Four ways to bring back customer loyalty programs

by Mehr Singh
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By 1998, television and radio eclipsed traditional forms of advertising. Having grown up with the sensory overload of the “dot-com” boom of the 1990s, millennials are desensitized to conventional store promotions and seek a greater degree of engagement. With the advent of the capitalist climate that we live in and the ‘it’ brand changing faster than a ‘disruptive’ Silicon Valley gets start-up funds a new way to sell socks; consumer loyalties are fluctuating.

Over the past decade, online promotions for occasions such as Black Friday and Cyber Monday have not only been monumentally successfully in generating sales; but more obscure occasions such as Singles’ Day have also carved a niche in this space. The e-commerce magnate Alibaba reported a record-breaking $38 billion in sales on Singles’ Day alone. In light of the holidays approaching, KPMG International surveyed over 18,000 consumers across 20 countries. This survey explored factors that drive customer loyalty, what keeps customers coming back—and what doesn’t. It also revealed that consumers are more likely to recommend a brand to others if they deem to brand to produce a high-quality product, or if they have a personal connection with the brand; than to recommend a brand based on its loyalty program. More appallingly; 75 percent of the respondents surveyed claimed that 96 percent of the millennials surveyed disclosed that brands need newer strategies to reward customers for their loyalty altogether.

KMPG UK’s Head of Retail Paul Martin sheds light on the atrophying state of consumer-driven loyalty programs today, and contests that they need to change in order to capture the attention of a noncommittal audience. He suggests that in order to change, these programs need to be more immersive, stating, “Retailers who are serious about customer-centricity need to ensure their loyalty programs are in line with the expectations of their customers. And today’s consumers like to interact with an ecosystem that covers payments, fulfillment, social media, etc. as this can drive value, convenience, and a positive experience. And that’s a platform experience.”

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Katherine Black, the Principal of Strategy for KPMG in the U.S. concurs with this line of thought and says, “Our research tells us that the top three valued benefits of loyalty programs are cashback or discounts, special pricing, and the ease of earning and redeeming rewards. But the stakes for winning loyalty now are much higher; to remain competitive, retailers must consider mixing it up, throwing in a bit of novelty, personalizing offers, and showing they know their customers through a great experience, whether online or in-store.” The organization compiled a report titled The Truth about Customer Loyalty and created a handy list of four ways to win it.

  • Revival

Around half of consumers agree that companies should find thoughtful ways to reward loyal customers. Responsible personalization, emotional connection, and purpose-driven causes should be key considerations. Another imperative facet of fostering customer loyalty is an emotional connection: according to the survey, six out of 10 consumers are loyal because they have a personal connection to a company that, for instance, commits to innovation, a charitable cause and/or the environment. Sustainability and purpose-driven causes have evidentially been successful in obtaining loyalty across younger customers.

  • Keeping it simple

If companies want customers to participate in loyalty programs, they first need to make their programs easy to join and simple to use. Lengthy registration processes, rules and conditions, technical difficulties with redeeming awards are all likely to turn customers away.

  • Maintaining relevance amid the noise

Retailers need to ensure their loyalty programs stay relevant to customers: too many programs equate to too many apps, so it’s no surprise that customers forget their memberships, lose track of their points and perhaps decide that the rewards are not worth the effort.  

  • Promoting awareness and familiarity with the brand

Finally, regular communication to consumers through a multitude of channels such as social media, email or advertising can help programs remain top of mind with consumers—the goal is to engage their customers with an immersive platform experience, and not an onslaught of repetitive ads and marketing gimmicks. Much like with the promotion of products, the key to promoting loyalty programs is originality.