[dropcap]32% [/dropcap]Loyalty program members do not receive any communication from the brand
[dropcap]94%[/dropcap] Customers are eager to hear from brands, provided relevant messaging made to them
Behaviour of consumers and business customers is rapidly evolving. Having high expectations, they know what they want from their favourite brand – meaningful conversations, real-time communication, and an experience that feels seamless, being few of the examples. Rather than having ‘one-for-all’ campaigns launched at them, they want to be heard, delighted and engaged with meaningful, relevant interactions.
Significant Findings
Loyalty programs have increased in popularity
58% of respondents enrolled for a new loyalty program in the year 2014. On an average, customers are part of 4.3 Loyalty programs across multiple categories. Even within the same category, customers, on an average, are a part of 2.5 loyalty programs.
Customers expect seamless and relevant experience across all physical and digital channels
The greater use of technology is changing customer behaviour with customers showing interest to interact with the brands using more than one channel. 47% customers expressed the desire for a program to communicate with them using more than one channel. Customers have their channels of preference and respond positively if the brand adheres to their likeliness.
Customers seek communication from the brand, provided relevancy of the messages is maintained
While customers are showing interest in enrolling for the loyalty programs, only about 52% of the program participants are exhibiting active behaviour. The main reason for inactiveness in the programs has been irrelevant or no communication from the brand.
Customers are willing to share personal information in return for a personalized shopping experience
Bombarding customers with irrelevant, broadcast messaging is resulting in customers being reluctant to sharing personal information with the brand. The customers, in almost all categories, prefer the brands proceed with caution in most areas of personal data.
Brand Love Vs. Program Love
In recent years, loyalty programs that reward buyers for sticking with the brand have steadily grown in popularity.
[box type=”info” align=”aligncenter” class=”” width=”400″]On an average, respondents are a part of 4.3 Loyalty programs across multiple categories [/box]
Even within the same category, customers, on an average, are a part of 2.5 loyalty programs. In most programs we surveyed, there were respondents who loved the brand more than they loved the loyalty program associated with it.These respondents in the consumer loyalty space would not switch brands simply on the basis of better engagement or rewards related to their spends. A great news for the marketers! But this can even be better if the brand provides seamless and consistent experience within its loyalty program as well.
[box type=”info” align=”aligncenter” class=”” width=”400″]Brand Love>Program Love A good loyalty program would build engagement with the customer and increase their life time value[/box]
A good loyalty program to build stickiness
Consumers love privileges, either in terms of experiences or rewards – and marketers love to show that they’re giving one. There’s a fair bit of role-playing with the customer trying hard to show her loyalty and the marketer trying even harder to reward it. These efforts manifest themselves in marketers investing in customer engagement and loyalty programs. A good loyalty program thus results in stickiness with the brand.
[box type=”info” align=”aligncenter” class=”” width=”400″]41% customers re-visit the brand only because of their love for the loyalty program [/box]
A loyalty program that builds Brand Advocacy
These 41% customers let us believe that brands have done a good job in creating customers’ love for the loyalty program, but have not done a good job in driving love for the brand itself. The marketing efforts have to be in building love for the brand via loyalty programs. When brands exclusively rely on discounts, rebates etc. in order to engage with the customers, the customers are more likely to shift to a competitor brand in pursuit of more benefits and higher discounts. Brands need to offer more than discounts. Privileged experiences, non-monetary benefits etc. in alignment to the brands’ attributes and positioning will ultimately lead to building love for the brand.
54% customers will switch the brand if given more benefits by another brand
62% respondents said monetary benefits (cashback, discounts, and rewards) are the most important aspect in loyalty programs for them
37% respondents prefer non-monetary benefits along with monetary benefits in a loyalty program
[box type=”info” align=”aligncenter” class=”” width=”400″]Program Love>Brand Love The loyalty program would encourage brand advocacy by incentivising customer behavior with the brand [/box]
What was also interesting to us was that analysing the responses yielded a predictable trend as below:
Sector wise influence of loyalty programs:
Airlines and Hotel industry enjoy the benefit of being the influential industries when it comes to loyalty programs. Loyalty programs in airlines influence 84% customers to engage with a particular brand while hotel programs have a 67% influence on the customers. The level of influence that loyalty programs have in retail sector is very less, being only 27%. However, trade loyalty programs are successful in achieving the ultimate aim of the loyalty program, which is to acquire customers and to ensure that they are loyal to the brand over a long period of time. Trade loyalty programs are seen to have an influence of 86% in the stickiness to any brand. In our survey with trade retailers and trade influencers, these figures were 92% and 79%, respectively.
Communication using multiple channels
The greater use of technology is changing customer behaviour and creating the need for new business models. Of the respondents surveyed, 47% expressed the desire for a program to communicate with them using more than one channel. 59% of the respondents wanted a brand to use SMS as a medium for communication with them, while only 21% were ok with a brand calling them proactively for communication. The major reason for this was highlighted as lack of relevant messaging received from multiple brands, on a periodic basis.
6% of the base wanted only email as a medium for communication with a brand. This was mainly on account of the amount of spam they have received from brands where they had shared their communication information, and hence the trust factor is comparatively low.
In the trade loyalty space, the numbers were highly tilted in favour of calls over relatively impersonal SMS or mails.
[box type=”info” align=”aligncenter” class=”” width=”400″]35% of respondents expressed the need to have some email communication from the brands of their choice [/box]
Non uniform clarity regarding the targets or promotions was cited as a major reason by many influencers and retailers in the trade segment as a cause of concern. Brands which followed a communication schedule over multiple channels were appreciated.
[box type=”info” align=”aligncenter” class=”” width=”400″]32% expected a mobile app to build engagement with a brand [/box]
These numbers also varied greatly by geography and demography. While most program members in metros and tier-1 cities preferred communication over less obtrusive channels like SMS, emails, mobile apps, or onsite, the consumers in tier -2 cities preferred phone calls as the primary means of communication, followed by SMS.
Businesses must use multiple-channels to create seamless and consistent engagement
The first commonly used commercial website was introduced in 1990s and the digital technology brought in a new level of convenience to the customers. This digital convenience came at an expense of
substituting physical interactions with digital transactions. Different digital channels have now been developed, but in isolation, resulting in inconsistency amongst the channels. As a result the transaction initiated online by a consumer can’t normally be completed in-store, which results in frustration amongst the customers. This frustration is more amongst the people who have grown up expecting to be ‘known at every interaction’.
However, now with the new technologies, there is an opportunity to bring all the channels together and give a unified experience to the customer. Consistent engagement modules are now available whether the customer chooses to walk into the store or to tweet about the product. Innovative companies are taking the elements of each channel that their customers value most, and combining them to deliver a more valuable experience overall.
Figure below shows how the engagement model has changed to date, and how it may evolve in the future. With Internet of Things gaining greater traction over the coming months, it will be interesting to see how brands use added channels to engage with their customers.
Relevant Communication
[box type=”info” align=”aligncenter” class=”” width=”400″]94% loyalty program members seek some communication from the brand [/box]
94% loyalty program members want to receive communication and want the messaging to be relevant as well, while only 47% program members are receiving relevant and timely information on their channel of preference. The disparity between these percentages is the room brands have to improve on the relevant
communications front.
How often customers want the brand to communicate with the brand?
Loyalty program members are eager to hear from brands more often, given the fact the relevancy of the messages is maintained. Amongst the customer base receiving relevant communication, 5 out of every 7 program members are active members and 5 out of every 8 members have done redemption with all the programs they are a part of.
[box type=”info” align=”aligncenter” class=”” width=”400″]32% respondents say they don’t receive any communication from the brand [/box]
Time to Hyper personalize your communication
The lifecycle approach to program communications should be used by brands to personalize communications and spark renewed engagement. Loyalty is part of the brand relationship and programs are having an influence on customer behaviour. On the other side, consumers have an insatiable appetite for loyalty and rewards that is seen from the fact that respondents are enrolled in an average 4.5 loyalty programs.
While, customers are showing interest in enrolling for the loyalty programs, only about 52% of the program participants are exhibiting active behaviour. The main reason for inactiveness in the programs has been irrelevant or no communication from the brand, followed by longevity of the points earning
period in loyalty programs.
What drives and sustains engagement between a brand and its customers is unique to each customer and, marketers need that old-style kirana shop 1-to-1 relationship to enhance their loyalty programs. “One size fits all” business model is outdated in this era of technology.
Data Security
Personalised marketing, though a method to enhance engagement, is one of the areas with a gap between customer expectations and tactics deployed by the brands. Bombarding customers with irrelevant, broadcast messaging is resulting in customers being reluctant to sharing personal information with the brand. The customers in almost all categories prefer the brands proceed with caution in most areas of personal data.
Not surprisingly, 44% respondents say brands ask for more information than they are actually willing to share. The areas that are high on the list of data not willing to be shared by customers are online browsing behaviour (61%), household information (64%) and phone numbers (61%).
[box type=”info” align=”aligncenter” class=”” width=”400″]52% Customers are willing to share personal information in return for a personalized shopping experience that provides relevant recommendations and targeted offers. [/box]
Despite the concern about privacy and security, customers respond to personalized messages far more positively than to mass-marketing blasts. Survey data finds that 51% of shoppers will respond to personalized marketing when it provides improved services or targeted offers.
Brands here thus have a responsibility to be vigilant about security, provide value in return, and avoid becoming one of those messages which are deleted instantaneously.
Conclusion
The 2015 Customer Loyalty Study reports that the popularity of loyalty programs is on a rise amongst the customers. 58% customers enrolled for a new loyalty program in the yearUnderneath this applause for the loyalty programs, was a rapid acceleration of customer expectations across the sectors.
Customers today know that the competition for their money is fierce, and they are perfectly willing to sit back and let brands fight it out. Brands thus need to be aware of their customers and their expectations. In other words, brands need to engage with their customers and provide them relevant offers at right time.
Methodology
The report compiles survey results from customers who were asked about the loyalty programs they are part of, their expectations from those loyalty programs and how satisfied they are with how brands have met those expectations.
