The Deloitte Consumer Review
In this edition of The Deloitte Consumer Review, we are revisiting a theme explored in our 15th edition: the challenge businesses have in delivering a positive customer experience. We focus in particular on: customer loyalty.
We believe traditional loyalty schemes need a rethink.
Not only because of changing consumer expectations, but also because they have become expensive to run and difficult to unwind. Securing customers' loyalty goes beyond having a loyalty programme. Loyalty is the brand's ability to be 'top of mind' in a customer's head as well as to secure a sense of allegiance from consumers. Allegiance is much harder to achieve at a time when every consumer has different expectations and responds to different triggers when it comes to engaging with a brand.
Getting the customer 'experience' right has become the differentiating factor for many successful business models. And the right loyalty strategy should help to deliver that experience.
This report will examine seven viewpoints:
- the traditional customer loyalty scheme has become a 'tired' concept that needs to be reinvented
- the customer experience is just as important as points or financial rewards to secure customer loyalty
- winning and retaining customers in the digital era requires a mix of personalisation, relevance, exclusivity and engagement across all the different channels
- traditional points-based schemes are often not agile enough to meet rapidly changing customer expectations the same way that 'connected stores' and new technologies can engage with consumers
- traditional financially driven loyalty schemes can become a financial liability for businesses
- businesses need to consider a custom-built solution for implementing their loyalty strategy versus an off-the-shelf 'buy' version
- loyalty solutions need to be agile to build and enhance the offering
Reinventing a 'tired' concept
According to our research, the majority of consumers consider being rewarded for their loyalty as the norm but not a differentiator. The research demonstrates that while participation rates to loyalty schemes are relatively high the reward offered is not seen as differentiating for the brand, it is expected rather than prized or valued.
The data shows that one in two consumers is a regular user of loyalty schemes, making use of a brand loyalty scheme at least once a month or more often. Moreover, while 54 per cent claims to like points-based loyalty schemes, a similar share of consumers do not always redeem all their points (53 per cent). When asked about their attitude to loyalty schemes, 42 per cent indicated they needed more than points to shop with a brand (see Figures 1 and 2).
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