Careful consideration of a new 'three Cs' of marketing has become a critical differentiator for loyalty programme operators, according to customer engagement agency 89 Degrees, which has published a 'snapshot view' of the evolving US consumer and loyalty landscape.
It should perhaps come as no surprise to most retailers that the web has put consumers more firmly in the driver's seat than ever before, and the evolution of loyalty programmes in the US seems to reflect that trend quite clearly, the company's research found.
But, according to Laura Saati, vice president of strategic marketing services for 89 Degrees, to ignore that trend is to risk not only the membership base of your loyalty programme but also the quality of your customer relationships.
The company split its examination of customer loyalty into three key categories:
There is an ongoing merger of technology, devices and messages into one, with ever-greyer dividing lines between them. By 2016, half of the money spent by US retailers will be influenced by the web, according to Forrester Research. And research by Reach Local found that an average of 43 American consumers convert to smartphones every minute, and Cisco forecast that by the end of 2013 there will be more mobile devices on Earth than there are people. Prestige Marketing found that over 50% of e-commerce store visits occur when consumers are logged into Facebook.
Messages and brand conversations are becoming much more fluid as they are now being shaped by both the consumer and the retailer. Helpscout found that 64% of customers have a strong relationship with a single brand because they share the same values, and Prestige Marketing found that conversion rates are an average of 105% higher for consumers who interact with internet-based ratings and reviews. Pew Internet Research found that 46% of all adult internet users post original photos of videos online that they themselves have created, and that 41% take photos or videos that they have found online and repost them on other sites for sharing with others.
Technology and the web are not isolating the customer experience as expected. In fact, the digital age is actually making relationships more personal, and companies now need to work harder to understand their individual customer segments: what motivates them, what's important to them, and what they really want from relationships with brands, according to a study by Accenture.
So, asks Saati, what does this emergence of the new 3 Cs mean for US loyalty programmes? Statistics also show that, for the member, discounts and savings remain a top motivator, but they want them delivered relevantly and personally. But there is a gap between member expectation and the delivery of programme value, with almost a third of members seeing little to no added value from their loyalty programme membership.
Meanwhile, retailers are working against message fatigue, irrelevance, poor experience - even geography, as some consumers in certain parts of the country are much more likely to not belong to any type of consumer loyalty programme.
Overall, the financial services sector leads US Loyalty programme membership by a large margin, followed by airlines - but the next in line, specialty retail, grew by 109% between 2006 and 2010. The entire retail industry has grown by almost 25%, and that represents a lot of momentum. Given current adoption rates, there is a very real opportunity today for greater loyalty impact and differentiation in the US retail market.
"Retailers need to deliver a customer experience that synchronises with their brand promise," concluded Saati. "They need to create an emotional imprint built on member needs and wants and, in terms of bricks-and-mortar operations, they need to drive the organic growth of store visits and spending. Failing to act on consumer demands for relevant, compelling loyalty programmes that offer real rewards will produce yet another useless loyalty programme, and a weakness that competitors will exploit."