Marketers: Does Your Loyalty Program Stink?

Do your customers love you?

A study done by The Chief Marketing Officer (CMO) Council looked at how marketers are using customer loyalty programs to keep their customers. Here is a summary of the results:

Most marketers (61 percent) believe that loyalty program participants are the best and most profitable customers. So it is not surprising that an almost equal number of respondents (65percent) view customer loyalty program investments as a very essential, or a quite valuable part of the marketing mix. How are marketers doing building customer loyalty?

Only 13 percent of respondents believe they have been highly effective in leveraging loyalty and brand preference among club members
nearly 20 Â percent donâ€™t even have a strategy for this
25 percent admit they have not mobilized brand loyalists to become active advocacy agents.

The study also reveals that marketers are mostly inducing loyalty with discounts or free products and premiums rather than quicker, better service or improved customer handling.

39 percent of respondents view discounts and savings as the key member benefits
34 percent view free products and premiums as essential incentives
33 percent are committed to offering points for merchandise redemption as a further motivator.

When asked to outline typical customer complaints about loyalty programs:

nearly 30 percent of marketers report that some customers see little or no added value to becoming a loyalty member
24 percent indicate rewards lack substance
a similar percentage feel they donâ€™t get enough personalized attention
21 percent have problems with receiving too much spam email and junk mail.
23 percent of customer complaints touch on a lack of individualized communication
18 percent have issues with redeeming points and miles.

Both customers and marketers agree that deeper engagement and personalized contact drives loyalty, not mass blast communications and gimmicks.

Despite these challenges, investments in loyalty programs will continue as nearly 80 percent of marketers are committed to maintaining or further funding loyalty programs as customer retention and relationship building vehicles. Over 34 percent report they are significantly increasing their commitments, and 45.9 are maintaining their current commitments. Just 4 percent expect to discontinue their programs.

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The Chief Marketing Officer (CMO) Council is dedicated to high-level knowledge exchange, thought leadership and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide-range of global industries. The Leaders in Loyalty: Feeling the Love from the Loyalty Clubs is the latest research from the CMO Council. Visit www.cmocouncil.org and www.infoprint.com for more information.

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