Retailers have been implementing loyalty programs for decades to incentivize shoppers to purchase items and visit stores more frequently. However, a recent survey from COLLOQUY indicates that although more people are registering for loyalty programs, consumers’ overall engagement and communication with these initiatives is depleting due to a lack of relevant offers across channels.
COLLOQUY’s 2011 Cross-Cultural Loyalty Study was developed to glean insight into the efficacy of merchants’ loyalty programs. Results were gathered from an online survey of 1,000 U.S. and Canadian consumers during July 2011. The study showed that 74% of U.S. shoppers participate in at least one loyalty program, while 90% of Canadians are active loyalty program members. Despite these high levels of participation, there is a great disconnect between customer activity and overall sentiment regarding the efficiency of these programs.
Relevancy and messaging strategies are top reasons why shoppers are paying less attention to brands’ loyalty initiatives, according to Kelly Hvlanika, Managing Partner for COLLOQUY. From direct mail and email to social media and mobile marketing, only 31% of Americans and 22% of Canadians feel that the loyalty communications they receive are relevant to their needs.
“There is a direct correlation between the drop in engagement with communications, and the lack of perceived relevance of the communications,” Hvlanika told Retail TouchPoints.
When consumers were asked whether it pays to be loyal to their favorite brands, only 12% and 10% of respondents in the U.S. and Canada, respectively, “strongly agreed.” These sentiments spotlight the need for more tailored rewards and communications that appeal to target audiences.
There also is a severe drop in influence of offers, deals and access for “exclusive shoppers,” according to the survey. Only 17% of U.S. respondents and 12% of Canadian respondents said that loyalty programs were “very influential” in their decisions about where they made purchases.
Connecting The Communication Dots
To increase consumer response and overall participation in loyalty programs, retailers must be eager and willing to coordinate messaging across channels, including direct mail, email, web sites, mobile messaging and social media, according to Hvlanika.
“The beauty of the ‘new school’ channels, such as mobile and social media, is that tailoring messaging to individual customer needs and preferences is easier than ever,” Hvlanika explained. “Based on COLLOQUY’s research findings, it’s evident that the need for loyalty marketers to ramp up relevance has never been greater.”
Although capturing program sign-ups is vital to retailers’ loyalty initiatives, shopper engagement in those initiatives is vital to improved brand advocacy and penetration.
To create a more compelling and unique experience, Hlavinka provided three best practices for optimizing communication with loyalty program members. These tactics include:
1. Increase communications with members – but make it more relevant. “This doesn’t need to be a daunting task for companies,” Hlavinka explained. Retailers can leverage customer data to determine what high-value customers buy and what drives their redemption of rewards and incentives. Furthermore, retailers can utilize mobile and social platforms to communicate directly with shoppers and ask them about their needs and preferences. However, the key to building this trust and communication is applying it to campaigns and future communications, Hlavinka added.
2. Innovate with rewards and recognition benefits. In order to exceed competition and boost awareness of loyalty perks, retailers should add specific program benefits that will amp up exclusivity and create a genuine VIP experience for shoppers, said Hlavinka. “Evolve your program so that your customers can design how rewards are tailored to their needs,” she said. “The new horizon for loyalty programs is breaking out of delivering what customers already expect and innovating with unexpected rewards and benefits.”
3. Keep it simple. According to the COLLOQUY survey, 64% of U.S. consumers and 57% of Canadians indicated that they joined a loyalty program because it was easy to receive rewards. This is the key to maintaining activity, Hlavinka reported. The more complex and time-consuming redemption processes are, the more likely consumers will disengage from a program.
Click here to access more findings from the “2011 COLLOQUY Cross-Cultural Loyalty Study.”