Stingy loyalty schemes alienate customers - report

Mark Johnson's picture

Loyalty marketers have lost sight of what consumers really want from brand loyalty schemes - that’s the stark finding of a new report from London-based research group Rare: Consulting.

The result of a survey among 1,000 UK-based consumers, Rare:’s report Loyalty 2020 concludes brands need to consider customer behaviour and expectations to build loyalty as it’s no longer simply a transactional requirement. In fact, quality is identified as the most important factor in building trust and loyalty, ahead of price and customer service.

The report benchmarks brands in the hospitality, retail, fitness and entertainment streaming sectors based on their ability to create loyalty. 

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Key findings

  • Netflix, Hulu, Spotify and other streaming providers are more successful at engendering loyalty than more traditional bricks and mortar product and service providers. Data plays a crucial role in creating services that help make brands “sticky” with their customers
  • Netflix is the only brand in an examination of 50 across all five sectors that was shown to deliver on its customer promise. Almost half of the consumer respondents subscribe to it, while 83% value the brand’s location and quality as its most pleasing attributes among six that were tested
  • Nando’s was the only non-streaming service to make the top three, finishing second out of the 50 overall

Streaming services collect data beyond behavioural data, including preference and attitudinal data highlighting a user’s previous consumption patterns, allowing the delivery of relevant and timely experiences. By limiting data collection and analysis to behavioural data, brands in other sectors are missing a huge part of what is important to users

Meanwhile, there is no unifying definition of the term “loyalty”, according to a panel of UK marketers interviewed by Rare. 

More than half (54 per cent) suggest it is a positive attitude between brand and customer that drives repeat purchase. However, a further fifth say it relates to repeat purchase, and an additional 15 per cent believe loyalty is “a strong feeling of allegiance”.

“Our research reveals confusion about both the definition and value of loyalty programmes among UK brands today”, said Ben Pask - founder and CEO of Rare. 

“Marketers need to find a common language around loyalty to leave consumers in no doubt about the benefits their schemes offer. 

“In other words, if brands want to get loyalty right they must start internally and agree what loyalty means to them, before deciding what customer rewards look like.”

No loyalty: Millennials don't see the point of poor schemes

The research also throws a spotlight on different attitudes across age groups. While loyalty programmes are generally valued by older consumers, younger people are less likely to agree that loyalty schemes make them feel special.

“This point will be especially worrying to brands, as the emerging consumer market - the people who will choose and spend money on products and services for decades to come - appears to be bored with loyalty schemes as they are now”, Past added. 

“Clearly, there is much that brands need to do in order to capture their imagination - and that means taking a more structural approach.”

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