30 per cent of outlet loyalty customers drive 70 per cent of loyalty spend
The Changing Face of Outlets, focuses exclusively on loyalty trends across Europe. The report looked at approximately 4 million transactions across 10 countries between 2016-2017 and found that 34 per cent of loyalty spend was generated by the top 5 per cent of loyalty customers, with a further 36 per cent generated by the next quarter (25 per cent) of loyalty shoppers.
Coniq analysts classified the top 5 per cent as ‘Elite Spenders’ and the next 25 per cent as ‘Value Drivers,’ with the remaining 70 per cent grouped as ‘High Volume Mass’. As well as generating the majority of spend, Elite Spenders and Value Drivers were also found to be an outlet’s most loyal customers, visiting the centre more often, making more purchases per visit and spending more on each transaction.
|Loyalty customer group||Transactions per visit||Average Transaction Value (ATV)||Total Spend|
|Elite Spenders (Top 5%)||3||£271.50 (€310)||£1,263 (€1,443)|
|Volume Drivers (Next 25%)||2.3||£162 (€186)||£453 (€517)|
|High Volume Mass (Remaining 70%)||1.4||£75 (€86)||£113 (€129)|
While ATV for Elite Spenders increased by 6.8 per cent to £271 (€310) over the two-year period and average spend per visit rose from £1,112 (€1,284) to £1,263 (€1,443), it was in the Value Drivers segment where the biggest growth was seen. During this time, ATV amongst Value Drivers rose by 12.9 per cent to £162 (€186) and spend per visit by 12 per cent from £402 (€460) to £451 (€517).
The report identified that over the last two years, the UK outlet market has remained consistently strong and enjoyed both the highest spend and year-on-year ATV growth across the countries analysed.The analysis calculated a pan-European ATV benchmark of €153 with several underlying variations: for example, whilst Spain and Italy have strong ATVs, they have struggled to achieve growth – possibly a reaction to the uncertainty surrounding the geo-political backdrop in these countries. The report also suggests that it remains to be seen how Brexit will affect retail as a whole and outlets specifically.
The power of key customer groups and the need to constantly manage a changing landscape demonstrate the critical importance of leveraging data from loyalty programmes to gain insights with the ultimate aim of building a long-term relationship between the outlet brand and its visitors. Identifying areas of growth and understanding the potential impact of losing the most valued customers highlights the need to use loyalty programmes to build a better understanding of your customers’ likes, wants and needs. Indeed, according to independent retail analyst Kantar, 71 per cent of people say that incentives alone don’t make them loyal; instead saying it is the relevance of the offer or experience to their needs that drives loyalty.
Ben Chesser, CEO and founder at Coniq, said: “If there is one take-away from this report, it’s that not all customers are equal – the key is to use data to focus activity on identifying, engaging and building loyalty with the most profitable customer groups. As this report shows, while the Elite Spenders are highly valuable, it is the Value Drivers who have increased their spending by the largest proportion, so in many ways offer more opportunity for growth.”
“Once you understand the motivations and behaviours of your different shopper groups you can then use this insight to personalise your message, offers, rewards and experiences to drive engagement and ensure that they remain your most powerful and profitable brand advocates.”