Collinson On… Customers’ increased expectations of loyalty programmes

Marketing Team
Marketing Team
13 Mar 2023

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If you're in the business of loyalty, you know that meeting customer expectations is key. So what are they and how are they changing in these turbulent times?

Purchasing habits changed post-pandemic and now the cost of living crisis is causing consumers to seriously consider how household incomes are allocated. This, combined with a crowded loyalty marketplace, is enough to give loyalty leaders the jitters. In fact, in our latest research, 41% of businesses considered customer fatigue and a saturated loyalty market to be amongst their biggest future challenges.

There will doubtless be desertions and defections as consumers rein in spending, make switches and do their level best to balance the books. The luxury sector is likely to suffer and premium brands will be usurped in many households by own-label and value brands, as consumers look to conserve and stretch funds. And yet loyalty leaders in all sectors can take action to stem customer attrition. How? Put simply:

Know what customers expect and deliver against this.

At Collinson, we make it our business to know what is ‘now, new and next’ – it is vital to know the future loyalty landscape so that we can plan and project forward accordingly. And we know for sure that customers are expecting more from brands. Loyalty really does need to be reciprocal, with a balanced value exchange at its heart.

In 2022 we asked consumers who belong to loyalty schemes their expectations of rewards in the next five years. 68% of respondents will still be looking for the bedrock of own brand and third party discounts, rewards points or miles. Our research also revealed that only around 40% of companies foresee the same. So there is a gap here, indicating that companies are under-estimating what they will need to put on the table to garner ‘loyalty love’.

And those that belong to schemes will not tolerate ‘cheap’ or lacklustre attempts at rewarding their loyalty either. One in four consumers has noticed rewards value being diluted over time, one in five is frustrated by the paucity of redemption options and 15% resent a lack of personalisation which means they receive irrelevant and poorly targeted offers. Those belonging to multiple schemes are more inclined to have these niggles.

The main change consumers would make given the chance is to increase rewards based on their spend – they want the value they are bringing to be reciprocated. This all sounds expensive for brands, who cited points and redemption costs, as well as infrastructure, to be amongst their heaviest costs in our business research and are currently navigating margin pressures caused by inflation. But brands really can meet and exceed expectations by creating what we call ‘loyalty magic’ – leveraging their own and others’ assets to create high perceived value at lower cost.

It's not all just about the basics of points or miles and discounts though. Over half of the consumers surveyed are showing an interest in real-time rewards, providing instant gratification (offers sent to your phone when shopping for instance). And those that pay for programmes like Amazon Prime are seeking special events and partner rewards too. The common theme is tangibility topped up with extras that recognise heavier spend or subscription payments.

Conclusion 

Customer expectations are increasing and brands that wish to stem attrition, retain valued customers and defend recurring revenues need to enhance their loyalty offers. 

Rich rewards, proper personalisation driving relevance and a range of redemption options all loom large as does the overall demand for value. Tangibility provides a firm foundation but extras are required the greater the consumer contribution.

Brands which don’t rise to the occasion may be closing the stable door once the horse has bolted. Loyalty leaders who champion customers will be those that lock them in.

To find out more about how to meet customer expectations, contact Collinson.

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Marketing Team

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