Reward scheme members reveal what they really want
Programmes doling out rewards but failing to fully connect with customers
The main things reward scheme members want are more rewards for staying loyal and less irrelevant communication, according to the results of a new survey.
As more marketers turn to loyalty and rewards programmes to spark business growth, a new report from the Chief Marketing Officer (CMO) Council report indicates that marketers are under-valuing these often costly programmes even as customers give the perks, discounts, deals and additional service opportunities high marks. Both customers and marketers agree: deeper engagement and personalised contact drives loyalty, not mass blast communications and gimmicks.
The report (Loyalty Leaders: Feeling the Love from the Loyalty Club) found that loyal consumers expect marketers to understand them better and deliver more relevant and valued offers. Unfortunately, marketers are not meeting the needs of their business, and question their ability to meet the needs of the customer.
The Marketer’s View
Most marketers (61 percent) believe that loyalty programme participants are the best and most profitable customers. Unfortunately, only 13 percent of respondents believe they have been highly effective in leveraging loyalty and brand preference among club members, and nearly 20 percent don’t even have a strategy for this. Another 25 percent admit they have not mobilised brand loyalists to become active advocacy agents, either.
The study also reveals that marketers are mostly inducing loyalty with discounts or free products and premiums rather than quicker, better service or improved customer handling. Some 39 percent of respondents view discounts and savings as the key member benefits, 34 percent view free products and premiums as essential incentives, while 33 percent are committed to offering points for merchandise redemption as a further motivator.
When asked to outline typical customer complaints about loyalty programmes, nearly 30 percent of marketers report that some customers see little or no added value to becoming a loyalty member; 24 percent indicate rewards lack substance; a similar percentage feel they don’t get enough personalised attention; and 21 percent have problems with receiving too much spam email and junk mail. Customer complaints also touch on a lack of individualised communication (23 percent) and issues with redeeming points and miles (18 percent).
Despite these challenges, investments in loyalty programmes will continue as nearly 80 percent of marketers are committed to maintaining or further funding loyalty programmes.
Online channels dominate expected investments as nearly 60 percent of respondents said they planned to make better use of the web and new community and networking tools to grow and develop loyalty programmes. Other key actions for generating a greater ROI from club members include:
• Personalising interactions and target messages (51 percent)
• Increasing frequency and relevance of communications (39 percent)
• Gathering more insights and intelligence for better customer handling (38 percent)
• Adding new benefits, incentives and inducements (36 percent)
• Studying industry best practices and making adjustments accordingly (19 percent)
Marketers appear to be falling down on extracting greater value from customer loyalists. When it comes to in-depth profiling of customers, the vast majority of marketers still only aggregate and analyse limited customer data sets. 73 percent collect basic demographics and 68 percent track the location of members, but critical insights – such as advocacy rates (14 percent), brand loyalty and attachment (27 percent), personal preferences (31 percent), satisfaction levels (33 percent), and product preferences (38 percent) – are not being leveraged.
Loyalty programme operations, however, are increasingly challenged. Acquiring and retaining motivated and engaged participants is the number one problem facing 46 percent of marketers. Other obstacles and issues include:
• Measuring marketing value and effectiveness (42 percent)
• Collecting, integrating and maintaining customer data (41 percent)
• Deriving valuable insight and intelligence (38 percent)
• Delivering more personalised offers and inducements (34 percent)
• Creating more customised communications (33 percent)
Digital marketing channels are definitely taking precedence in ways marketers promote their loyalty and rewards programmes. Nearly 60 percent rely on web sites, nearly 60 percent on email, 47 percent on word-of-mouth, 46 percent on point-of-sale information, 42 percent on direct mail, and 39 percent on a sales or service representative.
“Targeting has taken on a very different meaning in today’s marketing mix,” said Sandra Zoratti, VP of global solutions marketing for InfoPrint Solutions Company. “Before, targeted messages relied on basic data to engage in rudimentary segmentation and single channel communication delivery. Today’s loyalty leaders are better leveraging customer insights to deliver highly personalised, multi-channel communications that are more relevant to the individual customer and provide for ongoing interaction and attachment.”
The Consumer View
Marketers can take a deep breath as consumers report they see value in loyalty programme membership. A surprising 79 percent of consumers surveyed say they are very, or pretty, satisfied with their loyalty and rewards programme experiences. But 70 percent want to see more discounts and savings, and 52 percent more compelling personal deals and offers as reward for steering their business to loyalty programme operators. In a definitive call for personalisation, 58 percent say they want more compelling personal benefits and services, as well as more relevant offers or individualised deals.
And while social media also tops the list of investments for marketers, consumers report that point-of-sale information, service representative interactions, company web sites and word-of-mouth are the primary sources for learning about loyalty clubs. Nearly 65 percent acquired information about the programmes in retail environments compared to only 4 percent in social media networks, 3 percent in blogs and 11 percent in online advertising. This finding is not surprising when you consider that consumers engaged in loyalty programmes demand high-touch direct engagements, versus mass messages, regardless of channel.
Too much spam and junk email topped the list of negatives associated with loyalty and rewards programme membership (44 percent), followed by too many conditions and restrictions (38 percent), and rewards that lacked real value (37 percent). Other prevalent beefs included members having a hard time redeeming points or rewards, programme membership lacking value, as well as communications and service not being personalised or targeted specifically for members.
Surprisingly, soft economic conditions are not necessarily inducing consumers to sign up for loyalty and rewards programmes. Only 22 percent said the economic climate had raised their interest in these programmes compared to 41 percent who indicated it had no impact at all.
For marketers, the big question is how much loyalty club membership influences purchasing decisions and customer affinity and attachment to brands. Club membership strongly motivates, or is a big factor, in influencing buying decisions, for 52 percent of survey respondents. When it comes to word-of-mouth, nearly 20 percent of club members say they are big brand boosters and almost 50 percent say they sometimes talk up the product or service they support. On the other hand, 54 percent of survey respondents stated they would give up their loyalty or rewards club membership if they had a poor product or service experience with a brand.
Despite spam and junk email concerns and irritations, over 64 percent of loyalty club members want to receive information, notifications or updates electronically. That is good news for the environment and a significant contributor to cost reduction. Nearly 16 percent say they are comfortable visiting web sites to source their loyalty information and about 14 percent prefer a monthly printed statement.
“Today’s consumer loyalist wants essential information delivered through multiple channels in the most relevant, personal and customised way possible,” said Zoratti. “Customers are issuing a very clear warning to marketers. Give me relevant communications that reflect my history and connections to you, or we will go elsewhere with our business. Smart marketers will respond by taking what they know about customer wants, preferences and behaviours to be more targeted, efficient and relevant in their messaging to improve response rates and increase customer gratification and purchase intent.”
The CMO Council
The Chief Marketing Officer (CMO) Council is a US-based industry association that has 5,000 members who control more than US$125bn in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. In total, the CMO Council and its strategic interest communities include over 12,000 global executives across 100 countries in multiple industries, segments and markets. Regional chapters and advisory boards are active in the Americas, Europe, Asia Pacific, Middle East and Africa.