Marketers have lost sight of what consumers – especially younger people – really want from customer loyalty schemes, with “pointless points” leaving most customers disinterested.
That is the stark conclusion of a new report, Loyalty 2020, carried out by research group Rare: Consulting among 1,000 UK-based consumers.
The report urges brands to consider customer behaviour and expectations to build loyalty, as it is no longer simply a transactional requirement. In fact, quality is identified as the most important factor in building trust and loyalty, ahead of price and customer service.
The report benchmarks brands in the hospitality, retail, fitness entertainment streaming sectors based on their ability to create loyalty.
Netflix, Hulu, Spotify and other streaming providers are more successful at engendering loyalty than more traditional bricks and mortar product and service providers, with data playing a crucial role in creating services that help make brands “sticky” with their customers.
Streaming services collect data beyond behavioural information, including preference and attitudinal data, highlighting a user’s previous consumption patterns, allowing the delivery of relevant and timely experiences. By limiting data collection and analysis to behavioural data, brands in other sectors are missing a huge part of what is important to users, the report authors claim.
In fact, Netflix is the only brand in an examination of 50 across all five sectors that was shown to deliver on its customer promise. Almost half of the consumer respondents subscribe to it, while 83% value the brand’s location and quality as its most pleasing attributes among six that were tested
Meanwhile, Nando’s was the only non-streaming service to make the top three, finishing second out of the 50 overall.
Another major issue highlighted in the report is that there is no unifying definition of the term “loyalty”, according to a panel of UK marketers interviewed by Rare. More than half (54%) suggest it is a positive attitude between brand and customer that drives repeat purchase. However, a further fifth say it relates to repeat purchase, and an additional 15% believe loyalty is “a strong feeling of allegiance”.
Rare founder and CEO Ben Pask said: “Our research reveals confusion about both the definition and value of loyalty programmes among UK brands today. Marketers need to find a common language around loyalty to leave consumers in no doubt about the benefits their schemes offer. In other words, if brands want to get loyalty right they must start internally and agree what loyalty means to them, before deciding what customer rewards look like.”
The research also throws a spotlight on different attitudes across age groups. While loyalty schemes are generally valued by older consumers, younger people are less likely to agree that loyalty schemes make them feel special.
Pask concluded: “This point will be especially worrying to brands, as the emerging consumer market – the people who will choose and spend money on products and services for decades to come – appears to be bored with loyalty schemes as they are now. Clearly, there is much that brands need to do in order to capture their imagination – and that means taking a more structural approach.”
To assist brands, Rare has developed a new Loyalty Framework. For more details, and to download the free report in full, visit the Rare website>
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