4 ways in which brands can improve their loyalty programs: KPMG

• KPMG International’s The Truth about Customer Loyalty report reveals that only 37% of respondents globally say that points and rewards are one of the most effective ways to secure their brand loyalty.
• 74% of Indians suggest that companies need to appeal to customers’ hearts as well as their minds and wallets.
• Report suggests a few ways brands can improve customer loyalty.

Digital disruption and new generational influences are making customer loyalty tough to hold onto these days, but fresh thinking on loyalty programs is key to winning and retaining customers, suggests 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 programs, long a mainstay of customer retention strategies, may not be keeping consumers brand-faithful.

“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” said Harsha Razdan, Partner and Head, Consumer Markets and Internet Business, KPMG in India.

“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 programs 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

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

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

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. 80% in Brazil and China feel that way, 76% 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 programs stay relevant to customers. 49% of loyalty program members globally agree they belong to too many programs. This is particularly the case for consumers in China (72%), Brazil (70%) and India (61%). Too many programs 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 programs remain top of mind with consumers. More than one in three consumers globally who did not belong to any loyalty programs globally said they were not aware of any. 17% globally compared to 21% in India have not joined a program. Lack of awareness (42%) is one of the main reasons stated by respondents in India for them not being part of any loyalty program in India.

What Indians feel about loyalty programs:
Out 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% 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%).
84% of the respondents in India believe in loyalty programs and are more likely to buy new products offered by the company
47% of the respondents are not likely to shift to a competitor brand even if they have a bad experience
33% 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% 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% of the consumers surveyed globally said they are loyal to their favorite brand because of a personal connection compared to 74% in India.

75% of consumers globally said their loyalty was driven by product quality compared to 81% in India, 66% consumers globally as compared to 74% in India said their loyalty was driven by value for money and 57% consumers globally as compared to 73% in India said their loyalty was driven by customer service.

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