Transactional customer loyalty trend emerges

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By: Wise Marketer Staff |

Posted on December 26, 2011

Transactional customer loyalty trend emerges

Customer loyalty in the United Kingdom is being driven as much by financial benefits as it is by emotional attachments, thanks to the emergence of a 'transactional loyalty' shopping trend, according to the 'Imperatives for Customer Loyalty' study by The Logic Group.

The study found that approximately three-quarters (77%) of British consumers are members of one or more loyalty schemes and, among those members, 69% are satisfied with the loyalty schemes to which they belong, while only 5% are dissatisfied with them.

When asked in more detail about why they were satisfied, members of loyalty schemes commented that points (and, more specifically, being able to use points in lieu of cash) were the main reason for their satisfaction (35%), far ahead of discounts (25%) and other loyalty rewards (24%).

Perhaps not surprisingly, supermarkets enjoy the highest loyalty scheme adoption of all sectors included in the study:

  • 68% of British consumers are members of any supermarket loyalty schemes compared to 28% for their nearest rival: petrol stations.  
  • On average, consumers in Britain are members of two supermarket loyalty schemes.  
  • Women are more likely to be a member of any supermarket loyalty scheme than are men (75% compared to 62%, respectively).  
  • More consumers aged 35+ have a loyalty scheme membership (77%) than their younger counterparts (55%).

However, supermarkets also illustrated an interesting point in loyalty scheme behaviour: 68% of consumers said they are members of supermarket loyalty schemes, yet only 47% feel loyal to their favoured supermarket. This means that 21% of consumers are members of supermarket loyalty schemes for reasons other than emotional attachment. This, the study suggests, is where the pull of points, discounts and rewards incentivises consumers to belong to loyalty schemes (and therefore to shop repeatedly at the same supermarket) for purely transactional or financial benefits.

"Transactional loyalty is evident in consumers that join loyalty schemes for discounts, rewards, vouchers and money off, but don't have a real affinity to the brand. It's a case of getting something for nothing - which the supermarkets in particular excel at - especially against a backdrop of uncertainty over personal finances and spending power," said Antony Jones, CEO of customer interactions specialist for The Logic Group. "However, given the apparent lack of emotional attachment within the sector, supermarket loyalty schemes must find a way to foster attachment to their brand as well as driving repeat business."

So what do consumers really want in return for their loyalty? When they were asked about specific ways in which they could interact with and benefit from loyalty schemes, the study found that:

  1. Consumers want better offers and services for their loyalty Loyalty scheme members want special treatment in exchange for their loyalty, as 71% said they prefer loyalty schemes where they can earn better offers or services for being more loyal. This was echoed by their desire to receive better customer service than other shoppers (48%).  
  2. Beware of anything 'too tailored' Nearly two out of five consumers (38%) said that they prefer general offers to more individually tailored ones, with only 21% saying they prefer tailored offers.  
  3. Consumers must believe their personal data is safe In focus groups, while a few consumers had reservations about 'big brother' watching, none cited data security as a reason not to have a loyalty card. Overall, almost half of British consumers (48%) said they do trust loyalty schemes to keep their personal information safe, and only 14% do not trust them.

"From the research we can see that loyalty schemes are, on the whole, seen to be delivering satisfaction to members - particularly those offering points and discounts," said Simon Atkinson, assistant chief executive for Ipsos MORI, which conducted the study survey. "The survey did however highlight a fine line between providing relevant rewards and over-tailoring the offer. Consumers want to benefit from better service, over and above that received by their non-member counterparts, and this can be achieved by improvements in simplicity, immediacy and accessibility of offers and information."

The survey also observed some interesting age-related variations with regard to loyalty scheme membership and engagement:

  • Focus on 15 to 24 year-olds Some 56% of 15-24 year olds are a member of at least one loyalty scheme (compared to 77% of all people surveyed). Members of this group of loyalty scheme participants joins an average of 3.63 loyalty schemes.

    This group is most likely to feel loyal toward:·  Fashion/Clothes shops (41% vs. 28% overall);·  Cinemas/Theatres (34% vs. 24% overall);·  Sport (e.g. gyms, sports clubs) (23% vs. 16% overall).

    And they are most likely to be members of loyalty schemes in the following sectors:·  Cinemas/Theatres (12% vs. 8% overall);·  Mobile phones (22% vs. 16% overall);·  Sport (e.g. gyms, sports clubs) (10% vs. 7% overall).  

  • Focus on 55 to 64 year-olds Almost all 55-64 year olds (85%) are a member of at least one loyalty scheme, and members of this group join an average of 3.38 loyalty schemes.

    This group is most likely to feel loyal toward:·  Supermarkets (70% vs. 60% overall);·  Garden centres/DIY stores (32% vs. 21% overall);·  Banks/Building Societies (73% vs. 66% overall);·  Insurance companies (31% vs. 20% overall);·  Petrol stations (39% vs. 29% overall).

    And they are most likely to be members of loyalty schemes in the following sectors:·  Supermarkets (79% vs. 68% overall);·  Garden centres/DIY stores (29% vs. 17% overall);·  Petrol stations (36% vs. 28% overall).

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