The State of UK Customer Loyalty & Retention 2023

In December 2022, Yotpo surveyed 1,266 consumers from the United Kingdom on all things customer loyalty and retention — what made an excellent post-purchase experience, what keeps customers loyal, how customers expect to be treated in exchange for their continued business.

These shoppers spanned six age groups (16-17, 18-24, 25-34, 35-44, 45-54, and 54+) and four generations (Gen Z, Millennials, Gen X, and Baby Boomers).

As you’re probably feeling, our macroeconomic environment has been tenuous, to say the least. Since late 2021, the UK has been experiencing a cost of living crisis as disposable incomes account for less and less. Inflation seems to have peaked around 13% in late 2022, but we’ve seen a definitive slowdown in consumer spending as recession worries continue to loom.

Where does this leave customer loyalty?

Last year, the state of UK brand loyalty was directly tied to customers’ emotions and values. Shoppers wanted to feel seen and recognised by the brands they love. They also championed brands with similar beliefs as their own. In exchange for their loyalty and repeat business, UK shoppers wanted a relationship with brands that surpassed the checkout page.

This year, with price and product quality on everyone’s minds, UK consumers expect that much more from brands. If you’ve gotten customers’ attention this year, congratulations. Now you have to figure out how to keep it.

Getting retention right in 2023

While our macroeconomic environment has changed, impacting customers’ sensitivity to price and value, there are strategies that motivate UK shoppers to stay loyal to brands.

Customer loyalty isn’t set for life. Every time the economy shifts, on a micro or a macro level, customers’ loyalty to your brand is being questioned and challenged. It needs to be earned over and over again. It’s why retention is so much more multidimensional than acquisition; retention demands you treat first-time, two-time, repeat, and loyal shoppers with nuance. And, the margin of error is that much smaller.

Successful customer retention for UK brands means crafting exceptional post-purchase experiences, communicating effectively, offering worthwhile loyalty experiences, and knowing shoppers to their core.

Customers are feeling the effects of price hikes and inflation, and it now takes more for them to stay loyal and less for them to walk away.  Everyday essentials like utilities, basic groceries, and rent have increased significantly in the past 12 months. But, UK customers’ loyalty is not lost; it just comes with higher expectations. British consumers aren’t going to give their repeat business away for free, especially not in this macroeconomic environment. 

With costs up, so is customers’ price sensitivity. But, UK shoppers are still backing their favorite brands. When asked how they define being “loyal” to a brand, 71.5% of UK consumers said they tend to buy from the same brand, compared to 65.6% of global shoppers. 

What does the path to purchase for UK customers now look like? When buying from a brand initially, 22.8% of answers said they are influenced by product prices, followed by positive customer reviews (21%) and product quality (20.7%). Though price sensitivity is of note, it’s not the whole story.

When buying for the second time, over 26% of shoppers answered, “There was a sale, and I found an item I liked. On the surface, this feels like another discounting strategy. Oh, a sale! But, underneath, this second purchase had to start with making the customer aware of the products pertinent to them. 

Via text, email, on-site banner, or social media: the brand needed to create relevant, personalised communications for these customers to come back. Discount fatigue in today’s climate is real, and customers need to feel confident in their purchasing decisions. Additionally, almost 23% of answers also said the top-notch brand’s customer service also brought them back to buy again. Price is important, now more than ever. But brands cannot overlook providing an exceptional customer experience during hard economic times.

Price sensitivity is an inevitable challenge for UK brands to overcome. But, loyalty programmes offer shoppers value beyond their transactions, making up for some of buyers’ inflation woes. 

Over 46% of UK shoppers said they have signed up for a brand’s loyalty programmes to show their loyalty. 

Additionally, 47.6% of shoppers said not receiving loyalty points for purchase equated to a bad purchase experience overall. 

Loyalty programmes offer value by way of perks, points, and personalisation. Buyers get a VIP experience just for shopping with your brand. In our recent Loyalty Benchmarks Report, strategic loyalty programmes impact brands’ bottom lines in a major way.

In just 90 days, brands, on average, see:

• 8.5x ROI
• A 164.4% increase in RPR among loyalty redeemers
• An 88.5% increase in average revenue per customer when comparing loyalty redeemers versus non-redeemers
• A 71.3% increase in purchases per customer when comparing loyalty redeemers versus non-redeemers

But this doesn’t mean you can just launch a loyalty programme and see results. Your approach to customer loyalty must deliver what shoppers actually want. In our survey, consumers made it clear that customer loyalty is harder to win with cheap tricks and gimmicks. 

Other than discounts, UK consumers most want: 

• Early access to sales
• Gifts and swag
• Offers and recommendations tailored to them

When it comes to customer retention, UK customers are telling all. Over 64% of respondents said bad customer service would make a brand lose their loyalty. That even tops a decrease in product quality, which would make 61.8% of respondents change their tune.

What do these sub-par experiences look like? Often, irrelevant messages. 

When asked what would cause a brand to lose their loyalty, 42.1% of respondents said that when a brand sends too many or spammy messages. Over 60% of UK shoppers would go so far as to call too many messages “annoying.” That “spammy” feeling often comes down to irrelevance. A customer can only receive so many text or email blasts before they start to feel a little chagrinned.

Customers continue to want personalisation. Based on McKinsey’s research, 71% of consumers expect personalisation and 76% feel frustrated when brands don’t deliver. But, relevancy also plays a key part in UK shoppers’ desire to return to a brand.

Just take a look at the respondents’ definition of a bad post-purchase experience:

And these bad post-purchase experiences aren’t just one and done. They have reverberations. After a negative interaction with a brand, Brits are most likely to:

• Write a negative review: 31% of respondents
• Post about their negative experience on social: 22.7% of respondents
• Tell their friends about the negative experience: 56% of respondents
• Unfollow the brand on social media: 27.8% of respondents
• Unsubscribe from brand communications: 39.9% of respondents
• Write to the brand directly about their poor experience: 20.1% of respondents