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ST. PETERSBURG, Fla. — Total revenues of the top 100 brands in the nationwide Catalina Network of food, drug and mass grew by just 0.7% during the 12-month period ended in early July, according to new research by Catalina. The report also demonstrated that brand defections and reduced share among previously highly loyal consumers represent a major drag on individual brand performance.
“The 2011 Mid-Year Performance Review is a strong argument for making loyalty a more significant part of brand strategy,” stated Todd Morris, EVP brand development for Catalina. “Staying close and in touch with the changing needs and purchase behaviors of your brand’s most valuable consumers is the best way to retain loyal customers and grow revenue.”
The average brand in the top 100 grew revenues 2.2% during the past 12 months. However, the average brand also experienced a lost opportunity equal to 8.5% of revenues because of defections and reduced share among shoppers who had been highly loyal buyers a year earlier. For the average brand, 46% of previously highly loyal consumers either completely left the brand (20%) or reduced their loyalty (26%).
The study also showed that the fastest-growing brands tended to hold on to more of their loyal consumers, while large revenue decliners tended to lose more loyal consumers. On average, the lost opportunity because of loyalty erosion equaled 11.1% of revenues for the five largest revenue decliners in the top 100, versus 6% for the top gainers.
Brand defection often occurs suddenly, according to the study. One-out-of-3 shoppers who were 100% loyal to a brand in the first year of the study completely abandoned the brand for the next year after just one competitive purchase.