Loyalty schemes may still have their detractors but the customer insight they provide is a powerful way of building stronger relationships, with the vast majority of consumers seeing real value in being a loyalty club member.
In an age when brand trust is so crucial to data handling, a new study by analysis and data specialist GI Insight shows that you would be mad not to operate a loyalty scheme.
In fact, it discovered that 76% of people do not want to hand over their data to a business unless it has a “proper loyalty programme”.
The company interviewed more than 1,000 UK consumers (balanced by age, gender, region and social class) for the report, “Putting Data in the Driver’s Seat”, which claims to show the crucial role loyalty schemes play in gaining consumer confidence and trust, as well as the major impact they can have on purchasing behaviour.
The research indicates that, in today’s digitally driven market, the consumer is much more aware of the use of personal data by organisations and its value to them.
Some 64% of survey respondents say they are happy for a company to hold and use a considerable amount of detail on their personal preferences and circumstances as long as it uses this information to send them “relevant and timely offers and communications”.
Loyalty schemes provide a platform for businesses to gather information on buyers, analyse that data in order to gain insight into the customer segments they serve, and then act on that knowledge.
Many consumers note that a large number companies fail to even acknowledge them as existing customers. Close to 40% of those surveyed observe that some firms neglect to recognise them as regular buyers when they have visited their websites because, without a loyalty scheme, they have no way of identifying them as frequent customers.
Other key findings in the report that underline the ability of loyalty schemes to drive consumer attitudes and behaviour include: 87% of consumers say that a company having a good loyalty scheme has led them to continue buying from that brand over the last few years; 82% of consumers confirm “now that things are picking up” they will continue buying from businesses whose loyalty schemes have delivered value in recent years; and 33% have even switched purchasing from one brand to another in the last year because the company they moved to had a loyalty programme they liked.
GI Insight managing director Andy Wood commented: “In the age of big data and omni-channel customer engagement, a loyalty scheme is a sophisticated way of capturing customer data that also provides a built-in mechanism for applying the resulting insight in a logical and highly targeted way.
“Companies need to continuously collect fresh consumer data to provide value to their customers through well-timed promotions that reflect these consumers’ latest needs. A loyalty scheme does just that.”
Wood continued: “Data is the most vital component of a successful loyalty programme and it is essential to employ the resulting customer insight to keep members engaged and further develop their relationship with the business.
“Successfully analysing customer activity can positively influence buyer behaviour and help a brand to really bond with these consumers, enabling companies with loyalty schemes to gain a significant competitive advantage.”
According to a separate study published last week by Aimia, the firm behind Nectar, those aged between 18 and 35 are far more likely than any other generation to permanently disengage with brands if they receive high volumes of mass generic email communications – even though they have bought products and services from them in the past.
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