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Organisations waste billions on loyalty programs that don’t work

Organisations waste billions of dollars each year on customer loyalty programs that don’t work like they used to, according to new research from Accenture Strategy.

Accenture surveyed 25,426 consumers around the world, including 1,343 Australian consumers, about their loyalty relationship with brands and organisations for its report, ‘Seeing beyond the loyalty illusion: it’s time you invest more wisely’.

The report reveals the need for different loyalty programs in the digital age, with 20 per cent of Australian consumers saying their expectations around brand loyalty have completely changed. New factors, such as personalised discounts and social influencers, are having a significant impact on customer loyalty today.

Accenture’s senior managing director and global lead of advanced customer strategy Robert Wollan describes these factors as the new ‘languages of loyalty’.

“Every consumer has a natural instinct around what makes them ‘stick’ to a brand. The traditional ‘low price’ and ‘reliable service’ mechanics are no longer as effective at driving loyalty,” Wollan said.

“With 58 per cent of Australian consumers spending more with the brands they love, organisations that stick to traditional approaches and don’t explore the new drivers influencing loyalty risk draining profitability and pushing customers away – even when they have the best intentions or are following their historical playbook. It’s time for organisations to take a fresh look at loyalty.”

The first step is identify the loyalty languages of the organisation’s most profitable customers and implement loyalty programs to deliver the experiences that drive advocacy, retention and growth, according to Accenture Strategy’s managing director Luca Martini.

“An appetite for extra-ordinary, multi-sensory experiences, hyper-personalisation and co-creation, are changing consumer dynamics around loyalty and forcing brands and organisations to shift their approaches and loyalty programs,” he said.

Accenture Strategy has identified five languages of loyalty which are driving customer relationships in the digital age, particularly among Australian millennials:

1. Tokens of affection: 56 per cent of Australian consumers feel loyal to brands that present them with small tokens of affection, such as personalised discounts, gift cards and special offers to reward their loyalty.

2. Get to know me: 38 per cent of Australian consumers are loyal to brands that offer them the opportunity to personalise products to create something that is bespoke to them. 46 per cent are loyal to brands that interact with them through their preferred channels of communication. 73 per cent feel loyal to brands that are there when they need them, but otherwise respect their time and leave them alone. Furthermore, 81 per cent are loyal to brands that safeguard and protect the privacy of their personal information.

3. Thrill seeker: 42 per cent of Australian consumers are loyal to brands that actively engage them to help design or co-create products or services. 36 per cent are loyal to organisations that present them with new experiences, products or services. Furthermore, 27 per cent are loyal to brands that engage them in ‘multi-sensory’ experiences, using new technologies such as virtual reality or augmented reality.

4. If you like it, I like it: 18 per cent of Australian consumers are loyal to brands that partner with celebrities, and another 17 per cent feel loyal to organisations that partner with social influencers, such as bloggers and vloggers. 39 per cent are loyal to brands that their family and friends do business with. Furthermore, 34 per cent show loyalty to brands that actively support shared causes, such as charities or public campaigns.

5. Hook me up: 40 per cent of Australian consumers feel loyal to brands that connect them with other providers, giving them the ability to exchange loyalty points or rewards. Likewise, 45 per cent are loyal to brands that keep them on the cutting edge by consistently offering the latest products and services.

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