subscribe: Daily Newsletter

 

Failed loyalty programmes cost billions

0 comments

Organisations are wasting billions each year on customer loyalty programs that don’t work like they used to, according to new research from Accenture Strategy.

With millions of loyalty points sitting dormant and the majority of South African consumers (79%) retracting loyalty at profit-crushing rates, organisations must pay attention to the new factors driving customer loyalty in the digital age or risk losing customers for good.

The Accenture Strategy report, “Seeing beyond the loyalty illusion: it’s time you invest more wisely”, gauges the experiences and attitudes of 25 426 consumers around the world, including 366 South African consumers, about their loyalty relationship with brands and organisations today.

The report found that 81% of South African consumers have switched provider in the past year, and 40% confirm their expectations around brand loyalty have completely changed. The report also identified five new factors influencing loyalty today.

“New ‘languages of loyalty’ have emerged, driven by brands experimenting with creative digital experiences, which have changed the dynamics of customer loyalty today,” says Dr Dunja Kartte, senior manager for Accenture Strategy in South Africa. “Every consumer has a natural instinct around what makes them ‘stick’ to a brand.

“The traditional ‘low price’ and ‘reliable service’ mechanics are no longer as effective at driving loyalty. With 78% of South African consumers spending more with the brands they love, organisations that stick to traditional approaches and don’t explore the new drivers influencing loyalty risk draining profitability and pushing customers away – even when they have the best intentions or are following their historical playbook.

“It’s time for organisations to take a fresh look at loyalty.”

Accenture Strategy has identified five languages of loyalty which are driving customer relationships in the digital age, particularly among South African millennials:

* ‘Tokens of affection’ – Sixty-seven percent of South African consumers feel loyal to brands that present them with small tokens of affection, such as personalised discounts, gift cards and special offers to reward their loyalty.

* ‘Get to know me’ – Fifty-five percent of South African consumers are loyal to brands that offer them the opportunity to personalise products to create something that is bespoke to them. Sixty-seven percent are loyal to brands that interact with them through their preferred channels of communication. Seventy-eight percent feel loyal to brands that are there when they need them, but otherwise respect their time and leave them alone. Furthermore, 88 percent are loyal to brands that safeguard and protect the privacy of their personal information.

* ‘Thrill seeker’ – Fifty-four percent of South African consumers are loyal to brands that actively engage them to help design or co-create products or services. Fifty-seven percent are loyal to organisations that present them with new experiences, products or services. Furthermore, 47% 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’ – Just over a quarter (26%) of South African consumers are loyal to brands that partner with celebrities, and another 24% feel loyal to organisations that partner with social influencers, such as bloggers and vloggers. Fifty-four percent are loyal to brands that their family and friends do business with. Furthermore, 52% show loyalty to brands that actively support shared causes, such as charities or public campaigns.

* ‘Hook me up’ – Sixty-one percent of South African consumers feel loyal to brands that connect them with other providers, giving them the ability to exchange loyalty points or rewards. Likewise, 63% are loyal to brands that keep them on the cutting edge by consistently offering the latest products and services.

“Organisations 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 Kartte. “An appetite for extra-ordinary, multi-sensory experiences, hyper-personalisation and co-creation, are changing consumer dynamics around loyalty and forcing brands and organisations to shift their approaches and programs.”

Additional South African consumer findings from the report include:

* Just 10% of South African consumers currently have a negative or non-existent reaction when brands try to earn their loyalty.

* Another 28% think brands should do everything possible to earn their loyalty.

* Sixty-seven percent of South African consumers express loyalty by recommending the brands and companies they love to family and friends.

* Fifty-one percent increase the level of business they do with the brands and companies they love.