Four ways retailers can revitalize loyalty programs

In what could pose an opportunity for retailers’ private label programs, 75% of all consumers said they would switch brands for a better loyalty program, according to KPMG International's recent The Truth About Customer Loyalty report.

KPMG surveyed more than 18,000 consumers in 20 countries to explore the nature of customer loyalty and how some traditional loyalty programs — a mainstay of customer retention strategies — may not be keeping consumers brand-faithful, according to the professional services firm.

Digital disruption and new generational influences are making customer loyalty difficult, and fresh thinking on loyalty programs is needed to retain customers, KPMG said in the report.

"Despite massive digital and consumer-driven disruption in the retail sector, and the resulting need for a laser focus on customer centricity, it's ironic that many customer loyalty programs today haven't changed much," said Paul Martin, head of retail for KPMG in the United Kingdom. "Our research shows that 75% of consumers would switch brands for a better loyalty program. Retailers that are serious about customer centricity need to ensure their loyalty programs are in line with the expectations of their customers. And today's consumers like to interact with an ecosystem that covers payments, fulfilment, social media, etc., as this can drive value, convenience and a positive experience. And that's a platform experience."

KPMG learned that brand loyalty not only earns retailers repeat business from their loyal customers, but more than 86% of consumers across generations said they would recommend a brand they liked to friends and family. KPMG also found that 59% of the consumers surveyed said they are loyal to their favorite brand because of a personal connection, 75% said their loyalty was driven by product quality, 66% said value for money and 57% said customer service. 

Here are KPMG's four recommendations to improve customer loyalty programs:

1. Revitalize them — Around half of consumers agree that companies should find thoughtful ways to reward loyal customers. Responsible personalization, emotional connection and purpose-driven causes should be key considerations.
2.  Keep it simple — Make loyalty programs easy to join and simple to use. Globally, 60% agree loyalty programs are too hard to join and/or earning rewards is a challenge.

3.  Maintain relevance amid the noise — Retailers need to ensure their loyalty programs stay relevant to customers. Forty-nine percent of loyalty program members globally agree they belong to too many programs.

4.  Promote awareness and familiarity — Regular communication to consumers through social channels, e-mail or advertising can help programs remain top of mind with consumers.