Loyalty Movement Report: Apparel

Apparel: Stop Taking Customer Loyalty for Granted

Introduction

In our previous report, Redefining Customer Loyalty, Cardlytics defined loyalty as a consumer’s preference for a merchant over its competitors. We analyzed $160B in spending across six industries to measure customer loyalty and spending patterns with both loyal and non-loyal customers.

But customer behavior isn’t fixed—customers shift between loyalty segments over time. Understanding these shifts helps identify churn and informs strategies to nurture relationships and move customers to higher loyalty segments. In our Loyalty Movement Report, we dive into customer behavior in the Apparel category to better understand engagement over time by analyzing more than $17B in consumer spend behavior.*

Apparel Category Loyal Customers

On average, 61% of a merchant’s customers are not actually loyal. But the loyal segment has a much higher share of wallet (85%) than a not loyal segment (21%).

Top Customers (top 10% of most frequent transactors) show a +6 point uptick as loyal vs not loyal customers. But the loyal customer segment shows more than 3x higher share of wallet.

Findings

We looked into purchase data at all Apparel brands in the US over the last 8 quarters (Q1-23 through Q4-24) on a quarter by quarter basis to see whether even the “most loyal” customers showed changes in their purchase behavior.

Apparel Loyalty Movement

Overall, quarter over quarter, 41% of customers tend to remain in their existing segments while 16% increase or decrease their loyalty to a merchant. Yet there is much more extensive customer loyalty movement within the “not loyal” segments. 

Segment Movement

While all segments show purchase behavior movement, the Tied segment (part of Not Loyal customers) shows the most movement - both up (29%)  and down (29%) - into other segments. 

Apparel Leaky Bucket

Apparel brands are acquiring new customers yet even more existing customers are moving into the lapsed tier. This cycle can be reversed by continuing to nurture existing customers.

Diving deeper into the individual segments tells us:

• ‍Loyal customers and those that Prefer the competition are the most rigid (with 57% and 58% staying the same, respectively). Those customers that are Tied have the greatest propensity for a behavior change (with only 18% staying the same).
• While the most Loyal customers show a 25% lapsed rate at similar levels as Tied, this is most likely not connected to churn vs connected to cadence of shopping behavior (maybe they don’t buy clothes every that frequently).

Definitions of Customer Segments

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Loyal Customers
Loyal: Only shop with a specific brand, or have the highest share of wallet with a given brand and relative rank is lower than all other brands in consideration set

Not Loyal Customers
Tied: Similar relative ranks to 2 or more brands regardless of share of wallet ranking
‍Prefer: Lower share of wallet and higher rank than other brands in their consideration set
‍Lapsed: Shopped historically but do not shop currently, as defined by the analysis time period
‍New: Shop currently but have not shopped historically, as defined by the analysis time period

Takeaways

Marketers know it’s more costly to acquire or re-acquire customers than to keep existing ones engaged. When brands neglect current customers, they risk losing them and undoing past investment yet the reasons why a customer might “lapse” is different depending upon their loyalty tier.  Loyalty is fragile and demands ongoing effort as competition is always close by. To stay top of mind, marketers must continuously nurture relationships, understand customer needs, and offer seamless experiences. To foster loyalty with your customers, consider these recommendations:

• Use an “always on” strategy to keep customers engaged, regardless of purchase frequency.
• Regularly update/refine customer segments and adjust reward offers to keep them engaged.
• Use targeted campaigns to boost loyalty and revenue.

Cardlytics can deliver a comprehensive Customer Loyalty Analysis with insights into customer behavior and movement across defined loyalty segments. Contact us for more details.

* For this report, we've selected the entire Apparel category in our data, collectively representing $17bn in annual card spend. This sample differs from the previous Customer Loyalty Analysis report.
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About Cardlytics‍

Cardlytics (NASDAQ: CDLX) is a commerce media platform, powered by our publishers’ first-party purchase data, that makes commerce smarter and more rewarding for everyone. We offer a range of solutions to help advertisers and publishers, including financial institutions, grow and strengthen customer loyalty. With visibility into approximately half of all card-based transactions in the U.S. and a quarter in the U.K., Cardlytics enables advertisers to engage consumers at scale and drive incremental sales through our industry-leading financial media network. Publisher partners can enhance their platforms with relevant and personalized offers that improve the shopping experience for their customers. Cardlytics also offers identity resolution capabilities through Bridg, which helps convert anonymous shoppers into known and reachable customers. Headquartered in Atlanta, Cardlytics has offices in Menlo Park, Los Angeles, Champaign, New York and London. Learn more at www.cardlytics.com or follow us on LinkedIn.

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