Customer loyalty programmes have not evolved with the digital age - report

Customer loyalty programmes “are not evolving at the same pace as the digital age” says a new Capgemini Consulting study, which analyses the tactics brand loyalty schemes currently use to reward consumers.

The report “Fixing the Cracks: Reinventing Loyalty Programmes” highlights a number of key statistics gleaned from researching the loyalty programmes of 160 global companies across 7 sectors, and 40,000 consumer conversations on social media, which highlights that 89% of opinions about loyalty programs via social networks were negative in connotation.    

It found that just 11% of loyalty programmes offer personalised rewards based on a customer’s purchase history or location data, and that crucially, 79% of loyalty programmes use the mobile channel, yet only 24% allow customers to redeem rewards through it.

The research also states that 97% of loyalty programmes are based primarily on purchases made by consumers, but that social media opinion of loyalty schemes proves brands should be shifting their focus to rewarding customers for engagement rather than transactions.

“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,” says Mark Taylor, global lead for customer experience transformation at Capgemini Consulting.

“Additionally, since relevance is the highest form of customer intimacy, offering advanced levels of customisation and tailored experiences will enrich loyalty programs and further encourage customer engagement.”

Recent research from Accenture stated that that a potential $1.6 trillion economy was emerging in the US alone, as a result of traditional customer loyalty methods being devolved.

Just 28% of consumers state they feel loyal towards any brands, and only about one in three said they recommend brands to other people.

The travel sector, in particular, has felt the strain, with roughly seven in ten regular travel users stating they are no longer happy with the loyalty and reward schemes they receive through travel providers.

In keeping with Capgemini’s findings, consumers in the sector state that more choice in terms of the rewards they receive and more engagement about how they will receive them are key factors in brands being able to shift this mindset.