One of the Toughest Markets to Get Loyalty

I just read a study done by the IBM Institute for Business Value. The title of the study is "Why Advocacy Matters to Grocers." The study was performed in 2007 and provides both interesting statistics as well as some very insightful perspectives about loyalty. It appears the full study is available from IBM at iibv@us.ibm.com. The following information is just a taste of the information that is in the study.

Perhaps one of the innovative (at least from my perspective) classifications of customers used in this study is:
1. An advocate is a customer who likes your store, buys from you and stays with you. These customers recommend their grocer to others, would not switch if another valued grocer moved to the area and would increase purchases if grocer offered other store products. The study found that only 27% of grocery customers are advocates.
2. An apathetic is a customer who is neither an advocate nor an antagonist.
3. An antagonist is a customer who carries a poor attitude toward their grocer and may be actively casuing damage to the business reputation. Almost half (46%) of the entire surveyed group was identified as antagonists.

Some of the consumer attitude statistics derived from the study include:
1. 79% of customers will commit to a deeper product or service relationship with a brand after a satisfying experience.
2. 31% of grocery customers tell multiple people about their bad experiences.
3. 48% of grocery customers avoid a store based on on someone else's experience.
These statistics come form "Retail Customer Satisfaction Study - 2006" by The Jay H. Baker Initiative at Wharton and the Verde Group.

These statistics clearly point out the need to create a satisfying experience for customers and pay attention to customer perceptions that may breed a contagious negative message.

Some of the observations that were derived in the study include:
1. The large national and regional grocers are the least customer-focused and have earned the fewest advocates (19%).
2. The Regional and local specialty stores ranked the highest in terms of advocates
(46%).
3. 19% more advocates give the majority of their business to their chosen grocer.
4. Conversely, twice as many antagonists as advocates decreased the amount they purchased from their primary grocer over a two-year period.

The study did an excellent job of identifying the key attibutes that drive success.

1. Quality - 97% of advocates strongly agree their grocer does this well. 73% of the apathetics strongly agree and only 48% of the antagonists strongly agree.
2. Convenience - 94% of advocates strongly agree their grocer does this well. 53% of apathetics strongly agree and 38% of antagonists strongly agree.
3. Employees - 94% of advocates stongly agree they are happy with the service from store employees. 61% of apathetics strongly agree and 38% of antoagonists strongly agree.
4. Availability - 84% of advocates strongly agree their grocer has products that I want always on the shelf. 48% of apathetics stongly agree and 17% of antagonists strongly agree.
5. Social responsibility - 78% of advocates strongly agree their grocer is socially responsible. 39% of apathetics strongly agree and 22% of antagonists strongly agree.

The grocery business is probably under more continuous consumer scrutiny (daily) than most businesses - most people visit their grocer more frequently than any other business. As pricing, quality and options for consumers keep improving, grocers must figure out how to maintain,or even better grow, their customer base and then how to increase the percent of advocates in their base.