Loyalty Programs Out of Step with Digital reward Transactional Mindsets We assessed loyalty programs on a number of parameters. These included Dominate their central objective, their use of customers (see Figure 3). Companies Most companies have basic digital channels, and their ability to have their finger on the pulse don’t yet transactional loyalty programs, where provide a seamless experience across of the digital consumer. rewards are based primarily on channels (more detail on the approach A VP responsible for Loyalty at a purchase. The customer makes a is at the end of this paper). We found, leading online book retailer stressed to purchase and takes their points in in short, that companies have a lot of us the criticality of connecting with the exchange for gifts, merchandise or catching up to do. today are customer. “Customers cash. Our research shows that 97% of actively engaged with the brand. They loyalty programs still use this basic want to be asked about how to design philosophy (see Figure 3). This the new loyalty program, or what Customers today are continued reliance on transactional items should be sold in the store,” he rewards-only programs is sub-optimal. actively engaged with is a growing need explained. “So, there 77% of programs like this actually fail the brand. They want to for two-way communication between in the first two years7. the loyalty program and the customer.” be asked about how to Companies are struggling to break design the new loyalty out of the narrow transactional mindset. According to our research, program, or what items only 25% of loyalty programs reward Most companies have should be sold in the customers for some form of basic transactional engagement. For instance, only 16% store. of loyalty programs reward customers loyalty programs, for activities such as taking online where rewards are based surveys, rating and reviewing - Leading Online Book primarily on purchase. establishments or referring friends to Retailer the program. Similarly, only 14% employ gamification techniques to Figure 3: Reward Mechanisms in Loyalty Programs % of companies ...Purchases ...Mobile App Downloads ...Activities (ex: writing reviews, taking surveys) ...Social Media Engagement in Gamification …Participation Campaigns 97% ...In-Store Checkins N=160 Source: Capgemini Consulting Analysis Note: Percentages do not add up to 100 as a company may reward customers in multiple ways
Loyalty Programs Out of Step with Digital We assessed loyalty programs on a number of parameters. These included their central objective, their use of digital channels, and their ability to provide a seamless experience across channels (more detail on the approach is at the end of this paper). We found, in short, that companies have a lot of catching up to do. Customers today are actively engaged with the brand. They want to be asked about how to design the new loyalty program, or what items should be sold in the store. - Leading Online Book Retailer Transactional Mindsets Dominate Most companies have basic transactional loyalty programs, where rewards are based primarily on purchase. The customer makes a purchase and takes their points in exchange for gifts, merchandise or cash. Our research shows that 97% of loyalty programs still use this basic philosophy (see Figure 3). This continued reliance on transactional rewards-only programs is sub-optimal. 77% of programs like this actually fail in the first two years7. Companies are struggling to break out of the narrow transactional mindset. According to our research, only 25% of loyalty programs reward customers for some form of engagement. For instance, only 16% of loyalty programs reward customers for activities such as taking online surveys, rating and reviewing establishments or referring friends to the program. Similarly, only 14% employ gamification techniques to reward customers (see Figure 3). Companies don’t yet have their finger on the pulse of the digital consumer. A VP responsible for Loyalty at a leading online book retailer stressed to us the criticality of connecting with the customer. “Customers today are actively engaged with the brand. They want to be asked about how to design the new loyalty program, or what items should be sold in the store,” he explained. “So, there is a growing need for two-way communication between the loyalty program and the customer.” Most companies have basic transactional loyalty programs, where rewards are based primarily on purchase. Figure 3: Reward Mechanisms in Loyalty Programs % of companies ...Purchases ...Activities (ex: writing reviews, taking surveys) …Participation in Gamification Campaigns ...Mobile App Downloads ...Social Media Engagement 97% ...In-Store Checkins N=160 Source: Capgemini Consulting Analysis Note: Percentages do not add up to 100 as a company may reward customers in multiple ways