Modern consumers expect much more from their loyalty programmes than simply reward points in today’s multichannel, big-data-driven world. While most consumers still look mainly for cost savings from a loyalty scheme, this does not mean they are simply intent on collecting redeemable points.
According to our recent research, other forms of cost-cutting, convenience and special extras are also major factors in getting people to join and remain active in schemes.
The research clearly indicates that while loyalty programmes endure as a means of building customer relationships – with 94% of the 1,000-plus UK consumers surveyed acknowledging they are members of at least one scheme – companies need to do more than just dole out points if they are to reap all opportunities to further engage buyers.
With only 50% of members actively participating in schemes, many loyalty programmes have untapped potential. To do better, scheme providers need to look at whether they are doing enough to fully engage members.
While 74% of consumers said that earning reward points was a motivator for enrolling and participating in a scheme, 60% cited vouchers and coupons giving cost savings or a percentage discount and 54% pointed to special offers as major drivers for scheme membership and use.
Women are particularly driven by cost savings in various forms: 78% say they are excited by reward points, compared with 70% of men; 65% say vouchers and coupons are a key factor (versus 56%); and 55% look for special offers (versus 50% of men).
Convenience (in terms of sign-up and access) can also be a significant factor for a substantial proportion of consumers, with up to 25% citing this as a primary motivator. Overall, factors related to ease of use and fit with personal habits were more important to older consumers.
Significant proportions of consumers also said special perks were critical to their joining and staying active in schemes. Survey respondents cited free treats such as cake and coffee (17%), recognition of personal events such as birthday discounts (12%) and exclusive access to new products and deals (12%) as scheme features that had a powerful appeal. Women placed more importance on these extras than men.
And while having a mobile app is a must-have element of a loyalty scheme for some consumers, this group represents a small minority: just 6%. Nonetheless, the youngest consumers are more excited by mobile loyalty capability than their older counterparts: 10% of 18-24-year-olds and 14% of 25-34s say they are positively influenced by the offer of a good app, compared to just 2% of those in the 55-64 age group and 1% of those aged 65-plus. So brands targeting young customers, especially in firms in the technology space, may see potential in developing and promoting a loyalty app as a differentiating feature going forward.
Just as important as luring customers to join and use a loyalty scheme, is the ability to make effective use of the data and insight gathered through the programme. Evidence indicates, however, that not enough companies are effectively doing this successfully. Only 27% of scheme members feel companies are effectively analysing their needs and sending relevant offers.
An established, well-structured and efficiently managed loyalty scheme provides a full kit of tools for the provider to foster customer loyalty and to further grow relationships with members.
The key is to have a complex and varied offering that appeals to a broad spectrum of consumers, and to make full use of the captured data in tailoring communications so that the members – particularly those proving to be most profitable – remain engaged and expand their spending with the brand.
Andy Wood is managing director of GI Insight