Data Collection Pushing Loyal Customers Away: Study

Loyal retail consumers are jumping ship, saying retailers are asking for too much personal information to participate in loyalty programs.

The number of shoppers who said they were long-term loyal customers dropped to 77.2% this year, compared to 83.8% in 2005, according to a report by the NRF Foundation, the non-profit education and research arm of the National Retail Federation.

The study found that shoppers were willing to give retailers their name (89.8%), e-mail address (78.1%), street address (60.7%) and past transactions (46.8%). Consumers were least likely to allow retailers to track weight (14.4%), income (12.5%), job title (12.1%), employer (10.9%) and net worth (8.2%).

"Retailers looking to create loyalty will need to walk a fine line between specializing their services to customers and invading their privacy," said Kathy Mance, NRF Foundation VP, in a statement. "The more trust and goodwill a retailer builds, the more likely it is they will have a long-term loyal customer base."

When it comes to reaching new customers this year, television (31.7%) has replaced direct mail (21%) as the best way to get shoppers to try a new retailer. Word of mouth (17.7%) remains influential, but underestimated, the study found.

As for ineffective ad methods, only 3.5% of consumers found Internet advertising effective in influence their choice of retailer. Ads before a movie got a 2.3% response, product placement 1.8% and radio 0.4%.

"While the fading of the 30-second spot is underway on Madison Avenue, retail consumers clearly still see TV as the most effective way to choose a new retailer," said Gary A. Williams, managing officer of research for Adjoined Consulting, which co-developed the study with the NRF Foundation. "Traditional advertising isn't going away anytime soon, but is more likely to morph into the integrated channel approach consumers already desire when making a purchase."

The multi-channel shopping approach is appreciated by consumers who want to shop and buy seamlessly across numerous channels, such as the brick-and-mortar and online stores as well as the catalog. The majority of consumers (70.2%) use a combination of all three shopping channels compared to stores only (17.5%) or online only (2.9%). Of those consumers that choose physical locations, indoor malls (36%) were the preferred option, followed by stand alone (28.4%) and strip malls (14.5%).

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