Loyalty Programs Miss Consumer Connection: CMO Council
Most marketers view loyalty programs as an “essential” piece of the marketing pie. Members of these programs are viewed as the best and most profitable customers a company can have. Despite this, marketers are not leveraging effectively the dedication these customers have to their brands, and in many cases don’t even have a strategy to put into action to capitalize on the loyalty.
Even more startling, one in every four marketers to a recent survey admitted that they have done nothing to engage and mobilize loyal customers to become brand advocates, despite the fact that more than $2 billion is spent annually in growing and running loyalty and reward programs, according to the study from the CMO Council.
The study took insights from 600 marketers and more than 700 consumers.
There appears to be a disconnect in the ways that consumers and marketers view these programs. Most consumers are “satisfied” with the programs, but they want more relevant and valued offers, including discounts and savings. They believe that marketers should understand them better and put much more focus on compelling personal deals, benefits and services. For their part, marketers are focusing on gaining loyalty with discounts, free products and premiums rather than quicker or improved customer service.
When asked to outline typical customer complaints about loyalty programs, nearly 30% of marketers report that some customers see little or no added value to becoming a loyalty member; 24% indicate rewards lack substance; a similar percentage feel they don’t get enough personalized attention; and 21% have problems with receiving too much spam e-mail and junk mail. Customer complaints also touch on a lack of individualized communication (23%) and issues with redeeming points and miles (18%), the study found.
The work will continue. Nearly 80% of marketers will continue to fund loyalty programs as customer retention and relationship building vehicles. And in a signal that marketers will have to retrain consumers, marketers will earmark a significant portion of their budgets for the Web and new community and networking tools to grow membership. Consumers, however, reported that they primarily learn about loyalty programs through P-O-S materials, service representative interactions, company Web sites and word of mouth. Nearly 65% acquired information about the programs in retail environments compared to only 4% in social media networks, 3% in blogs and 11% in online advertising.
In general, more than 34% of marketers are significantly increasing their financial commitments, and 50% are maintaining their current commitments. Just 4% expect to discontinue their programs, the CMO Council study said.
Acquiring and retaining loyal customers poses a challenge, with 46% of the marketers saying it is the No. 1 problem. Other obstacles and issues include: measuring marketing value and effectiveness (42%); collecting, integrating and maintaining customer data (41%); deriving valuable insight and intelligence (38%); delivering more personalized offers and inducements (34%); and creating more customized communications (33%).
Some 44% of consumers identified spam and junk email topped the list of negatives associated with loyalty and rewards program membership, followed by too many conditions and restrictions (38%), and rewards that lacked real value (37%). Other prevalent beefs included members having a hard time redeeming points or rewards, program membership lacking value, as well as communications and service not being personalized or targeted specifically for members.
