

17 January 2017 - 08:52 by Sarah Collinson

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A new report from Verint and IDC has shown that modern consumers who are used to shopping online rather than buying items in-store are less loyal than their predecessors, with customer retention rates falling seven per cent around the world last year.

Analysts are convinced that this trend is to do with the shift to digital retail platforms, since brands that only exist on the web are less likely to secure the long term allegiance of their customers, compared with those that operate bricks and mortar outlets.

Just half of those questioned in the study who prefer to shop online said that they had stuck with the same retailers for a period of over three years. Meanwhile, among those who instead choose to visit high street outlets, this level of loyalty is exhibited by 57 per cent of respondents.

Some believe that one of the reasons for the customer retention rates being higher among those who fall into the latter group is that face to face interaction with representatives of a brand will foster loyalty in way that is not replicated online.

Of course, the internet also provides consumers with many tools that are specifically aimed at getting them the best deal across a range of retailers and companies, with comparison encouraging people to switch loyalties rather than stay put.

This information should give retailers the motivation to make greater efforts to keep long time customers happy, rather than solely appealing to newcomers with offers and opportunities.

This is especially important at a time when a growing number of retailers are offering subscription-based services to supply customers with products, rather than relying on one off purchases over a longer period to ensure that their business model continues to be viable.