Capgemini: Loyalty schemes fail to involve digital clients

07 April 2015

Loyalty programmes have not evolved with the digital age and as a result are failing to engage digital consumers, research by Capgemini Consulting shows. The majority of schemes still primarily focus on transaction-based rewards instead of customer-engagement, which, according to the consulting firm, is essential to a successful loyalty programme. The firm suggests companies look at each step of the development of a programme through the prism of engagement.

Global strategy and transformation consultancy Capgemini Consulting recently released a new report on loyalty programmes, titled: ‘Fixing the cracks: reinventing loyalty programmes for the digital age’. For the report, the consulting firm researched the loyalty programmes of 160 global companies across 7 sectors* on a number of parameters, including their central objective, their use of digital channels, and their ability to provide a seamless experience across channels. In addition, 40,000 consumer conversations on social media were scanned to measure customer sentiment towards loyalty programmes. The overall conclusion: loyalty programmes are often failing to engage digital consumers, resulting in low active participation rates and loyalty.

Capgemini Consulting - ‘Fixing the cracks: reinventing loyalty programmes for the digital age’

The research of the loyalty programmes sentiment on social media shows that 89% of customer opinions were unfavourable. The highest negative sentiment is found in the Telecom industry, with 96% of opinions unfavourable, followed by Consumer Electronics (94%) and Retail (93%). Sentiments were the least negative for the Hotel industry, with 72% of opinions negative. Almost half (44%) of the negative social media sentiment related to a lack of reward relevance, flexibility and value. Other reasons include a lack of a seamless multi-channel experience, concerning 33% of negative sentiment, and customer services issues (17%).

Loyalty Programmes - Social Media Sentiment

Not digital proof
The key finding of the study is that that loyalty programmes are not evolving at the same pace as the digital age, with 97% of loyalty programmes still relying primarily on purchases made by consumers. Only a 25% of loyalty programmes recognise and reward consumers for engaging and interacting with the brand in other meaningful ways. This includes rewarding consumers for activities, such as taking online surveys, rating and reviewing establishments or referring friends to the programme (used by 16%), employing gamification mechanisms (14%) and rewarding consumers for mobile app downloads (6%). The strong focus on transaction-based rewards can prove unsuccessful for the companies behind these programmes, as 77% of those programmes actually fail in the first two years, Capgemini notes.

Reward Mechanisms in Loyalty Programmes

Another issue to be taken into account when setting up a loyalty programme, is to engage customers across every customer touch point, offering cross-channel redemption services. A service that is currently only offered by one in ten loyalty programmes (9%). Especially the mobile channel is underutilised as redemption channel, and although 79% of loyalty programmes use this channel, only 24% allow redemption through it.

Support for Reward Redemption across Channels

Focus on customer-engagement
Capgemini stresses that companies should focus on developing of customer-engagement focused loyalty programmes as a highly engaged customer is equally likely to be loyal. The report explains: “Customer engagement is the sum total of specific, actual behaviours that can be measured in the immediate term. Customer loyalty is an outcome and measured by the quantum of repurchase over the longer term. Engagement is therefore a leading indicator of customer loyalty and financial performance.” To develop such a loyalty programme, companies should looking at each step of the development process, from design to iteration, through the prism of engagement.

Developing an Engagement-Based Loyalty Programme

“Brands need to revisit their approach to loyalty. For us, the key is to integrate the loyalty programme into the overarching customer experience and to reward engagement as well as the simple transaction. Additionally, since relevance is the highest form of customer intimacy, offering advanced levels of customisation and tailored experiences will enrich loyalty programmes and further encourage customer engagement,” explains Mark Taylor, Global Lead for Customer Experience Transformation at Capgemini Consulting.

* The seven sectors researched are: Retail, Banking, Consumer Products, Telecom, Airlines, Hotel Chains and Consumer Electronics.

More news on


Four ways digitalisation is transforming car brands and dealers

16 April 2019

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”