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Loyalty programmes failing to engage digital customers, says Capgemini

Mar 31
Tags: Capgemini
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Loyalty programmes failing to engage digital customers...

Loyalty programmes have not evolved with the digital age and are failing to engage customers, according to a new report from Capgemini Consulting.

The 'Fixing Cracks: Reinventing Loyalty Programs for the Digital Age' report attempted to lift the lid on why active participation rates in such schemes are often low and why 89 per cent of social media opinions on loyalty programmes are negative.

Capgemini analysed the schemes of 160 global companies from seven sectors, including retail, banking, consumer products, telecoms, hospitality, airlines and consumers electronics. It also scanned 40,000 conversations on social media to gauge the public's opinions about these schemes.

The report discovered that most programmes follow a basic transactional philosophy where rewards are based on purchases, while only a minority recognise consumers for engaging with the brand in other meaningful ways, such as sharing and liking posts on Facebook.

Furthermore, the research revealed that most loyalty programmes lack personalisation and do not offer cross-channel redemption services. It also demonstrated that negative social media sentiment stemmed mainly from the lack of reward relevance, rigid structures, user experience issues with online channels and poor customer service.

Other key findings included that just 11 per cent of these schemes offer personalised rewards based on a customer's purchase history or location data. Under four-fifths (79 per cent) used a mobile channel, yet just 24 per cent allowed customers to redeem rewards through it.

A large majority (97 per cent) of loyalty programmes are primarily, if not solely, based on purchases made by the customer, while just 16 per cent reward customers for activities like taking online surveys, rating and reviewing establishments or referring friends. Only 14 per cent employ gamification mechanisms to reward customers.  

Capgemini recommends that the focus of loyalty programmes be switched to driving customer engagement, as this is likely to make them more successful. The report suggests that such schemes be viewed within the larger context of a marketing strategy that centres on achieving this goal.

Mark Taylor, global lead for customer experience transformation at the firm, said: "Brands need to revisit their approach to loyalty. For us, the key is to integrate the loyalty programme into the overarching customer experience and to reward engagement, as well as the simple transaction.

"Additionally, since relevance is the highest form of customer intimacy, offering advanced levels of customisation and tailored experiences will enrich loyalty programs and further encourage customer engagement."

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