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Customer loyalty programs aren’t working like they used to and marketers need to take a fresh look at their respective strategies to ensure success, according to a new report from Accenture Strategy. As a result, the report shows, companies are wasting billions of dollars annually.
Marketers must pay attention to the new factors driving customer loyalty in the digital age or risk losing customers for good, the report notes.
The report titled, “Seeing Beyond the Loyalty Illusion: It’s Time You Invest More Wisely,” gauges the experiences and attitudes of 25,426 consumers around the world, including 2,532 U.S. consumers, about their loyalty relationship with brands and organizations today. The report found that 54 percent of U.S. consumers have switched providers in the past year, and almost one fifth (18 percent) confirm their expectations around brand loyalty have completely changed. The report also identified five new factors influencing loyalty today.
“New ‘languages of loyalty’ have emerged, driven by brands experimenting with creative digital experiences, which have changed the dynamics of customer loyalty today,” said Robert Wollan, senior managing director, global lead of Advanced Customer Strategy at Accenture Strategy. “Every consumer has a natural instinct around what makes them ‘stick’ to a brand. The traditional ‘low price’ and ‘reliable service’ mechanics are no longer as effective at driving loyalty. With 66 percent of U.S. consumers spending more with the brands they love, organizations that stick to traditional approaches and don’t explore the new drivers influencing loyalty risk draining profitability and pushing customers away – even when they have the best intentions or are following their historical playbook. It’s time for organizations to take a fresh look at loyalty.”
According to the report, there are five languages of loyalty which are driving customer relationships in the digital age, particularly among U.S. millennials:
Tokens of affection – Fifty-nine percent of U.S. consumers feel loyal to brands that present them with small tokens of affection, such as personalized discounts, gift cards and special offers to reward their loyalty.
Get to know me – Forty-one percent of U.S. consumers are loyal to brands that offer them the opportunity to personalize products to create something that is bespoke to them. Fifty-one percent are loyal to brands that interact with them through their preferred channels of communication. Eighty-one percent feel loyal to brands that are there when they need them, but otherwise, respect their time and leave them alone. Furthermore, 85 percent are loyal to brands that safeguard and protect the privacy of their personal information.
Thrillseeker – Forty-four percent of U.S. consumers are loyal to brands that actively engage them to help design or co-create products or services. Forty-one percent are loyal to organizations that present them with new experiences, products or services. Furthermore, 33 percent are loyal to brands that engage them in ‘multi-sensory’ experiences, using new technologies such as virtual reality or augmented reality.
If you like it, I like it – Twenty-three percent of U.S. consumers are loyal to brands that partner with celebrities, and another 23 percent feel loyal to organizations that partner with social influencers, such as bloggers and vloggers. Forty-two percent are loyal to brands that their family and friends do business with. Furthermore, 37 percent show loyalty to brands that actively support shared causes, such as charities or public campaigns.
Hook me up – Thirty-nine percent of U.S. consumers feel loyal to brands that connect them with other providers, giving them the ability to exchange loyalty points or rewards. Likewise, 51 percent are loyal to brands that keep them on the cutting edge by consistently offering the latest products and services.
Here are some additional U.S. consumer findings from the report:
Sixteen percent of U.S. consumers currently have a negative or non-existent reaction when brands try to earn their loyalty.
Over a quarter (26 percent) think brands should do everything possible to earn their loyalty.
Fifty-five percent of U.S. consumers express loyalty by recommending the brands and companies they love to family and friends.
Forty-three percent increase the level of business they do with the brands and companies they love.
Loyalty360 asked Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, for his thoughts on this provocative study.
“Loyalty as we think of it evolved from hospitality in a broad ‘points for purchase’ mindset,” Magliocca explained. “But today’s customer is evolving. That old mindset simply is not enough anymore and the competition for share of loyalty is relentless. That pressure is producing a back-and-forth evolution of loyalty programs and customer expectations that are dizzying compared to where most programs started.”
Accenture’s study shows that shift and evolution, Magliocca added.
“Instead of clumsy, one-size-fits-all programs, members expect an agile, personalized program that worries more about the needs of the customer than it does the program’s liability rate,” he explained. “Loyalty programs need to utilize a scalpel, not a sledgehammer, to nurture and build members.”
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