Bridging the loyalty chasm
Brands are missing the mark when it comes to meeting the needs of their loyal customers, writes Stuart Evans, UK general manager, ICLP, iclployalty.com.
How big is the loyalty chasm?
The challenging economic climate of recent years has proved that customer loyalty has become more important than ever. However brands could still be doing much more to secure the loyalty of their customers.
To quantify those areas in which this could be achieved and to mark ICLP’s 25th anniversary in loyalty, we commissioned Forrester Consulting to survey over 1500 consumers across the UK, US, China, India and Brazil.
The results identified a loyalty chasm - a gap between what is important to consumers in driving their loyalty and what companies are delivering.
Consumers want greater instant and flexible rewards
While it is very important for consumers to be rewarded for their purchases, they are demanding rewards should be more immediate, convenient and flexible.
The largest gap identified in the UK is a failure of brands to instantly reward customers with discounts and savings. Seventy five percent of consumers indicated this was important to them but only 50% think that brands perform well in this area, revealing a gap or ‘loyalty chasm’ of 25%.
This is followed by a lack of customisable rewards (21% chasm) and rewards or vouchers that consumers can use whenever they want (20% chasm).
The report, called Crossing the Loyalty Chasm, also revealed the desire of UK consumers for immediacy in the ways in which brands engage with them. A chasm of 17% was identified in making reward and loyalty information available in real time.
Brands over-delivering in social channels
Brands are over-delivering against consumer expectations and, surprisingly, these are in the areas which are least important to consumers in determining their loyalty.
The ability to interact with a brand via social media has a negative gap (-9%), meaning brands in the UK are delivering in excess of what customers currently expect. Similarly, sharing brand news and offers via social media has a loyalty chasm of -5%.
However it is worth noting that UK respondents under 35 still wanted far more digital interaction than brands currently provide.
Loyalty across the world
Looking at brand loyalty across the globe, Crossing the Loyalty Chasm reveals that it is the emerging countries that are leading the way in mobile and social engagement. The biggest chasm in China and Brazil is the ability to redeem rewards in different ways, such as via mobile, with over three quarters of consumers saying this was important to them and only around half of consumers agreeing that brands were meeting their expectations.
Furthermore, demand for engagement with brands via social media, SMS and mobile apps is far higher in emerging markets than in the UK and US. Consumers in China, India and Brazil are over three times more likely to visit the websites of their favourite brands than here in the UK.
In evaluating the chasms of the more mature markets of the UK and US, the results were rather similar. The biggest chasm in the USA is for the offering of customisable rewards (26%) followed by the desire to be rewarded with instant discounts and savings, which has a chasm of 25% in both the US and UK markets.
What this means: brands need to meet and exceed these evolving needs
These results show that UK consumers want more control and choice over the way they are rewarded by brands. What is even clearer is that brands need to work harder to create more immediate value for their customers whereby they realise instant and tangible benefits from their brand choice. The traditional collect and save mechanic of rewards is no longer enough for modern consumers.
Whilst it is not a key driver of customer loyalty, social and mobile interaction cannot be ignored. The research clearly highlighted that these channels are particularly important for Generation Y and Z consumers and are likely to become increasingly important to all consumers.
However, brands today need to ensure their expenditure and efforts are aligned to match the needs of their customer demographics and focus on the areas which matter most to them.
The research reinforced that marketers with an international remit need to understand and deliver against the local needs of consumers, rather than applying the more mature models of loyalty and engagement seen in the UK and US.
Given the increasing use of new technologies, consumers are clear on what they want and brands need to challenge themselves on how they can find more innovative and flexible ways of meeting their evolving needs, both now and in the future.
Regardless of geographic region, there is no doubt that the future of loyalty will be increasingly digital, interactive and data-driven as consumers continue to evaluate the way in which the emotional ‘love’ and rational ‘commitment’ they show to brands is recognised and reciprocated.
Stuart Evans, UK general manager, ICLP, iclployalty.com
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