80% of loyalty programs fail to drive further customer engagement

80% of loyalty programs fail to further guest engagement

80% of loyalty programs fail to further guest engagement

A commissioned study conducted by Forrester Consulting on behalf of Collinson, a global leader in customer benefits and loyalty, reveals that the majority of organizations in Asia Pacific (APAC) are missing opportunities to leverage strategically on loyalty initiatives to drive further engagement during the customer lifecycle.

Surveying decision-makers in organizations with revenue exceeding US$300 million, the study asked respondents to grade their own loyalty programs based on a series of measures, and also share their loyalty initiatives and approach for improving customer experiences. The study surveyed and compared the results for a number of countries and regions in APAC, including Hong Kong, mainland China, Singapore, Indonesia, Japan, Korea, and Australia.

Personalization has been a talking point in loyalty for a while and loyalty practitioners in APAC realize it is key to a standout customer experience journey and for driving customer loyalty. Of the survey respondents, 72% say they intend to increase spending to improve customer experiences in the next 12 months. While they are arguably in a strong position to prove they understand and reward their customers with relevant experiences at the right moment during customer lifecycle, the research found that many organizations fall short when it comes to personalization of customer experience:

  • Only 26% of surveyed organizations personalize all promotional offers. Australia has the highest percentage (41%) of positive respondents in APAC in this regard.
  • Less than half (41%) of surveyed organizations track and analyze the interactions between their loyal customers and their brands with the aim of improving the overall loyalty experience based on personalized, relevant content. Mainland China reported the lowest percentage (28%) compared with the highest percentage (74%) from Australia.

The research reveals that 56% of loyalty practitioners in APAC conduct regular loyalty-specific market research to better understand who are their best customers. Singapore (70%) is the best-performing market in this regard, followed by Australia (65%) and Japan (58%), with the lowest being Hong Kong (47%).

Mary English, Executive Vice President – APAC at Collinson, said: “Today’s consumers want to buy from brands that offer convenience, relevance, and a positive experience. Incorporating the data insights on customer behavior into the customer lifecycle engagement strategy will improve the success of a loyalty program, strengthening its effectiveness and return on investment.”

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One of the most powerful aspects of a loyalty program is maximizing engagement at every stage of the customer lifecycle, instead of just recognizing and rewarding customers at the point of sale. The research found that organizations are missing opportunities to leverage on loyalty program mechanisms to drive further engagement at every customer touchpoint. Remarkably, they fail to make their loyal customers feel valued and special, typically because they are not providing exclusivity and convenience to loyalty program members:

  • Just 18% of loyalty practitioners in APAC and 25% globally are providing member-only events for their loyal customers. At 53% Australia is the clear leader amongst the surveyed markets in APAC, compared to just 5% in Hong Kong, 7% in Korea and 11% in mainland China. It is clear with regards to member-only exclusivity and loyalty rewards in the region, there is room to grow.
  • Only 30% of respondents are adopting experiential benefits in their loyalty program. Australia has the highest percentage (43%) among the surveyed markets in APAC.
  • Less than one third (33%) of respondents provide their loyal customers with instant access to coupons and reward redemption, though close to half (47%) are currently using a points-based system for payment/redemption.

Mary added, “Customers are drawn to the ease of participation and the rewards available in a loyalty program, or they would not bother joining. It is about taking your loyalty strategies to the next level and creating unique and special experiences for the customer that removes common pain points and makes their lives easier. Designing a loyalty proposition based on the customer experience is the foundation to successful loyalty initiatives. Within this, organizations that offer customers the experience of choosing and receiving just the right rewards drive emotional engagement with the brand.”

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