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Seeing Beyond the Customer Loyalty Illusion

By Special Guest
Robert Wollan, Senior Managing Director, Advanced Customer Strategy, Accenture Strategy
February 15, 2017

Investments in customer loyalty programs are booming. More than 90 percent of companies currently employ some form of customer engagement or loyalty program, and there are around 3.3 billion memberships in existence today.

But customer loyalty is costing more than many business leaders realize. Organizations spend billions each year on non-cash loyalty incentives. Once activated, they are difficult to shut down. Members of loyalty programs typically generate between 12 and 18 percent incremental revenue growth per year compared to non-members.

However, there are several indications that loyalty investments, in their current form, are not generating all the value they could.

Today’s loyalty reality

Accenture Strategy’s latest Global Consumer Pulse Research, which surveyed 25,426 consumers globally, including 2,532 U.S. consumers, found that loyalty investments are simply missing the mark for many consumers today.

Seventy-eight percent of U.S. consumers say they are quicker to retract loyalty today compared to three years ago. Another 54 percent have switched providers in the past year alone. Nearly one fifth says their expectations around loyalty have completely changed, and just 66 percent are spending more with the brands they love. Furthermore, 16 percent say they have a negative or non-existent reaction to companies trying to earn their loyalty today.  

These findings suggest that as loyalty investments have grown, our understanding of how customers behave and how they view loyalty have not kept pace. It’s time for organizations to rethink loyalty and maximize the value of today’s most loyal customers. Without a course correction, companies risk draining profitability and pushing customers away.

The new ‘languages of loyalty’

Accenture Strategy’s research highlighted the other factors, beyond traditional loyalty mechanics such as good price and reliable service, which are influencing customer relationships and brand loyalty in the digital age. These ‘languages of loyalty’ demonstrate the growing appetite among U.S. consumers for new product and service experiences, and the relationships they want and expect from brands and organizations today.

'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. 

‘Thrill seeker’ – 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’ – Only 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. 

It’s evident that brands need to start thinking differently about loyalty today, specifically about the types of experiences their most profitable customers desire, which can help drive advocacy, retention and growth.

Consumer appetite for extraordinary, multi-sensory experiences and hyper-personalization and co-creation opportunities will force brands and organizations to shift their approaches and programs. Doing so will ensure they achieve a new form of competitive advantage, and a stronger understanding of what inspires loyalty among their customers…and justify the massive investments being made on the promise of loyalty with business results to back them up.

Edited by Alicia Young

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