In the era of big data, consumers are not only much more aware of the use of personal data by companies, but of its importance in forging lasting brand-customer bonds.
New research from GI Insight demonstrates the power of loyalty schemes in influencing and shaping consumer attitudes and behaviour today.
A well-run loyalty scheme provides a comprehensive platform for building longstanding ties. But too few companies understand that, with today’s complex mix of data-producing channels, these programmes have to be much more than simply a mechanism for providing points, discounts and freebies. Relationships guided by customer insight are the key to successful loyalty schemes - not rewards.
While consumers should rightfully feel that the aim of loyalty schemes is to reward them for their custom, companies need to take a more multi-faceted approach. Data and its resulting insight is the company’s reward. Employing loyalty scheme data is essential to gaining the insight necessary to keep members engaged and expand their ties to the brand.
Our latest survey, carried out by MindMetre Research, shows that gaining customer insight through loyalty schemes really does work in building loyalty and further customer spending, and that the vast majority of consumers see real value in these programmes.
Importance of the loyalty scheme
The research reveals that consumers rate loyalty schemes highly and are happy for companies to capture and analyse their data - as long as it is of benefit to them in terms of providing value through useful offers. The research revealed that 76 per cent of consumers expect “any credible retail chain” to have a loyalty scheme in place, with the same percentage of consumers reluctant to hand over their data to a company unless it has a proper loyalty scheme in place. Indeed, 64 per cent of consumers are happy for a company to hold and use a considerable amount of detail on their personal preferences as long as it uses this information to send them “relevant and timely” offers.
Impact on customer behaviour
The research demonstrates that loyalty schemes have a real and direct impact on purchasing behaviour - not only did the survey reveal that consumers will keep purchasing from brands with strong loyalty schemes in place, but they intend to keep doing so as the economy strengthens. The research reveals an overwhelming 87 per cent of consumers say that, where a company has a good loyalty scheme, they have continued purchasing from that brand, while 82 per cent confirm “now that things are picking up” they will continue buying from a business whose loyalty scheme has delivered value. Additionally, a significant proportion of consumers - 33 per cent - have even switched brands because the company they moved to had a loyalty programme that appealed to them.
Loyalty schemes in the digital age
Many consumers today take note when companies fail to acknowledge them as existing customers online, with close to 40 per cent observing that some companies have neglected to recognise them as regular buyers because, without a loyalty scheme, these firms have no way of identifying frequent customers. In fact, it is the digitally-savvy younger consumers who are most likely to demand a loyalty scheme in exchange for their personal data, with 89 per cent saying they require one versus 69 per cent of 55 to 64-year-olds.
In the age of big data and omni-channel customer engagement, a loyalty scheme is a highly-sophisticated way of capturing customer data that also provides a built-in mechanism for applying the resulting insight in a logical and highly-targeted way. It has become fundamental to companies more effectively addressing customer wishes and expectations, not only providing them with rewards, but with incentives that address what they need, when they need it.