Receive 20X the points! Free coffee reward! Redeem for $10 off your next purchase!
Such is the holler of brands spending billions of dollars on loyalty programs each year. And despite some valiant efforts and trackable successes, studies show consumers are fickler than ever.
Ad Age cites statistics from Accenture’s research here, showing that 54% of people surveyed (25,000 respondents globally) said they’d switched providers in the past year, and 78% say they retract loyalty faster now than they did three years ago. According to the report, banks, internet service providers, retailers, and cable and satellite providers were the most likely to have customers switch brands—no big surprise there.
An estimated $90 billion a year is spent on non-cash rewards alone by U.S. marketers. (The Canadian spend is significant, could not find a verifiable source for this article.) But there’s a lot of money being thrown at customers in hopes that they’ll keep coming back for more. Question for me is this: is the massive loyalty spend working for the brands doing the spending?
The Canadian Marketing Association partners with Bond Brand Loyalty to produce a yearly report that analyzes changes in consumer attitudes and behaviours in response to loyalty initiatives. The 2016 report sampled over 7,000 Canadian and nearly 12,000 U.S. consumers to gain insights on a variety of behavioural and attitudinal attributes. The report found some positives, such as:
- On average consumers are ‘members’ of ~ 11 loyalty programs, with ~ 7 active
- A majority of consumers (63%) modify the amount spent to maximize points
- 66% of members are more likely to recommend brands with ‘good’ loyalty programs
- ‘Very Satisfied’ rating of loyalty programs by members remains steady at 32%
And the research uncovered a few, key negatives:
- Digital divide: Only 17% are ‘Very Satisfied’ with the program website experience
- Missed opportunity: Just 12% feel ‘Very Satisfied’ with the level of personalization they experience with the program!
- Show me the love: Just 13% ‘Strongly Agree’ that they ‘love their loyalty program’
- Trust has declined: only 22% ‘Strongly Agree’ that programs are trustworthy
There’s an awful lot loaded into ‘loving my loyalty program’ and declining brand trust – those are strategic, complex topics for another day. But low ratings on both consumer website experience and level of personalization—the extent of the gaps here surprised me. These are strategically and tactically integrated, and can be improved by brands, like right now!
The data-driven and personalized consumer experience, when executed properly and ethically across all channels, shows consumers you value and respect them as an individual customer, you want to grow your understanding of their needs and preferences, and you have a mutual interest in solving their problems (perhaps even before they know they a problem).
As with pretty much everything we talk about with our clients at Wellspring, it’s all about the data. Collecting, analysing, deploying multi-source, aggregated and individual data (ethically) in ways that individualize, personalize and customize the consumer experience—that’s the magic that good data can create.
Especially when it comes to the biggest generation in the Canadian workforce today: millennials. The Accenture survey found that millennials aged 18-34 cited product experience, trust, customer-service, corporate social responsibility, and the ability to use points for privileged access to products and services as key factors contributing to their loyalty. A transparent relationship + personalization + brand alignment = more loyal millennial consumers – and every other segment, too.
So go ahead, offer up that free coffee. But don’t forget to customize and personalize your messaging, online and offline, too. You might just score some loyal consumers in today’s fragmented, message-overloaded marketplace.