According to the latest Deloitte Consumer Review: Customer loyalty: A relationship, not just a scheme, highlights the need to rethink traditional loyalty schemes since more than a fifth (22%) of UK consumers - 10.3 million people - have unused loyalty points.
The report includes findings from a survey of more than 2,000 UK adults which reveals that one in four consumers (26%) are regular users of brand loyalty schemes, using them at least once a week. However, almost half of consumers (41%) use such schemes once a month or less, with 14% of respondents ‘never’ using them.
While the majority of respondents (54%) claim they like points-based loyalty schemes, only half of consumers (47%) always redeem all of their points. 18 to 24 year olds are even less likely to redeem points (40%) despite a higher percentage than average enjoying a points-based loyalty scheme (60%). This might reflect the fact that the most popular loyalty schemes were designed for previous generations and now need to reflect consumers’ growing appetite for personalization and experience.
Furthermore, brand loyalty is driven more by customer service (41% of respondents), convenience (36%) and the overall shopping experience (27%) than having a traditional loyalty scheme (26%). Deloitte’s research also found that personalization and relevance are high on the list of what consumers expect from a loyalty scheme. One in three consumers (32%) want a loyalty scheme that “better reflects my lifestyle, such as offering ‘freebies.’”
Ben Perkins, Head of Consumer Business Research at Deloitte comments: “Traditional loyalty schemes need a rethink not only because of changing consumer expectations but also because they have become expensive to run and difficult to unwind.
Perkins adds: “Consumers want to be recognized and rewarded as individuals, not as faceless points collectors. A decade on from the introduction of the first smartphone, today’s savvy consumer also expects brands to be more relevant in the way they communicate and engage with them.
“Retailers and consumer businesses should consider smartphone apps, coupon scanning, data profiling tools and connected stores. These may help evolve a traditional loyalty scheme into a custom-built ‘smart’ loyalty programme that engages consumers at a personal level.”