Accenture: Traditional loyalty programs waste ‘billions’ in digital age

FEBRUARY 14, 2017 | BY DEENA M. AMATO-MCCOY

Organizations are throwing away billions of dollars annually on customer loyalty programs that just don’t work like they used to.

 

This was revealed in the Accenture report, “Seeing Beyond the Loyalty Illusion: It’s Time You Invest More Wisely.” The study gauges the experiences and attitudes of 25,426 consumers around the world about their current loyalty relationship with brands and organizations.

 

Millions of loyalty points are sitting dormant, and the majority of U.S. consumers (78%) are retracting their loyalty at profit-crushing rates. In fact, 54% of U.S. consumers have switched provider in the past year, and almost one fifth (18%) confirmed their expectations around brand loyalty have completely changed, or have a negative or non-existent reaction when brands try to earn their loyalty (16%), the study said.

 

“Every consumer has a natural instinct around what makes them ‘stick’ to a brand,” said Robert Wollan, senior managing director, global lead of Advanced Customer Strategy at Accenture Strategy. “The traditional ‘low price’ and ‘reliable service’ mechanics are no longer as effective at driving loyalty. New ‘languages of loyalty’ have emerged.”

 

Key findings regarding these new ‘languages of loyalty’ include:

 

• 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.

 

• Forty-one percent of U.S. consumers are loyal to brands that enable them to personalize products, or interact with them through their preferred channels of communication (51%). Meanwhile, 81% feel loyal to brands that respect their time and leave them alone, and those that safe-guard and protect their personal information (85%).

 

• U.S. consumers are loyal to brands that actively engage them to help design or co-create products or services (44%), or that present them with new experiences, products or services (41%). Furthermore, 33% are loyal to brands that engage them in ‘multi-sensory’ experiences, using new technologies such as virtual reality or augmented reality.

 

• Consumers are loyal to brands that partner with celebrities (23%), and another 23% feel loyal to organizations that partner with social influencers, such as bloggers and vloggers. Shoppers are also trust brands that their family and friends do business with (42%), or that actively support shared causes, such as charities or public campaigns (37%).

 

• Consumers feel loyal to brands that connect them with other providers, giving them the ability to exchange loyalty points or rewards (23%), or consistently offering the latest products and services (51%).

 

“Organizations need to understand the loyalty languages of their most profitable customers and implement the optimal mix to ensure they’re delivering the experiences that drive advocacy, retention and growth,” said Kevin Quiring, managing director, Advanced Customer Strategy, Accenture Strategy. “An appetite for extraordinary, multi-sensory experiences, hyper-personalization and co-creation, are changing consumer dynamics around loyalty and forcing brands and organizations to shift their approaches and programs.”