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Enrollment is up in loyalty programs, despite a limited capacity for customer engagement. That is according to the 2015 Loyalty Report, which was released Tuesday by Bond Brand Loyalty.
Scott Robinson, senior director of Loyalty Consulting & Solutions for Bond Brand Loyalty, told Loyalty360 that marketers should look beyond the functional attributes of loyalty programs (i.e. rewards and discounts) and engage with customers about the things they truly want and value.
“It’s about making them feel valued and making sure it’s personalized,” Robinson explained.
Bond Brand Loyalty’s comprehensive 2015 Loyalty Report included 5,300 responses and analysis of about 100 loyalty programs.
All of the company’s tracker metrics registered year-over-year increases, Robinson said.
The average number of loyalty programs in which consumers are enrolled continues to climb—from 10.9 programs per Member in 2014 to 13.3 programs per Member in 2015. But, customer participation paints a different picture.
Despite the increase in average enrollments, the average number of programs in which Members are active (i.e., make a purchase) has decreased from 7.8 to 6.7—and the report notes that consumers appear to have a finite capacity in terms of the number of programs with which they can actively engage.
Differentiation among loyalty programs in a crowded marketplace is absolutely crucial.
“What caught our attention is the number of loyalty programs consumers are active in,” Robinson said. “Consumers have enthusiasm for loyalty programs, but have limited capacity to engage with programs and brands. For marketers, how do they keep their brand front of mind and their programs active?”
Robinson said loyalty marketers do a nice job regarding the types of rewards offers, ensuring they can easily be redeemed, and the amount accumulated for each dollar spent.
“One of things that’s important for marketers to focus on are experiential features,” Robinson said. “Such as how loyalty programs can meet customer needs, and making sure the program experience is enjoyable and easy to participate in. There is such a focus on getting the rewards right that sometimes marketers overlook meeting the needs of their customers.”
Here are some of the key customer sentiment trackers, which incurred year-over-year increases:
“Programs are definitely worth the effort.”
“Programs make me more likely to continue doing business with certain companies.”
“I modify when and where I make purchases in order to maximize the benefits I receive.”
“I modify what brands I purchase in order to maximize the benefits I receive.”
“Programs are part of my relationships with the brands.”
Marketers must focus on authentically fulfilling customer needs to break the habitual reliance on the discount-oriented value proposition, the report noted. Program satisfaction correlates well with many of the desired outcomes that marketers expect of an investment in loyalty, such as the likelihood to continue doing business with the brand and recommend the program.
Meanwhile, mobile is seen as not only a vehicle to improve the loyalty program experience, but ultimately drives loyalty to the brand.
Mobile is a strategic high ground in loyalty, the report noted. It’s at once a combination of a communication conduit, a unique identifier, and a payment vehicle. It is the customer’s link between online and the real world. Mobile adds utility to marketing as part of an improved customer experience in a way that loyal customers appreciate.
But there is contradictory data regarding whether consumers want to interact with programs via mobile.
While 48% of Members agree, “I would like to engage with loyalty programs through my mobile device,” only 12% of customers have downloaded a program app, and 60% of smartphone owners are not even aware whether or not their program offers a mobile app.
For brands with mobile loyalty apps, there are benefits being achieved. For example, 62% of customers using the program’s mobile app are satisfied with the program, as compared to only 45%among Members who have not downloaded a mobile loyalty app.
“If there is one thing marketers are talking about, it’s mobile, particularly in the loyalty space,” Robinson explained. “Consumers saying I’d love to engage with my program through my mobile device, but we’re seeing how few consumers have actually downloaded loyalty program apps, and how many don’t even know if their program offers an app. Marketers can’t lose sight of mobile because it has the ability to improve program experience and drive loyalty to the brand.”
Last year’s Loyalty report revealed a tight link between customer satisfaction and the extent to which customers deem loyalty program communications as personally relevant; the higher the relevance, the higher the satisfaction with the program.
Given the investment most programs make in communications, marketers can do more to ensure their Members feel valued and important, the report noted. A coalition loyalty program has the benefit of a shared marketing and targeting cost structure, and will therefore be able to communicate more frequently. Conversely, it is even more important to ensure each standalone loyalty program communication effort is highly relevant and rewarding for Members.
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