Customer loyalty programmes fail to capture consumers

30 July 2015 Consultancy.uk

Customer loyalty programmes have failed to grow with the times, recent research from Capgemini Consulting finds. Nearly 90% of consumers have a negative sentiment toward Customer loyalty programmes, often citing that they do not take the digital developments of 2015 into account.

Customer loyalty programmes are aimed at keeping customers coming back to a shop or service provider. Customers that are loyal to a brand come back regularly and are thereby rewarded via the loyalty programme. Furthermore, ‘loyal’ customers are more inclined to recommend a shop or service provider to their friends or family to which they are loyal. Yet do customer loyalty programmes still perform in securing ‘loyal’ customers in the year 2015? To find out, advisory firm Capgemini Consulting sought after the answer.

Social Media Sentiment

Fixing the Cracks
The consulting firm studied 160 customer loyalty programmes of companies from all over the world in seven different sectors. In addition, the firm scanned social media conversations of 40.000 consumers regarding their daily use of the programmes – aimed at improving the loyalty of customers – to gauge their sentiments. The resulting conclusions are disclosed in Capgemini’s report: ‘Fixing the Cracks: Reinventing Loyalty Programs for the Digital Age’.

The results are not positive. Only a few customers actively engage in loyalty programmes and 89% of the social media conversations express a negative tone in relation to the programme in question. Particularly the sentiment towards the Telecom, Consumer Electronics and Retail sectors show extremely negative reviews, with 96%, 94% and 93% of customers unsatisfied by the loyalty programme offered.

Key Reasons for Negative Social Media Sentiment on Loyalty Programs

Dysfunctional programmes
The reasons for the dissatisfaction show considerable variation. Three main reasons stand out. 44 % of consumers say they are dissatisfied with the loyalty programs because of the lack of personalised offers and opportunities to exchange the accumulated points for products. Further, 33% think that the programmes lack consistency across different channels, for example when points collected cannot be used via smartphone or online channels. Finally, 17% are dissatisfied about customer service, for example as a result of long delays when calling the Customer Contact Centre.

Reward Mechanisms in Loyalty Programs

The lack of personalised offerings is directly visible in the data from Capgemini Consulting. “Most of the customer loyalty programmes (97%) keep to the traditional reward pattern whereby clients are rewarded only after they have made a purchase. Only a handful of the programmes studied recognises and rewards consumers for their interest and interaction with a brand in other meaningful ways”, says the firm. Writing of reviews and filling in of online forms is only rewarded by 16% of the programmes, and barely 14% makes use of gamification as a reward for customers.

Another issue uncovered is that loyalty programmes have not evolved digitally when it comes to the swapping of points for products or services. In barely a quarter of cases is it possible for consumers to use an app, and merely 9% of service providers are able to call themselves ‘omnichannel-proof’ with respect to the use of their loyalty programmes.

Industry wise Adoption of Engagement bases Reward Mechanisms

“It is remarkable that businesses still only reward purchases and not the promotion of the brand. Businesses need to reconsider the way in which they look at loyalty. The loyalty programmes need to become an integral part of customer engagement and customer experience. Above all, the engagement of customers needs to be rewarded via all channels, as well as being personal and relevant to them. Customisation will further enrich loyalty programmes while further engaging customers,” says Manfred van Gurchom, Lead Digital Customer Experience at Capgemini Consulting.

Customer Needs and their Impact on Loyalty Program Design

Focus on customer engagement
According to the consultancy, customer loyalty programmes need to focus more on customer engagement, and therefore need to be seen in the wider context of market strategy. “Businesses should critically consider every aspect of their loyalty programme.” With the authors recommending a number of steps towards making the programmes successful, including adding the programme into the customer experience strategy, incorporating ‘Social Listening’ and the increased use of gamification techniques. Concluding: “Offer value in addition to the traditional rewards.”

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