Millions of loyalty cards are remaining moth-balled in wallets up and down the country, according to a new report, which urges marketers to work harder to encourage customers to reap loyalty club benefits.
The survey, carried out by ICM Research, found that 86% of consumers are signed up to at least one loyalty programme, with 40% to three or more programmes. But over a third (39%) say they don’t use all the schemes they enrol in, while a third of 18- to 24-year-olds have not signed up to any kind of loyalty programme.
The findings coincide with Boots and Ikea revealing major overhauls of their loyalty programmes, while Tesco admitted its poor Christmas performance was in part down to its failure to capitalise on Clubcard data.
According to ICM, consumers are seeking ever-more value, while marketers are demanding loyalty schemes to increase profitability by retaining, cross-selling and upselling to customers more.
ICM project director Jamie Belnikoff said: “In addition to effective loyalty schemes increasing business profitability, marketers must ensure that schemes also strengthen customers’ emotional commitment, from which positive recommendation will follow.”
The company cites a number of reasons why participation falls short among those enrolled in loyalty schemes. For many, the rewards on offer were never relevant or had ceased to be relevant – they were not the right rewards.
Belnikoff commented: “Relevance is fundamental. Unsurprisingly these days, near-cash rewards appear more compelling than ever. But it’s fascinating to observe that what people find relevant depends on the sector the business is in.”
ICM found that when a mobile phone company offers rewards, most people would prefer to receive something not related to mobiles: 48% said they would prefer a voucher to spend at a high street store against only 32% who would opt for any of free minutes, free texts or free mobile Internet.
By contrast, when a supermarket offers rewards, 70% prefer offers or discounts to spend at the supermarket, with only 18% wanting a voucher for another high street store.
“Loyalty scheme operators would be well-advised to research both the category and mix of rewards and then refresh or even relaunch their programmes where necessary”, Belnikoff added.
Many people also told ICM that they find some loyalty schemes difficult to understand and not user-friendly.
Belnikoff believes the success of schemes like Boots and Nectar is born out by the finding that 77% of consumers would prefer small, guaranteed rewards on an ongoing basis rather than the chance to win something big.
He added: “This presents a creative challenge to many marketers – how to design a loyalty programme that is exciting, engaging and differentiating whilst delivering rewards on a regular piecemeal basis.”
Perhaps unsurprisingly, many marketers see greater customer personalisation as the way forward. Benikoff concluded: “It’s interesting to see that both Ikea with its Family Card and Boots with its Advantage Card are sharpening their targeting and using more personalisation in an effort to improve engagement.”
Back in November, Ikea unveiled a revamp of its loyalty card mailings through newly-appointed agency Lida, with a new mailing strategy which boosts segmentation.
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