Two thirds of businesses fail to measure the right information to gauge customer loyalty

27 September 2018

A commissioned study conducted by Forrester Consulting on behalf of Collinson, a global leader in loyalty and benefits, reveals the majority of organisations do not understand what is driving customer loyalty, putting customer relationships and profitability at risk.

Surveying decision makers at organisations with revenues exceeding $300 million, the study found that two thirds (64%) do not understand why their customers are loyal to their organisation or employ a strategy to strengthen customer relationships. 

This lack of accurate measurement is particularly worrying as 65% of decision makers said they were planning to increase their spend in loyalty technology in the next 12 months. Without the appropriate measurement framework, organisations cannot determine return on investment of their loyalty programmes. 

Organisations are also taking a disjointed approach to loyalty, with almost half (49%) failing to collect sufficient data which is essential to gain a deeper understanding of who their customers are. The same number fail to integrate loyalty technology with other internal systems – meaning loyalty is in silo rather than being measured across the entire customer journey and business operations. 

Steve Grout, Director of Loyalty at Collinson, said: “It’s surprising that so many organisations are taking such a disjointed approach to loyalty in 2018. Programme providers need to put loyalty back on track by becoming better aligned in terms of their objectives, what they measure and what success looks like. They are essentially flying blind in an age when customers have more power, choice and higher expectations than ever before. Customers want to feel recognised by the companies they’re loyal to and receive highly relevant and personalised experiences and to be rewarded for their loyalty – one bad experience and they can switch to a competitor.  

“Loyalty is a powerful way for businesses to build deeper customer relationships, positively influence behaviour and grow their bottom line, but this can only be achieved when you take a proactive approach to measurement. Without this, you can’t possibly know if your strategy is successful, how it could be improved or understand your return on investment. Loyalty needs to be embedded in everything an organisation does, for every stage of the customer lifecycle, to build a deep understanding of who your customers are and what makes them tick. Then, organisations can recognise, reward and create tailored experiences that will keep customers coming back, or purchasing, again and again.” 

The survey focused on businesses in the financial services, retail and travel and hospitality sectors. When it comes to loyalty strategy and measurement, the retail sector leads the way. The travel sector is better at collecting and analysing customer data for loyalty purposes, but the financial sector is better at measuring loyalty against business objectives. 

 

 Financial 
services

 Retail  

Travel and Hospitality

My organisation does not understand why customers are loyal or have a strategy to
strengthen customer relationships

66% 65% 64%

My organisation does not collect a range of customer profile, preference, transaction and engagement data

53% 45% 50%

The primary objective for our loyalty
programme is to boost customer acquisition

57% 55% 51%

My organisation’s loyalty strategy does not have clearly defined business objectives and goals

55% 51% 57%

My organisation does not measure loyalty in the context of business performance

67% 68% 69%

My organisation plans to invest more in loyalty
in next 12 months

62% 68% 65%

 

About the research:

A commissioned study conducted by Forrester Consulting on behalf of Collinson was carried out in April 2018.  635 respondents in UK, North America, Hong Kong, China, India, UAE, Singapore, Brazil, Australia, France, Japan, Korea, Indonesia, Saudi Arabia, Mexico, South Africa were asked 20 questions. Participants’ job function included decision makers (‘manager’ or above) for organisations with revenues over $300 million in the retail, travel and financial services sectors.