Customer loyalty is dead. Long live customer loyalty
NRG Synergy Newsletter 42 17 Feb 2006
Despite over 50% of UK consumers belonging to three or more loyalty schemes, new research shows that the saturation of schemes and increasingly savvy customers have, in fact, created less loyalty overall.
The survey reveals that customers are becoming disloyal 'offer tarts'. They are taking what they can from companies and switching freely.
Loyalty initiatives face steep challenges in creating breakthrough and delivering results. Customers are now turning the tables on brands and demanding loyalty from them!
The survey showed that:
- John Lewis was voted best for customer service;
- Kia had the poorest customer service rating, but provided the best offers;
- Tesco Clubcard was voted the Best Loyalty Scheme;
- Mercedes topped the Best Brand Name poll;
- Text marketing can have a negative impact when used for interruption vs. engagement;
- Only 20% of those 62% of consumers who could remember a company's marketing communication, remembered the message.
The survey also showed that while 81% of consumers were active members of a loyalty scheme, this represented a fall of 11% on 2003. Moreover, those holding up to five cards rose by 10%, indicating that while some customers are losing interest in them altogether, others are getting what they can from as many companies as they can, without necessarily being loyal to any of them.
The nation's favourite loyalty programmes last year were Tesco Clubcard (37%), Boots Advantage (28%) and Nectar (23%). It is the simplicity of these cards, giving members money off purchases and points for rewards, which appeals to consumers. Behind the scenes, these companies are using their understanding of their customers' shopping baskets to drive offers that are relevant to individual consumers.
Carlson Marketing believes that to succeed in this new era of loyalty, companies must stick to three golden rules:
- Make customer loyalty an integral part of the business strategy. It's about treating a loyalty initiative as a fundamental change in the way you operate, not as an operational cost.
- Inspire customer engagement - guided by customer control and involvement rather than interruption marketing. Ensure consistent and relevant interactions with the customer across all touchpoints.
- Deliver the Wow Factor - without constant refreshment of offers, innovative new solutions, and breakthrough ideas, loyalty initiatives will never engender true loyalty.
José Ferrão, President of Carlson Marketing, said: 'Industry urgently needs to embrace the new reality of earning loyalty from customers, not bribing them for it.'