Consumers want more rewards from loyalty clubs

Consumers want more rewards from loyalty clubs
January 25, 2010

As more marketers turn to loyalty and rewards programs to spark business growth, a new report from the Chief Marketing Officer Council indicates that marketers are under-valuing these often costly programs even as customers give the perks, discounts, deals and additional service opportunities high marks. But both customers and marketers agree on one important area: deeper engagement and personalized contact drives loyalty, not mass blast communications and gimmicks.

"The Leaders in Loyalty: Feeling the Love from the Loyalty Club" is the latest research from the CMO Council, tapping into the insights of more than 600 marketers, and gaining first-hand perspective from the recipients of these programs in an audit of over 700 consumers. Sponsored by InfoPrint Solutions Company, a joint venture between Ricoh and IBM, the study shows that loyal consumers expect marketers to understand them better and deliver more relevant and valued offers.

According to the study, 79 percent of consumers surveyed say they are very, or pretty, satisfied with their loyalty and rewards program experiences. But 70 percent want to see more discounts and savings, and 52 percent more compelling personal deals and offers as reward for steering their business to loyalty program operators. In a definitive call for personalization, 58 percent say they want more compelling personal benefits and services, as well as more relevant offers or individualized deals.

And while social media also tops the list of investments for marketers, consumers report that point-of-sale information, service representative interactions, company Web sites and word-of-mouth are the primary sources for learning about loyalty clubs. Nearly 65 percent acquired information about the programs in retail environments compared to only 4 percent in social media networks, 3 percent in blogs and 11 percent in online advertising.

When asked to outline typical customer complaints about loyalty programs, their responses include:

Nearly 30 percent of marketers report that some customers see little or no added value to becoming a loyalty member
Twenty-four percent indicate rewards lack substance
A similar percentage feel they don't get enough personalized attention
Twenty-one percent have problems with receiving too much spam email and junk mail
Customer complaints also touch on a lack of individualized communication (23 percent) and issues with redeeming points and miles (18 percent)

According to consumers, too much spam and junk e-mail topped the list of negatives associated with loyalty and rewards program membership (44 percent), followed by too many conditions and restrictions (38 percent) and rewards that lacked real value (37 percent). Other prevalent problems included members having a hard time redeeming points or rewards, program membership lacking value, as well as communications and service not being personalized or targeted specifically for members.

Despite these challenges, investments in loyalty programs will continue as nearly 80 percent of marketers are committed to maintaining or further funding loyalty programs as customer retention and relationship building vehicles.

"Targeting has taken on a very different meaning in today's marketing mix," said Sandra Zoratti, vice president of global solutions marketing for InfoPrint Solutions Co., in a news release. "Before, targeted messages relied on basic data to engage in rudimentary segmentation and single channel communication delivery. Today's loyalty leaders are better leveraging customer insights to deliver highly personalized, multi-channel communications that are more relevant to the individual customer and provide for ongoing interaction and attachment."

Of the 700 respondents who participated in the third quarter 2009 research, more than 50 percent had household incomes of $100,000 or greater, and were fairly split across gender and age groups.