Recent reports show 74% of UK buyers have halted shopping from their favourite brands

In the face of mounting living expenses and changing economic challenges, retailers are confronting a surge in customer churn, resulting in diminished customer loyalty, according to a recent study conducted by MoEngage, a leading insights-led customer engagement platform.

According to the research of over 1,000 European brands, including 500 UK businesses, in its latest 2023 Customer Retention Benchmark report, over a third (36%) of retailers' average customer retention rates are currently up to 30 per cent, with a further two fifths (22%) saying their average retention rate falls between 31 to 40 per cent.

Meanwhile, only two per cent of retailers claim to have a retention rate of more than 80 per cent, implying that marketers are passing up sales potential from repeat purchases and loyal customers by focusing on acquisition rather than retention in their existing customer engagement strategy.

Unearthing the impact of escalating living costs, Retail Insight's research revealed that 74 per cent of UK buyers have halted shopping from their favourite brands. This financial strain on disposable income has intensified the challenges of nurturing shopper loyalty.

As MoEngage's research shows, retailers are seeing high rates of customer churn, making shopper loyalty even more difficult to achieve. According to the survey, 45 per cent of retail and eCommerce firms polled currently have customer attrition rates of 51 per cent or higher, 18 per cent have churn rates of 51 to 60 per cent, and 14 per cent have churn rates of 61 to 70 per cent.

The study pinpointed two critical periods where customer turnover is most prevalent: within the first seven days following sign-up (20%) and after the conclusion of a free trial period (20%). This underscores the importance of sustained client engagement and nurturing after initial conversions.

Furthermore, a significant 18 per cent of retailers witnessed considerable churn levels upon product returns, underscoring the need to enhance the returns process and elevate the overall customer experience.

Jason Smith, VP of UK & Europe at MoEngage, said: "By putting data to work, retailers can turn the tide on customer churn."

By leveraging valuable insights, Smith said retailers can create personalised, engaging, and meaningful customer experiences that not only rescue sales but also foster long-term loyalty, even amidst an era of brand-switching driven by higher living costs.

In addition to improving customer experience (CX), MoEngage's data demonstrates that harnessing insights can increase ROI on marketing spend.

Predictive marketing and analytics can enhance ROI by up to 500 per cent by transforming past data into future insights to properly estimate consumer actions and build highly relevant campaigns that guide customers towards desired actions.