Is the loyalty program bubble bursting? Pioneered by the travel industry's frequent traveler rewards, loyalty programs became widespread among retailers and across a broad range of businesses. But according to Collinson Group, an international market research organization, membership in loyalty programs among affluent consumers has been declining since 2014. "The affluent middle class is also now less likely to repeat purchase, recommend a brand to friends or refrain from switching to a competitor as a result of loyalty programmes that are too generic," reports Collinson Group.
In its most recent study, Collinson Group Collinson Group polled 6,125 of the top 10-15 percent of earners from Australia, Brazil, China, France, Hong Kong, India, Singapore, the United Kingdom, the United States of America and the United Arab Emirates. The study indicated that 69 percent of these consumers expect high quality, consistent customer service however they interact with a brand. The same percentage expect brands to be easy to do business with, and 67 percent value the flexibility to choose the rewards and benefits they are offered. When asked what would encourage higher and more frequent spending on their preferred brands, half of respondents requested a loyalty programme where it is easy to earn, redeem and adapt to their personal preferences.
Collinson Group suggests that loyalty programs must be specific and relevant to consumers' interests and needs. The group makes the following recommendations:
- "Recognise the value of relevance - Personalisation and breadth of rewards and benefits is key for brands to remain relevant."
- "Address how loyalty programmes are funded."
- "Embrace digital - The smartphone is becoming the consumer device of choice for many brand interactions. Incorporating loyalty programmes and initiatives into payment card and mobile ecosystems will drive engagement and increase consumer brand affinity."
- "Move beyond transactional rewards - Although discounts and cash-back provide instant gratification, they do little to drive long- term loyalty. Brands should instead get to the heart of what matters to their customers. For the affluent middle class, this is often their friends and families, so rewards should be more experiential, lifestyle and life-goal oriented."