The use of loyalty programs is on the rise, but marketers still aren’t connecting to their most valuable customers as well as they could be, according to a study released January 25 by the Chief Marketing Officer Council.
According to the report, more than three-quarters (78%) of consumers are satisfied with their loyalty rewards program experiences. “But we also found that 54% of people said that if their loyalty program didn’t give them tailor-made, relevant offers, they would potentially defect from the program,” said Sandra Zoratti, VP of global marketing solutions for InfoPrint and an advisory board member of the CMO Council. “So we have both great news and a warning for marketers.”
She added that the study, sponsored by InfoPrint Solutions Company, found big gaps between what consumers want and what marketers are delivering when it comes to these programs.
Liz Miller, VP of programs and operations for the CMO Council, said that marketers aren’t putting their dollars where consumers need them most. The greater percentage of marketers (60%) said they plan to invest more in community and networking tools on the Web. Yet when it comes to consumers, nearly 65% acquired information about the programs in retail environments at the point of sale, compared to only 2.8% who did so on social media networks.
“The top concern customers have with the programs is that they’re inundated with irrelevant messages and spam e-mails,” Miller said, “but the number-one thing marketers want to increase is the volume of e-mails they send. So there’s a big disconnect.”
Despite not wanting spam, more than 64% of consumers do want to receive information and notifications via e-mail. Zoratti explained that this finding reinforces the idea that consumers don’t want cookie-cutter communication. “When you base your messaging on consumer behavior and preferences, you’ll get a huge uptick in response rates,” she said.
“It’s not the medium; it’s the message,” Miller agreed. “What we’re seeing is this sense of paralysis that marketers are struck with. They’re overwhelmed and don’t know where to start. But you’ve got to use all your data.”
Miller added that marketers often have a “let’s just get something out the door” mindset. “And at the end of the day it’s hurting your customer experience.”
Zoratti added that using personalized messaging can also hurt marketers’ bottom lines. “I get that consumers would want to opt out of an e-mail list or the program due to spam,” she said. “But more than 50% said they would consider stopping doing business with the brand because of the annoyance factor of irrelevant messages.”
This is the first study the CMO Council has released specifically on loyalty programs. It was conducted by Ricoh and IBM and polled more than 600 marketers who deploy loyalty programs and 700 consumers who participate in them.
