Study: Consumers Get More Fickle Despite Billions Spent on Loyalty

accenture_loyalty_chartU.S. U.S. marketers spend an estimated $90 billion a year on non-cash rewards alone for loyalty programs, but that investment appears increasingly wasted, according to new research by Accenture.

The firm’s 12th annual survey of more than 25,000 consumers globally and 2,500 in the U.S. showed 54% of people said they’d switched providers in the past year, and 78% say they retract loyalty faster today than they did three years ago. Retailers, cable and satellite providers, banks and internet service providers were the most likely victims of switchers.

Survey results suggest many loyalty efforts are misdirected at things people don’t want that much, said Robert Wollan, senior managing director and global lead of advanced customer strategy at Accenture Strategy. Only 34% of respondents said what makes them loyal today is completely the same as three years ago. Some would just as soon brands play hard to get, with 8% saying they have a negative reaction when companies try to earn their loyalty, with another 8% saying they’re likely to be indifferent to such overtures.

Indeed, beyond the survey, some evidence suggests previously successful loyalty programs aren’t packing the punch they once did or need tweaking.

Kroger Co. has reported 52 consecutive quarters of same-store sales growth thanks largely to a loyalty program run first by Dunnhumby USA and more recently by Kroger’s wholly owned subsidiary 84.51. But same-sales rose a mere 0.1% in the most recently reported quarter in December, suggesting the effort powered largely by cents-off discounts from brand manufacturers and points toward gasoline discounts may be losing potency.

Starbucks last year revalued the points currency in its large, successful but expensive program – pushing back free-product rewards for many users and shifting to reward spending rather than simply store visits. Despite or perhaps because of that, executives said on a November earnings conference call that members are actually spending more than before.

Another sign that the impact of old loyalty tactics may be waning are the “millions of points that are laying dormant” in some programs, such as airline or hotel clubs, Mr. Wollan said. “You have to really look at whether you’re suffering from the loyalty illusion – that it worked before so it will keep working – or is it time for a fresh look?”

Of U.S. millennials ages 18-to-34 in the Accenture survey, many cited such factors as product experience, trust on such issues as data security, customer-service experience, corporate social responsibility, or the ability to use points for privileged access to products and services from other companies as having a growing impact on their loyalty today than in the past.

Also growing as a loyalty factor for millennials, according to Mr. Wollan, are things often seen more in the realm of advertising and PR – such as emotional connection to the brand and alignment with celebrities, causes or online influencers they favor.

%d bloggers like this: