Do loyalty programmes ensure brand loyalty?

17 Dec,2019


By A Correspondent


Digital disruption and new generational influences are making customer loyalty tough to hold onto these days, but fresh thinking on loyalty programmes is key to winning and retaining customers, according to KPMG International’s The Truth about Customer Loyalty report.


With the holidays nearing, KPMG’s  survey of over 18,000 consumers in 20 countries, with 1721 being from India explores the nature of customer loyalty and how some traditional loyalty programmes, long a mainstay of customer retention strategies, may not be keeping consumers brand-faithful.


Said Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG in India: “In India, brands and retailers are ready to run miles to acquire a customer. It becomes even more difficult to retain acquired consumers, unless there is a unique value proposition along with related benefits. The fact that over 55 per cent of consumers in India say they will buy from their favourite company even if it is cheaper and more convenient to buy from a rival company is further proof that loyalty endures. Loyal customers can be a reliable repeat source of revenue for retailers/brands.”


“The study in India revealed that when a consumer is loyal to a brand, 93 per cent will recommend it to their family and friends. 47 per cent will remain loyal, even after a bad experience. This substantiates that retailers today will need to re-imagine and re-invent to continue to lure/excite the new digital tech-savvy consumer. They will need to invest in creating convenient loyalty platforms, educating consumers about the program uniqueness and get the consumer to experience the benefits that the program has to offer. These programmes should make the consumer feel special, wanted and proud of being associated with the retailer/brand. Retailers/brands should continue to engage with consumers while ensuring that consumer data and interests are protected,” added Razdan.


What Indians feel:

Of the over 18,000 respondents from 20 countries, 1721 were from India. The maximum number of respondents were millennials (in the 17-36 age group).

— 93 per cent of the respondents who are loyal to a particular brand are very likely to recommend the brand to friends and family, compared to global average (86 per cent).

— 84 per cent of the respondents in India believe in loyalty programs and are more likely to buy new products offered by the company

— 47 per cent of the respondents are not likely to shift to a competitor brand even if they have a bad experience

— 33 percent of the customers in India view loyalty programs as crucial for making purchase decisions


What engenders brand loyalty today?

Brand loyalty doesn’t only earn companies repeat business from their loyal customers–over 86 per cent of consumers globally, from Gen Z to the Silent Generation, say they would recommend a brand they loved to friends and family.

In terms of earning customer loyalty, 59 per cent of the consumers surveyed globally said they are loyal to their favourite brand because of a personal connection compared to 74 per cent in India. 75 per cent consumers globally said their loyalty was driven by product quality compared to 81 per cent in India, 66 per cent consumers globally as compared to 74 per cent in India said their loyalty was driven by value for money and 57 per cent consumers globally as compared to 73 per cent in India said their loyalty was driven by customer service.

Meanwhile, only 37 per cent globally see loyalty programs as an effective way to earn their loyalty. And 55 per cent of consumers who are enrolled in loyalty programmes internationally use them infrequently –a few times a month or less. 96 per cent of the millennials surveyed globally said companies need to find new ways to reward loyal customers altogether.


Here is what KPMG recommends to improve customer loyalty programmes:

Revitalise them.

Around half of the surveyed consumers globally agree that companies should find new ways to reward loyal customers. This number stood at 97 per cent for India. Responsible personalisation, emotional connection and purpose-driven causes should be key considerations.


Keep it simple.

Make loyalty programmes easy to join and simple to use. Globally, 60 per cent agree loyalty programmes are too hard to join and/or earning rewards is a challenge. 80 per cent in Brazil and China feel that way, 76 per cent in India feel this way and as do nearly seven out of ten millennials globally. Lengthy registration processes, rules and conditions, technical difficulties with redeeming awards are all likely to turn customers away.


Maintain relevance amid the noise.

Retailers need to ensure their loyalty programmes stay relevant to customers. 49 per cent of loyalty programme members globally agree they belong to too many programmes. This is particularly the case for consumers in China (72 percent), Brazil (70 per cent) and India (61 per cent).  Too many programmes equate to too many apps, so it’s no surprise that customers forget their memberships, lose track of their points and perhaps decide that the rewards are not worth the effort.


Promote awareness and familiarity.

Regular communication to consumers through social channels, email or advertising can help programmes remain top of mind with consumers. More than one in three consumers globally who did not belong to any loyalty programmes globally said they were not aware of any. 17 per cent globally compared to 21 per cent in India have not joined a program. Lack of awareness (42 per cent) is one of main reasons stated by respondents in India for them not being part of any loyalty programme in India



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