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Loyalty isn't what it used to be

News, 15 February 2017

NEW YORK: Businesses need to rethink their approach to loyalty programs or risk wasting billions of dollars, new research suggests, as more consumers shift their allegiances more frequently and as their expectations of brands change.

The Accenture Strategy report, Seeing beyond the loyalty illusion, assessed the experiences and attitudes of 25,426 consumers around the world, including 2,532 US consumers, about their loyalty relationship with brands and organisations today.

It found that 54% of US consumers have switched provider in the past year, and almost one fifth (18%) reported that expectations around brand loyalty have completely changed.

"Every consumer has a natural instinct around what makes them 'stick' to a brand," according to Robert Wollan, senior managing director, global lead of Advanced Customer Strategy at Accenture Strategy, but traditional 'low price' and 'reliable service' mechanics are no longer as effective as they once were.

"New 'languages of loyalty' have emerged," he explained, "driven by brands experimenting with creative digital experiences, which have changed the dynamics of customer loyalty today."

The report highlighted five trends, driven by millennials, which it said were key to retaining customer loyalty in the years ahead.

These included the use of small tokens of affection, such as personalised discounts, gift cards and special offers. Fifty-nine percent of US consumers felt loyal to brands that offered them such things.

Brands also need to properly understand their customers, interacting with them through their preferred channels of communication (51% were loyal to such brands) at the right time (81% felt loyal to brands that were there when they were needed, but which otherwise respected their time and left them alone).

In addition to these personalisation measures, loyalty may be driven by an experiential approach – inviting consumers to help design or co-create products or services (44%) for example, or by presenting them with new experiences, products or services (41%).

Association is also important: 42% of US respondents were loyal to brands that their family and friends do business with. And 37% indicated they showed loyalty to brands that actively support shared causes, such as charities or public campaigns.

The report further suggested that innovation is important: 51% said they were loyal to brands that kept them on the cutting edge by consistently offering the latest products and services.

Data sourced from Accenture; additional content by Warc staff