What is loyalty?

Customer loyalty is fragile. In the hospitality sector, consumers say they are loyal to just 2.1 brands on average and nearly a third of UK adults say they are very or somewhat likely to switch to a competitor. Our research shows that restaurant goers are the most fickle customers – 34% of them say they are likely to switch venue, more than pub patrons (29%) and bar flies (30%) but how does this compare to other sectors?

The good news is that restaurants, pubs, and bars inspire more loyalty in consumers than energy companies and utility firms (35% of the 5,000 consumers questioned for this survey said they are likely to switch suppliers in those sectors). However, hospitality finds itself pretty much on par with supermarkets (31%), gyms (32%), and phone networks (32%), when it comes to likelihood of loyalty to a specific brand, which is perhaps less confidence building for operators. This may be due to energy companies and utility firms being viewed as transactional, while hospitality and supermarkets place people at the forefront. As a result, the primary driver of loyalty seems to stem from the experiences provided by people rather than the brand itself.

In a cash-strapped market, as we find ourselves in now, loyalty becomes more precarious but also presents a greater opportunity for hospitality businesses. Therefore, finding ways to keep people engaged between visits, rewarding them when they do come through the doors, and delivering consistently great experiences, becomes even more critical.

Age differences

When looking at the likelihood of switching loyalty varies across different age groups, our insight reveals loyalty is stronger amongst older consumers. A mere 16% of those aged 65+ say they are very or somewhat likely to switch to a competitor restaurant, pub or bar, compared to 41% of 25 to 44-year-olds.

Furthermore, parents are significantly more loyal to restaurants, pubs and bars than other groups, with only 26% of parents likely to switch to a competitor, compared with 37% of non-parents.

For a quick win, operators looking to build loyalty should therefore look at targeting these groups in the first instance before turning to the more fickle younger demographics.

Learning from others

Given the variance in loyalty levels across sectors, it is worth looking outside of our own industry to see what we can learn from others.

And, despite our research showing (perhaps unsurprisingly) that consumers are least loyal to utility companies and financial firms, there are nonetheless brands in these sectors working hard to change this – and finding success in doing so. Thus, proving that any company, in any sector, can build loyalty if they are willing to invest the time and resources – and genuinely put customers front and centre of their business strategy.

Octopus Energy: Wheel of Fortune

Octopus Energy has won awards for customer service and generates endless word-of-mouth recommendations from its customers to friends and family. It has achieved this by putting the customer experience at the heart of its offer, underpinning it with an understanding that dealing with energy bills is both boring and stressful.

No aspect of customer feedback is too small to warrant attention – following complaints about its hold music, for example, Octopus now plays customers tunes from the year they turned 14 (the theory being you are likely to enjoy it, as this is the average age at which people first engage with music). Meanwhile, the Octopus Wheel of Fortune recognises that it is inconvenient and time consuming to submit a meter reading and so every time an Octopus customer enters one, they can spin the “wheel of fortune” to win anything from 1p to £512 credit on their account – and more than 100,000 of them a month do so.

AO.com: “Treat Every Customer Like Your Gran”

Another industry you may not think to look to for loyal customers is white goods, but online retailer, AO.com has become famous for its loyal customer base. That’s in no small part down to the fact that one of its core values is, “Treat every customer like your gran” but, more than this, staff are supported to deliver on this promise. Stories are manifold, from delivery drivers paying for pizzas when a new oven can’t be fitted in time for dinner to local teams arranging for an AO branded van to visit a six-year-old van fan on his birthday.

First Direct: Hire for the Smile

Banks are not well known for building loyalty but talk to any customer of First Direct and most will be more than happy to tell you all about why their bank is best. First Direct famously, “hires for the smile, trains for skill” and then enables its teams to listen to customers and act with empathy. The bank does not insist its call handlers stick rigidly to a script, they aren’t held to time targets, and all calls are answered by real people. This means customer issues are listened to with empathy, solved quickly and customers come away feeling as if the bank really does care.

Whilst loyalty is rooted in giving something back and building positive relationships with your customers, it also offers tangible benefits to your bottom line. Building and nurturing a base of loyal consumers who visit regularly, and spend more when they do, will be key to mitigating the impact of rising costs, and ensuring your business remains profitable.