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Macroeconomic issues have had an impact on both consumers and businesses, causing changes in purchasing habits. Jonathan NACKSTRAND/AFP

Economic issues have a significant impact on consumer behaviours and preferences. As financial tides continue, brand loyalty, which was once steadfast, is undergoing a dramatic shift. In this context, the intricate interplay between customers and their allegiances is being reevaluated, as economic pressures shift the very underpinnings of brand loyalty.

Macroeconomic issues have had an impact on both consumers and businesses, causing changes in purchasing habits. As a result, according to new ServiceNow research of 2,000 adults in the UK, nearly two-thirds (60%) of those living in London think they are less loyal to brands than they were two years ago.

Financial considerations stand out as the driving force behind this paradigm shift, as half (50%) of Londoners report increased spending compared to a year ago, attributing it to the rise in living costs (66%). This trend gains further traction as 18 per cent of the capital's residents express a heightened inclination toward luxury product purchases, a trend bolstered by data showcasing a surge in retail sales volumes.

Interestingly, 17 per cent of respondents are willingly paying more for products and services with sustainability in mind. However, the majority (62%) are trimming expenses to navigate the challenges posed by rising living costs.

"Britain continues to grapple with higher prices, with London being the most expensive area to live," Jordi Ferrer, VP & GM UK&I at ServiceNow, explained. Ferrer noted that in the capital, this is causing a brand loyalty crisis.

Ferrer noted that businesses should shift their focus away from simply slashing prices to stand out. Instead, they should explore avenues that transcend monetary value, such as delivering exceptional customer experiences. This strategic approach becomes paramount at a time when consumers are more cautious with their spending due to financial constraints and rising living expenses. Ferrer pointed out that brands succeeding in enhancing client experiences today are likely to foster long-term loyalty.

The voice of the London consumer resonates with a demand for personalised interaction, as 72 per cent of them express greater loyalty to businesses they perceive as understanding their needs. Additionally, close to two-thirds (63%) advocate for investment in technology that enhances their overall experience.

The capital's tech-savvy nature is underscored by statistics revealing that 73 per cent of Londoners opt for fintech banks, surpassing the usage in the rest of the UK (58%). This inclination extends to the importance of chatbot services, with 54 per cent of London residents considering it vital for brands, compared to 48 per cent nationally.

Moreover, a majority (55%) of Londoners are willing to invest more in exchange for seamless services, surpassing the national average of 41 per cent.

The role of employee well-being surfaces as a critical factor influencing consumer perceptions. Over three-quarters (71%) of Londoners admit they would think twice about connecting with a brand if they knew its employees were discontented, a sentiment stronger than the national average (63%).

While salary (47%), workplace flexibility (36%), and employee perks (33%) are considered less pivotal by Londoners, elements such as ideal technological hardware (21%), robust technical assistance (19%), and workplace perks (19%) hold higher significance.

Other staff qualities that Londoners are more likely to value are ideal technological hardware (21%), strong technical assistance (19%), and workplace perks (19%).

Ferrer highlights the blurring boundary between employee and customer experiences, advocating for a unified approach to assessing these aspects. Treating employees well and equipping them with tools to work effectively not only leads to heightened productivity – but also translates to the kind of superior service customers yearn for.