Consumer businesses must look beyond mere points and rewards to attract and maintain customer loyalty, says KPMG

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British consumers pay more attention to product quality and consistency, value for money and pricing, and customer experience, than they do mere points and rewards when determining their loyalty, according to new research by KPMG.

In a survey of over 18,000 consumers in 20 countries globally, only 37% of consumers say that today’s loyalty programs are an effective way to earn their favour.

Further reinforcing the need for change and innovation, the vast majority of Brits (95%) say that companies need to find new ways to reward their loyalty.

Commenting on the latest findings, Paul Martin, UK head of retail at KPMG, said: “In much the same way as our high streets are coming to terms with ongoing structural change within the industry, the same goes for customer loyalty. Loyalty is by no means dead, but it’s clearly being reinvented for the digital age, and consumer businesses – including retailers – need to look beyond the points-based plastic loyalty cards of yesteryear. Consumers are increasingly engaging with platform businesses, often paying a subscription to access a plethora of goods and services, with their custom rewarded with tailored and personalised offers and rewards.

“As notable casualties and several disappointing months of retail sales performance have made painfully clear, UK retail is in danger of stagnating and consumers are very visibly less engaged. Remaining firmly on the radar of consumers is an ongoing struggle, although it’s an effort well worth waging if brands and retailers want to remain relevant and on top.”

Putting the benefits of loyalty further into perspective, British consumers pointed mainly to advocacy, stating that they are the most likely to recommend a consumer business to their friends and family (86% strongly agreed or agreed). 78% agreed they were also more likely to buy from a company because they wanted to, and not just because they needed to. 

In terms of the key factors driving customer loyalty, consumers pointed to product quality, consistency and value for money first and foremost. Meanwhile, when it comes to loyalty to retailers specifically, value for money, customer service and pricing are the three most important factors.

Loyalty points and rewards however, ranked woefully low by comparison to other deciding factors, including: easy shopping experience; the selection of products offered, and even online reviews.

Linda Ellett, UK head of consumer markets at KPMG, added: “Few consumers are willing to have their wallets stacked with loyalty cards, nor do they want to be members of a whole host of loyalty programs. In any case, more cards or memberships doesn’t necessarily equate to greater loyalty. Businesses must look beyond this somewhat simplistic view of what drives consumer purchase decisions.

“Interestingly the vast majority of consumers – 86% – believe that loyalty would prompt them to recommend a brand to their friends and family. However, conversely, only 36% said that popularity with their friends or family was a particularly important factor in determining their own loyalty. This stresses the complexities that brands and retailers face in attracting and retaining consumers – it clearly entails far more than just advocacy. 

“Nearly half of consumers would be willing to pay more for a product to earn loyalty rewards, whilst three-quarters feel that their experience is better as a member than a non-member. The benefit of having more brand faithful consumers is clear, but it will require a more in-depth look at offering; the customer’s journey and experience, as well as how returning customers are rewarded. Just as the wider consumer landscape is changing, so too is the view of loyalty. It appears ripe for innovation and change.”