Marketers are wasting their loyalty programs

Posted 02 February 2010 18:07pm by Meghan Keane with 1 comment

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Brands online and offline struggle to get consumers to spend money at their stores and win them over about products and services. But once they have their customers' attention, marketers often don't do enough to retain it.

According to a new report from the CMO Council, marketers are under-valuing perks, discounts, deals and other opportunities, even as customers' interest in loyalty programs grows. 

According to "The Leaders in Loyalty: Feeling the Love from the Loyalty Club," more than half of web users said they would be willing to join rewards programs in return for offers and deals that were more personally relevant.

But more important is the reaction of customers who are already invested in loyalty programs. 79% of consumers surveyed say they are very, or pretty, satisfied with their loyalty and rewards program experiences. But 70% want to see more discounts and savings, and 52% want more compelling personal deals and offers as reward for steering their business to loyalty program operators. Meanwhile, 58% say they want more compelling personal benefits and services and more relevant offers or individualized deals.

These are consumers who have already pinpointed an interest in specific brands, and they could be leveraged in much better ways.

As for marketers, 61% believe that loyalty program participants are the best and most profitable customers. 65% see customer loyalty program investments as a very essential, or valuable part of the marketing mix.

So then what are they doing with these valuable customers? Not enough. Only 13% of respondents think they have been highly effective in leveraging loyalty and brand preference among club members. 20% don't even have a strategy for this. 25% admit they have not mobilized brand loyalists to become active advocacy agents.

Almost 80% of marketers want to maintain or further funding loyalty programs as customer retention and relationship building vehicles. Over 34% say they plan to significantly increase their commitments, and 45.9% will maintain their current commitments. 4% expect to discontinue their programs.

What can be done to make loyalty programs more effective? For starters, increasing the benefits of joining. Consumers who join such lists are fans of brands and interested in communicating with them. That is a big step for a brand and worth some investment.

And consumer sentiment in this survey is not too much of a reach for marketers, if they're willing to listen. And give a little love to loyal customers. 39% of respondents view discounts and savings as the key member benefits, while 34% view free products and premiums as essential incentives.

Currently, 30% of marketers report that some customers see little or no added value to becoming a loyalty member. That's a problem. 

Donovan Neale-May, executive director of the CMO Council, says:

"It is notable that the economy is not a big driver of program participation, indicating that as marketers look to recovery, fully leveraging these programs must be a strategic priority. Figuring out ways to deliver added value to those willing to repeatedly purchase your products and services, advocate your brand on a viral level, or more actively respond to offers and incentives, is critical to marketing effectiveness."

Image: eMarketer