Loyalty rewards are popular, but still too distant
Although the popularity of loyalty programmes is growing among consumers, so is the dissatisfaction over their benefits and rewards - particularly when it comes to the high number of points and miles needed for redemption - according to a white paper from The First Club.
The paper, entitled 'Loyalty: Looking Forward: The State of the Loyalty Industry and its Digitized, Instant Future', argues that brand marketers must understand this new evolution of consumer demand as it relates to loyalty programmes, and focuses on the challenges of low motivation at the lower end of the loyalty member spectrum.
The paper answers a number of key questions, including what brands can do to prevent the defection of customers who maintain low point levels, suggesting that loyalty programmes should always provide incremental rewards that are personally relevant to the customer, easily attainable, and instantly available - through digital content if possible.
The paper observed that 68% of consumers feel that a loyalty programme can strengthen their relationship with a brand, and that successful rewards programmes should cater to this demand for relevant offerings by providing an array of instantly-available digital content.
In fact, 48% of consumers were found to spend more with a company whose loyalty programme offers content that is relevant to them personally, and that 65% have purchased digital content online. Looking at specific loyalty markets there are several implications to be considered. For example:
- Airlines The modernisation of airline FFPs to include digital rewards will substantially decrease airlines' exposure to financial liability (by encouraging the incremental redemption of miles), and will resonate with consumers who clearly desire more value from their airline loyalty programme.
- Hotels In today's online deal-shopping atmosphere, consumers are less responsive to in-hotel premium services. The days of offering elite status or premium service for customer loyalty are numbered. The new day requires an offer or promise of tangible added value: some 47% of consumers are motivated to join programmes that provide instant gratification.
- Retailers Offering direct discounts for loyalty programme members gives retailers the ability to immediately impact consumer decisions; these discount incentives, however, are easily duplicated by competitors. The result: price wars within the segment. Instead, companies have market expansion opportunities via loyalty programmes or promotions that engage consumers.
The white paper has been made available for free download from The First Club's web site - click here (free registration required).