Half of retailers’ loyalty programmes are ‘in their infancy’, study finds

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A commissioned study by Forrester Consulting on behalf of Collinson, a global leader in loyalty and benefits, reveals that half (50%) of retailers rank as ‘Beginners’ in line with its rigorous loyalty maturity test. Surveying decision makers at organisations with revenues exceeding $300 million, the study found that both the personalisation of in-store and online marketing, and the better application of data to improve customer loyalty are not key priorities for the marketing team.

What’s more, 65% of retail decision makers said they do not understand why customers are loyal to their organisation or have a strategy in place to strengthen customer relationships.

When asking retailers where specific areas of customer loyalty sit in their business’ marketing priorities over the next 12 months, they also revealed that:

  • Capturing more detailed data and customer knowledge to enhance business decisions is low down on the agenda for 45% of brands
  • Delivering more personalised customer experiences is not a priority for 32% of retailers who are satisfied with their customer-centricity
  • However, 68% of brands intend to invest more budget on loyalty technologies, of which a third (33%) will increase spending by more than 5% on the year prior

Analysing the wealth of data accrued in the study, Forrester evaluated respondents’ loyalty strategies in line with their capabilities to meet consumer needs at each stage of the customer lifecycle. In doing so, it assessed how advanced retailers’ loyalty programmes are, to form a loyalty maturity framework.

Ranking programmes from Beginner, Designer, Implementer to Expert, Collinson’s maturity scale cross-references parameters including loyalty programme design, execution, application of data, strategy and management. In the retail sector, it found 50% of brands to be Beginners, 9% to be Designers, 20% to be Implementers and 21% to be Experts.

Steve Grout, Director of Loyalty at Collinson, commented: “At a time during which the high street is vying for relevance against growing digital native brands like the Amazons of this world, it’s crucial that retailers evolve their loyalty strategies to meet the changing demands and expectations of modern consumers. Not only do the research findings highlight that many brands are in their loyalty infancy in terms of their proposed strategies, but that they are not aware of the key drivers that make a successful loyalty programme.

“Consumers are more empowered than ever to compare and shop with different retailers, so brands must be doing more than just offering product lines. Customers want to feel cherished for their custom and this is not achieved with periodical marketing tactics. Loyalty should be an overarching directive that aligns with broader business strategies to ensure it is present at every stage of the customer lifecycle.

“There is however good news for retailers. Technology creates more opportunities to build deeper relationships with customers and when applied effectively, it can be the making of a brand’s success. Combining customer data analytics with the right marketing technologies for respective brands will help them recognise and reward loyal customers with personal experiences, to keep them returning year after year.”