Retail loyalty programmes failing to prioritise data

DataIQ News

Most retail loyalty schemes are being held back by a failure to recognise the key drivers of what makes customers want to come back for more, according to a new study which shows only a fifth of businesses can be described as "loyalty experts".

The study by Forrester Consulting commissioned by loyalty specialist Collinson surveyed decision makers at organisations with revenues exceeding $300 million (£230 million), and found that both the personalisation of in-store and online marketing, and the better application of data to improve customer loyalty are not key priorities for the marketing team.

It also revealed that nearly two-thirds (65%) of retail decision makers admitted that they do not understand why customers are loyal to their organisation or have a strategy in place to strengthen customer relationships.

When asked where specific areas of customer loyalty sit in their business' marketing priorities over the next 12 months, the research revealed that capturing more detailed data and customer knowledge to enhance business decisions is low down on the agenda for 45% of brands.

Meanwhile, delivering more personalised customer experiences is not a priority for 32% of retailers who are satisfied with their customer-centricity. However, 68% of brands intend to invest more budget on loyalty technologies, of which a third (33%) will increase spending by more than 5% on the year prior.

Based on programme design, execution, application of data, strategy and management, Collinson ranked programmes from Beginner, Designer, Implementer to Expert. In the retail sector, it found 50% of brands to be Beginners, 9% to be Designers, 20% to be Implementers and 21% to be Experts.

Collinson director of loyalty Steve Grout insisted that at a time when the high street is vying for relevance against growing digital native brands like Amazon, it is crucial that retailers evolve their loyalty strategies to meet the changing demands and expectations of modern consumers.

Not only do the research findings highlight that many brands are in their loyalty infancy in terms of their proposed strategies, but that they are not aware of the key drivers that make a successful loyalty programme, Grout said.

He added: "Consumers are more empowered than ever to compare and shop with different retailers, so brands must be doing more than just offering product lines. Customers want to feel cherished for their custom and this is not achieved with periodical marketing tactics. Loyalty should be an overarching directive that aligns with broader business strategies to ensure it is present at every stage of the customer lifecycle.

"There is, however, good news for retailers. Technology creates more opportunities to build deeper relationships with customers and when applied effectively, it can be the making of a brand's success. Combining customer data analytics with the right marketing technologies for respective brands will help them recognise and reward loyal customers with personal experiences, to keep them returning year after year."