What are consumers missing about loyalty programs?
Through a special arrangement, what follows is a summary of an article from COLLOQUY, provider of loyalty-marketing publishing, education and research since 1990.
Celebrating its 25th anniversary, COLLOQUY gathered a select group of loyalty leaders and visionaries and asked them to share their own insights into the loyalty industry’s evolution. One of the topics explored was: "What do you think consumers miss/don’t see regarding the well-connected brand loyalty relationship?"
Here, a few of the responses:
Caroline Larson, director of customer engagement and loyalty, Caribou Coffee: Many consumers don’t realize how complex systems are required to be to do a good job of engaging, recognizing and rewarding guests. They think that all systems are built, integrated and easily flowing with information from one place to another. In reality, most systems are created piece by piece, over time, and sometimes in silos.
Roger Dow, president and CEO, U.S. Travel Association: Trying to join every program in a segment—spreading out their purchases vs. concentrating their spending on one or two, to gain the benefit of "high spender" points/miles accelerators.
Photo: COLLOQUY
Bryan Pearson, president and CEO of LoyaltyOne, author of "The Loyalty Leap": How much they can influence change and improve the role that loyalty marketing serves. Just consider the potential power of a well-connected brand ambassador—just Google "I Love IKEA" or "I Love Southwest." What many companies miss is the opportunity to give their budding ambassadors a platform.
Simon Uwins, author of "Creating Loyal Brands," former chief marketing officer of Tesco UK, Fresh & Easy: Once customers share data with you, they assume you know everything about them, and that you have the intention and the capability to personalize their experiences. But you can never perfectly know everything about them, or personalize everything. So it’s essential for the marketer to develop a proper two-way relationship with the customer to both manage expectations and maximize value.
Don Peppers, customer relationship expert, author, founding partner of Peppers & Rogers Group: They may think of (loyalty) as a company’s effort to secure their continued patronage, but I also think that consumers, unless really emotionally involved with the brand, are mercenary. They’re making economically rational decisions, and a lot are suckered into making loyalty program decisions based on upfront promotions.
Discussion Questions
What do you think consumers miss/don’t see regarding the well-connected brand loyalty relationship? In what ways can retailers better manage expectations while driving further engagement?
Poll
BrainTrust
Max Goldberg
President, Max Goldberg & Associates
A few things: First, these programs are really continuity-of-purchase programs designed to get customers to buy more or more often. As noted customers are rational and recognize why these programs exist. Second, the use of technology allows companies to engage in a dialog with their customers. Use this opportunity to learn more about their needs. Third, never lose sight of the fact that we tend to have customer loyalty backwards. Customers can be loyal to their family, country, Alma Mater, church, etc., but loyalty to a brand is suspect. Instead, companies need to be loyal to their customers. How? By delivering on your promises. To do this you need to understand what your customers seek and expect from you and consistently deliver on that.
Interesting comments. The only one that is not self-serving for retailers was made by Don Peppers. It’s up to the retailer to create a program that is interesting to consumers. That includes the rewards structure, how data is used and the incentives to join. Too many retailers create programs that neglect consumer wants and needs. Consumers will not be emotionally involved in a retailer’s loyalty program unless the retailer makes the program something other than an upfront promotion to garner participation.
I find it almost laughable that two of the five industry commenters say something about consumers expectations for loyalty programs being too high — as in, they want them personalized and for information to flow easily, etc. Shows you just how inwardly-focused the retailing industry can be at times. Retailers and others need to put the customer first in loyalty programs, and then they will have a chance of actually creating loyalty.
Today’s consumers are smarter and very well connected across many platforms and channels. They don’t miss much in terms of loyalty offers. If deemed “less loyal” to a brand, it has more to do with their searching for situational value across many choices which are just a click away on their smartphones. Value comparison across many has never been easier or quicker.
Maybe the better question to ask is, what do you think retailers miss/don’t see regarding well-connected brand loyalty programs?
Beauty lies in the eyes and experience of the beholder. And the beauty for omnichannel consumers today is flexibility, choice and a seamless experience across all channels. “Love” comes from consistency, and ease of connecting, and great experiences anytime, anywhere.
At most it’s about incentive. The way I see it there are two groups brands are trying to manipulate:
I have no issue with either “a.” or “b.” Both work and we should learn to use them as effectively as possible. But don’t call either one “loyalty!” At best all these clever programs offer incentives. When employee and manager engagement is at an all-time low (hovering around 30 percent) pretending to have customer engagement seems rather ludicrous. Get your employees engaged and you won’t have to worry about your customers.
What consumers understand that retailers and the consultants that engage them to spend millions on “Loyalty” miss is that they own their own loyalty. A program has little to do with the creation of consumer loyalty.
Consumers lend their loyalty to a retailer by experience. They join programs because they have to do so in most cases, especially in grocery or retail drug and convenience.
Retailers that simply don’t understand that their card or other portal of entry to their program is just a promotional program will continue to fail at gaining loyalty.
Consumers aren’t missing a thing. They’re taking advantage of of the promotions offered, at least the ones they understand, then moving on to the next best one that hits the street.
Retailers continue to believe that their program is driving their connection to their customer. The experience that the consumer has in connection with a retailer is their means of gaining a second opportunity to serve them. If the experience isn’t right, then it was just another promotion taken advantage of by the consumer.
The consumer has, does and always will own their loyalty. There isn’t a program that exists that will do anything more than a potential continuity.
The statistics about how many loyalty programs a consumer is a member of but never uses are high — and telling. Too many cards to carry around. Too many emails and other social messages from retailers. The consumer has loyalty program overload.
Retailers need to create a loyalty program that is excellent and (this is very important) is backed up by a customer experience that is so good that even without the loyalty program, the customer would still come back. The loyalty program just takes the experience to the next level with perks, recognition, etc., and further distances the retailer from its competition.
I think the consumer is hitting overload on “loyalty” programs. Considering the time pressure that most consumers have to deal with and consumers’ need to put simplicity into their lives, and not to add complexity to them, the best loyalty program should be structured something like this…..
Keep the store in stock, keep your retails in the store very competitive, reward the customer with some hot promotions, hire good people who smile and greet the customer, keep the store’s assortment fresh and on trend, and keep the look of the store fresh. Do these things every day and your customers will be pretty loyal.
Really? IMHO you’re asking the wrong question.
What are companies missing about improving the customer experience and driving more engagement?
Companies are more concerned about making the sale than about making an emotional connection with customers and earning customers for life. Become customer centric or risk being replaced by your competitor who is. Loyalty is based on emotional connection, not points.
Consumers don’t need to be aware of how well-connected brand loyalty is for a particular brand or product. Instead they need to have retailers continuing to manage their expectations so that they can align these with their efforts to increase traffic, peripheral sales and ultimately product revenues.
If a consumer isn’t loyal to a particular brand, at the highest level, to me that simply means the brand / merchant hasn’t generated a compelling reason for the consumer to be loyal. If the rewards, monetary and otherwise are significant enough to preclude the shopper from going to the competition, then the loyalty will build. Through direct communication, service and offers a brand can, and has in some famous instances, drive true loyalty and even beyond towards something like “brand enthusiasm”.
A: Communication is key. Consumers should understand that they can ask for, and receive a high rate of return on how their personal data is shared with a brand. Many loyalty customers unknowingly give up valuable intelligence about personal habits and preferences without expecting much in return. On the flip side, retailers need to communicate simply and clearly to the customer about how data collected via loyalty programs will be used (or not used) to provide more rewarding experiences to the consumer, including safe data sharing with like-minded vendors in partnerships that bring greater value to the customer journey.
I think retailers have done poor job in general of communicating what shoppers get from their loyalty programs. For some retailers, like Walgreens, there never seems to be any reward or benefit whatsoever. I think there is a lot that consumers don’t see or understand about loyalty relationships and in general this is caused by a lack of clear, concise, personalized if possible, communication from the retailer to the consumer about why participation is beneficial.
Consumers don’t miss nearly as much as marketers—including visionaries and loyalty leaders—think they do. It’s the brands and the marketers that are missing out in integrating their loyalty strategy with their brand and broader customer experience. The fact remains, and is supported by the numbers on the number programs along with membership and (lack of) engagement metrics, that most programs aren’t terribly well crafted or well executed.
The bar remains low and far short of what consumers should rightly expect.
Loyalty is not a product! So why does marketing treat it like something that needs to be sold? Therein lies the real problem.
Loyalty is earned by the brand for delivering brand experience and expectations to the customer. You get there by knowing your customers. Interacting with them. Spending time listening and learning from them. Not shoving yet another program in their faces.
That’s when the consumer is forced to take on the ‘What’s in it for me’ attitude and retailers will likely fail at delivering that and remaining profitable.
But that’s just my 2 cents.
Once upon a time, there was loyalty to brands. This broke down as product quality converged. The resulting product parity was exemplified by the rise of private label, discount airlines, and other entrants.
Then came the brand-based loyalty program. Beginning with airlines, it created a new kind of loyalty—loyalty to loyalty programs.
In time, that loyalty began to break down as well. According to Colloquy, only 9.5% of brand loyalty accounts are active.
Then came the coalition program. Beginning in other countries like Canada, and the UK, they include AirMiles and Nectar. Now in the US, there’s Plenti from Amex. That was supposed to be the big loyalty news of 2015. So what happened? Plenti wasn’t even mention by the preceding experts.
I’d rather be a multi brand loyalty program then a single brand loyalty program. Multi brand loyalty programs like retailers and coalitions satisfy more of a fickle consumer’s interests. Amazon Prime works. And for smaller retailers, Plenti gives them a shot.
Different customers enjoy engaging, with the their proprietors, in different ways. Some customers will happily explore mobile and web apps and will even participate in gamified loyalty apps and programs. Others want what they’ve always had; a simple punch card with simple rewards.
The best loyalty program will be flexible to make the broadest number of customers happy.