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New approaches needed for loyalty programs, says Eagle Eye study

Report says poor loyalty programs can negatively effect brand performance

Loyalty programs that have not been updated for modern, digital consumer culture could push members away from the program and have a bottom line impact on the brand, according to a new study by Ipsos for digital loyalty specialists Eagle Eye.  

The report, "Shifting Loyalties," suggests that loyalty program membership in Canada may not be as ubiquitous as often believed, with 87% of Canadian consumers belonging to five or fewer programs and 55% belonging to three or less. 

Canadians may sign up for a larger number of programs but only stick with ones they find valuable. According to Eagle Eye, the research indicates that consumers want loyalty and rewards programs that are "personalized, valuable, easy to use and delivered in real time." Increasingly that means more data-driven programs delivered through technology, such as smartphones.

The 24-page report, based on a survey of 2,000 Canadian consumers, touches on the significant forces shaping consumer culture and loyalty expectations including the impact of millennials, mobile technology and social media, and the importance of loyalty personalization.

"The Canadian loyalty market is clearly shifting, while the value of customer data is increasing," said Eagle Eye CEO Tim Mason in a release announcing the findings.  

"Loyalty programs, along with the wealth of customer touchpoints facilitated by consumer technology, yield a goldmine of data," he said. "From these surveys, we’ve learned that using data to develop a holistic customer view, and creating personalized, relevant experiences is the most advantageous and financially rewarding approach brands can take."

Eagle Eye is a U.K.-based software as a service company that works with retailers to deliver digital-based loyalty, promotions and couponing programs. The report focuses on areas of strength for Eagle Eye, which signed a deal with Loblaw in early 2016, and its software platform will underlie the new PC Optimum loyalty program, which will launch in February. Loblaw was Eagle Eye’s first client outside the U.K.

The report contends that effective loyalty programs ensure a returning customer base and generate insights into customer attributes and behaviours that drive revenue. Citing Forrester research, the report says program members typically spend 30% more than other customers.

But getting loyalty programs wrong can have a negative effect on a brand’s performance, with 45% of survey respondents saying they have quit a loyalty program that they don’t find satisfying. Of those, 57% shopped less or stopped shopping altogether with the brand. This reaction is greater for millennials, with 69% saying they reduced their shopping or stopped shopping altogether with a brand after quitting the loyalty program.

A few other key insights from the survey include:  

  • Asked about reasons for quitting a program, 56% said too much time and effort to earn a meaningful reward; 47% said not enough value in the program; and 31% said rewards are not relevant to them.

  • When it comes to instant rewards over long-term earning programs, 37% of millennials, 30% of Gen X and 21% of Boomers want instant rewards.

  • Asked if they’d ever shared any loyalty experiences on social media, 23% of millennials said yes, while just 11% of Gen X and 3% of boomers had done so.

  • 44% of millennials and 31% of Gen X want to use a mobile app for offer redemption.

  • In total, 27% of Canadian consumers don’t want merchants to use their personal data for marketing.

  • By sharing personal data, 45% of respondents said they want personalized offers, 25% want improved omnichannel customer service, 25% want communications in preferred channels and 20% want geolocated offers.

"Personalization 2.0 is about getting to know the individual, what motivates them, what they value and how to make a connection," said Mason in the report. "This is only possible if you collect the right transactional and personal data to create an accurate portrait of your customers."

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