Customers Dissatisfied with Existing Loyalty Program Value Propositions

Customer dissatisfaction is a problem in loyalty marketing and the problem is global in scope according to a Colloquy report titled, “Global Strategy, Local Tactics”.

The report draws on research conducted in the U.S., Brazil, India, Turkey, and Singapore. 

According to the study, consumers uniformly said a loyalty program’s overall features play an important role in their decision to participate, but in every market satisfaction with delivery on those features fell below 50%. 

The 2013 Global Loyalty Attitudes Study looked at five economies with differing amounts of exposure to, and history with, loyalty programs: Turkey, Brazil, Singapore, India, and the U.S. The study included quantitative data as well as qualitative data via interviews.

Here are three key findings revealed in the report:

Local market conditions and attitudes mold loyalty offerings

Much of the differentiation between types of programs from market to market is fueled by the specific business conditions unique to each of the five countries in addition to their cultures. For example, markets with low point-of-sale technology development but high mobile penetration are likely to bypass cash register rewards or offers in favor of mobile offers. What’s more, the level of business and retail environments is not necessarily a predictor of success.

Model proliferation is not linear

It’s not necessary to test and learn from implementing a traditional model before exploring more creative structures. Some successful loyalty programs are leap-frogging directly into partnerships, points-sharing, and mobile initiatives. Although some of these strategies bear resemblance to more traditional models seen in more developed markets, successful ones combine elements of different models to create something slightly different and better suited to local market conditions.

It is important to note, however, that many of these new models are cleaving very close to a more short-term utilitarian reward scheme. Many such programs are focused on transactional exchanges with little room for developing longer term relationships.

This trend is not universal. Several case studies of newer models have managed to move beyond merely transactional relationships.

Consumers are increasingly dissatisfied

The majority of loyalty programs are not building true loyalty. Consumers worldwide are not satisfied with the quality of the program attributes they find most important – all regions indicated just below 50% satisfaction with overall program features.

As a result, consumers’ satisfaction with their loyalty programs along this dimension lags the importance that the market places upon it. This means that there is an “expectations gap” that consumers are falling into, leaving a large part of the market disengaged.

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