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Disconnects Plague Loyalty Programs

January 27, 2010

Even as more marketers adopt loyalty and rewards programs to improve sales, they are failing to fully engage their customers: Most consumers surveyed (54%) say the barrage of irrelevant messages, low-value rewards, and impersonal engagement don't particularly engender loyalty, according to a survey from the CMO council.

Overall, program members want better financial rewards and more individualized communications:

  • 70% say they want to see more discounts and savings from loyalty programs.
  • 58% want better personal benefits and services.
  • 52% want more compelling personal offers as a reward for steering their business to loyalty-program operators.

At the same time, 65% of marketers view loyalty program investments as an essential or quite valuable part of the marketing mix, and 61% say loyalty program participants are among the most profitable customers.

However, only 13% of marketers say they have been highly effective in leveraging loyalty and brand preference among club members. Another 25% admit they have not mobilized brand loyalists to become active advocacy agents.

Customers and marketers agree: Deeper engagement and personalized contact, not mass blast communications and gimmicks, drives loyalty, according to the CMO Council survey.

Below, other findings from the CMO Council's Feeling the Love from the Loyalty Clubs study.

Marketers' View: Discounts Engender Loyalty

Marketers are inducing loyalty mostly with discounts or free products and premiums rather than quicker, better service or improved customer handling:

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

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