Brands need to bridge the ‘Loyalty Chasm’

26 February 2013
Brands around the world are missing the mark when it comes to meeting the needs of their loyal customers , says new global research by Forrester commissioned by Collinson (formally ICLP).  The tough economic climate of recent years has proved that customer loyalty has become more important than ever. But according to a new report, brands are failing to deliver what their loyal customers want - including instant and flexible rewards, and the ability to redeem rewards in different ways.

New global research conducted by Forrester Consulting on behalf of Collinson, surveyed over 1500 consumers across the UK, US, China, India and Brazil, and identified a 'loyalty chasm' - a gap between what is important to consumers in driving their loyalty and what brands are delivering.

The largest gaps identified across US and UK consumers surveyed is a failure of brands to instantly reward customers with discounts and savings. 84% of US consumers and 75% of UK consumers indicated instant rewards were important to them but only 59% of US  consumers and 50% of UK consumers think that brands perform well, revealing a gap or 'loyalty chasm' of 25%* in both markets. Consumers in more emerging markets felt the provision of instant discounts and savings were just as important, but brands fared slightly better in meeting consumer expectations, with a smaller chasm of 16% being reported for China and 10% for India.

In the more mature markets, other significant gaps where brands were not meeting consumer needs included the lack of customisable rewards (US 26% chasm, UK 21% chasm) and having coupons/rewards that consumers can use whenever they want (US 24% chasm, UK 20% chasm).

However the report, called 'Crossing the Loyalty Chasm', reveals the largest chasm in China (27%) and Brazil (35%) is the ability to redeem rewards in different ways, such as via mobile, with 83% of consumers in Brazil and 77% of Chinese consumers stating this was important to them. In comparison, only 27% of UK and 32% of US consumers regarded this as important.

Furthermore the report also highlights that it is the emerging countries of Brazil, China and India that are outpacing the UK and US in their use of mobile and social engagement.

Approximately 50% of consumers in the emerging markets regard engaging with a brand on social media as important whereas the average level of importance for UK and US consumers is only 19%. Surprisingly the research also revealed that it is in these areas in which brands in the mature markets are over-delivering, for example the ability to interact with a brand via social media has an average negative gap of -8% meaning UK and US brands are providing more in this area than customers currently expect.

The research also demonstrated marked differences in the way in which consumers interact with brands to which they are loyal. Consumers in India and China are three times more likely to use instant messenger or online chat facilities and twice as likely to respond to direct mail than those in the UK or US.

'Crossing the Loyalty Chasm'
 also highlights that brands need to review the ways in which they make themselves and information available to their consumers. Both of these areas were regarded as important but the results show consumers perceive brands in more mature markets not to be as accessible as they would like with chasms of 20% and 21% for the UK and US respectively.  In addition, clear chasms were highlighted for brands in Brazil, UK and US when providing consumers with access to real-time loyalty and reward information (chasms of 16%, 17% and 22% respectively).

Mignon Buckingham, Corporate and Strategy Development Officer, Collinson, comments: "These results show that in more mature loyalty markets, informed consumers want more control and more choice over the way they are rewarded by brands. What is even clearer is that brands need to work harder to create more immediate value for their customers - the collect and save mechanic of rewards is no longer enough to keep the modern consumer active and engaged."

Buckingham continues: "Whilst the emerging markets may be leading the way in new channels and digital engagement, the research highlights that it's vital for marketers in these regions to understand and deliver against the local needs of consumers. Given the increasing adoption of new technologies, consumers are clear on what they want and brands need to challenge themselves on how they can find more innovative ways of meeting these fast evolving needs. Regardless of geographic region, there is no doubt that the future of loyalty will be increasingly digital, interactive and data-driven as consumers continue to evaluate the way in which the emotional 'love' and rational 'commitment' they show to brands is recognised and reciprocated."