The State of Australian Customer Loyalty & Retention 2023

In December 2022, Yotpo surveyed 1,266 consumers from Australia 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 on the fritz. Earlier in 2023, inflation rates in Australia hit all-time highs since the 1990s, affecting shoppers’ disposable income and pushing them to think critically about every purchase.

Where does this leave customer loyalty? Last year, the state of Australian brand loyalty was majorly influenced by shoppers’ emotional ties and core values. They also felt strongly about data usage transparency and felt compelled by brands’ loyalty programs. 

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

Successful Australian brands must craft exceptional post-purchase experiences, communicate effectively, offer exceptional loyalty experiences, and know their shoppers to their core to keep customers coming back.

With the cost of living crisis affecting many Australian shoppers’ day-to-day, price sensitivity is on the up and up. Customers are considering the value of every purchase, meaning brand loyalties are shifting. It now takes more for Australian shoppers to stay loyal and less for them to walk away. 

When asked how they define what being “loyal” to a brand means, 54.7% of Aussie shoppers said “I tend to buy from the same brand,” a decrease compared to past years’ surveys. It’s no secret that everyone is feeling the effects of price hikes. Everyday essentials like utilities, basic groceries, and rent have increased significantly in the past 12 months. 

While this sounds bad for brands, all hope is not lost. Now more than ever, clearcut retention and loyalty strategies are vital for brands of the next decade. Customer loyalty is not gone altogether; it just comes with higher expectations. Aussies aren’t just going to give away their repeat business for free. Instead, they want real value in return.

When buying from a brand for the first time, 19% of Australian answers said they are influenced by product prices, followed by positive customer reviews (18.8%) and product quality (18.8%).

When buying for the second time,  31.2% of Australian answers denoted their second purchase was due to finding an item they liked during a sale. 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, personalized 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. Smart brands will commit to a new strategy — prioritizing focused communications that rise above the noise to both capture attention and increase customer retention.

Additionally, over 20% of answers said rather than a price drop, a brand’s customer service 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 Australian brands to overcome in 2023. However, effective loyalty programs can ease some of shoppers’ woes by helping make up the difference.

Over 40% of Australian shoppers said they have signed up for a brand’s loyalty program to show their loyalty, alongside signing up for a brand’s emails (38.7%) and recommending the brand to others (35%). 

In that same vein, 42.4% of shoppers said not receiving loyalty points for purchase equated to a bad purchase experience overall. Why do loyalty programs stoke Aussie brand loyalty? Because they offer value by way of perks, points, and personalization. Every time a loyalty members logs into your website, their brand experience transforms. Loyalty programs make their repeat business worthwhile.

In our recent Loyalty Benchmarks Report, strategic loyalty programs 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

However, successful loyalty programs take both a brand’s business goals and its customers’ desires into account. 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, Australian consumers mostly want loyalty programs to offer: 

• Early access to sales
• Offers and recommendations tailored to you
• Free shipping 
• Gifts & Swag

When it comes to customer retention, Aussie survey respondents held nothing back. Over 53.5% of respondents said bad customer service would make a brand lose their loyalty. That even tops a decrease in product quality, which would make 50.6% of respondents change their tune.

What does a bad post-purchase experience look like to Australian shoppers? Bad communication. When asked what would cause a brand to lose their loyalty, 43.4% of respondents said when a brand sends too many or spammy messages. Additionally, over 50% of Australian shoppers would go so far as to call too many messages from a brand “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 Australian shoppers’ desire to return to a brand. 

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

• The brand sends too many messages: 50.87% of respondents
• Their recommendations aren’t appropriate for me and my tastes: 43.22% of global respondents
• The brand communicated with me through an undesirable channel (e.g. The brand sent me an email when I prefer SMS messages): 37.15% of respondents
• I didn’t receive additional relevant information about my purchase details (e.g. shipping dates, order status): 43.93% of respondents
• I didn’t receive loyalty points for my purchase: 42.35%

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: 32.6% of respondents
• Post about their negative experience on social:  30.9% of respondents
• Tell their friends about the negative experience: 46.5% of respondents
• Unfollow the brand on social media: 32.5% of respondents
• Unsubscribe from brand communications: 40.1% of respondents
• Write to the brand directly about their poor experience: 26.6% of respondents

Zooming out from Australian respondents’ sentiments, three main themes emerge: personalisation, relevancy, and added value. To keep AU shoppers coming back again and again, brands must create holistic profiles of their customers and deliver crafted experiences at every touchpoint. 

LSKD, an Australian activewear brand, embodies these retention pillars. As customer acquisition costs (CAC) and competition increase, LSKD saw an opportunity to create a single view of the customer that would allow them to engage with their shoppers more and help double down on their retention strategy.

The importance of building two-way relationships with customers at every touchpoint has been at the forefront of LSKD’s brand identity. Using SMS marketing, reviews, and a loyalty program, the brand has created a seamless customer journey that sparks genuine engagement.

Since launching their loyalty program and using SMS to power the communication and re-engagement of their Loyalty customers, their repeat purchase rate has skyrocketed to 83%. Plus, the brand’s CLTV from redeeming customers has more than doubled from the previous rate.

The TLDR

Customer loyalty and retention are not farces in today’s eCommerce landscape. They are, however, more nuanced. Customers today are looking for:

• Personalisation and relevance, not just one or the other
• Value beyond their transaction, like loyalty perks, to make up for price hikes
• Post-purchase engagements that aren’t just bombardments; they offer real value
• The cost of getting retention wrong is just as high as getting it right

Ready to revamp your retention strategy? Let’s talk.