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KPMG International’s The truth about customer loyalty report: Four ways retailers can revitalise loyalty programmes

The report says 84% of the respondents in India believe in loyalty programmes and are more likely to buy new products offered by the company

Digital disruption and new generational influences are making customer loyalty tough to hold onto these days, but fresh thinking on loyalty programmes is key to winning and retaining customers, according to KPMG International’s https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/11/customer-loyalty-report.pdf report.

With 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 programmes, long a mainstay of customer retention strategies, may not be keeping consumers brand-faithful.

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“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% 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% will recommend it to their family and friends. 47% 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 programme uniqueness and get the consumer to experience the benefits that the programme has to offer. These programmes 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.

What Indians feel:

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 programmes 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 programmes 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 favourite brand because of a personal connection compared to 74% in India.  75% 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 programmes as an effective way to earn their loyalty. And 55% of consumers who are enrolled in loyalty programmes 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.

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

Revitalise them

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

Keep it simple

Make loyalty programmes easy to join and simple to use. Globally, 60% agree loyalty programmes 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 10 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 programmes stay relevant to customers. 49% of loyalty programme members globally agree they belong to too many programmes. This is particularly the case for consumers in China (72%), Brazil (70%) and India (61%).  Too many programmes 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 programmes remain top of mind with consumers. More than one in three consumers globally who did not belong to any loyalty programmes globally said they were not aware of any. 17% globally compared to 21% in India have not joined a programme. Lack of awareness (42%) is one of main reasons stated by respondents in India for them not being part of any loyalty programme in India.

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