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Loyalty programs continue to provide rewarding avenues for brands seeking to attract customer attention in a very dynamic, challenging, and overcrowded marketplace. Customers have always been willing to engage with a loyalty program and, overall, they still are. As brands are increasingly forced to make consumers feel valued and appreciated, customer engagement in loyalty programs is up.
However, there is still a lot of work to be done in this space, especially on the digital front. In fact, a new report from Capgemini Consulting has just shown that, while most loyalty programs do reward customers for in-store purchases, many are ignoring a host of new digital customer engagement opportunities. And considering how mobile ready and digitally connected more people are, this neglect could be a major misstep for brands hoping to acquire and retain customers going forward.
This finding was detailed in an exhaustive survey of 160 brands around the world titled, “Fixing the Cracks: Reinventing Loyalty Programs for the Digital Age.” In addition to spanning seven industries including retailers, airlines, hotels, telecom corporations, and financial institutions among others, the report queried over 40,000 social media customer conversations to discern the popular opinions of loyalty programs.
And the results were rather surprising.
Only 9% of loyalty programs took an omni-channel approach and offered points or rewards to engage customers in multiple ways. Only 16% rewarded customers for simple online behaviors like reviewing products, referring friends, or taking surveys. The majority of programs still confined themselves to the standard practices of merely rewarding consumers for in-store purchases. An overwhelming 97% maintained this tradition.
"Brands need to revisit their approach to loyalty to reward engagement as well as the simple transaction,” said Mark Taylor, Global Lead for Customer Experience Transformation at Capgemini Consulting.
Taylor continued by saying that "advanced levels of customization and tailored experiences will enrich loyalty programs and further encourage customer engagement."
Making these changes are a critical move that brands must take to engage consumers. But more than that, the report also showed that customer disengagement was not the only danger. A look at social media results found that 89% of customer opinions towards loyalty programs were actively negative. The reasons cited? Customers don’t like inflexible rules, meaningless rewards, poor customer service, and, of course, the lack of online channels.
One glimmer of hope came from a program that Capgemini cited as positive example. Brands hoping to transform their loyalty program would do well to look at Sephora, a French cosmetics retailer. It’s called Beauty Insider, and it lets members use a mobile device to make purchases, receive promotions, check accounts, and more.
Beauty Insider also effortlessly integrates various mobile accounts including the Apple Passbook wallet, which links with Sephora’s app. This service has proved to be very popular. Customers that engage with the Sephora Wallet, on average, are purchasing at twice the volume and frequency as other customers.
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