Faaez Samadi
Feb 22, 2017

Billions wasted on failing brand loyalty programmes

Singaporeans are withdrawing from traditional loyalty programmes, with strong negative consequences for brands, according to an Accenture study.

Billions wasted on failing brand loyalty programmes

Brands are losing billions of dollars propping up outmoded and increasingly irrelevant loyalty programmes that consumers are disengaged with, according to a new report from Accenture Strategy.

Millions of loyalty points are lying inactive in consumer accounts, and 80 percent of Singapore consumers, for example, are withdrawing their loyalty to brands at profit-harming rates. Accenture's study examined the attitudes and experiences of 360 Singapore consumers among 25,426 respondents worldwide.

The consultancy concluded that the nature of consumer loyalty has radically changed, making old-fashioned loyalty programmes, which are costing brands billions in tough economic times, outdated.

“Organisations that stick to traditional approaches and don’t explore the new drivers influencing loyalty risk draining profitability and pushing customers away—even when they have the best intentions or are following their historical playbook,” said Alison Kennedy, managing director, ASEAN, at Accenture Strategy. “It’s time for organisations to take a fresh look at loyalty.”

The report found that 62 percent of Singapore consumers have switched providers in the last 12 months, and 24 percent say their expectations of brand loyalty have completely changed.

Brands need to quickly adopt the new “language of loyalty”, the report found, as 21 percent of Singapore consumers currently feel negative or apathetic to brands trying to earn their loyalty.

Examples of the new language include 66 percent of Singapore consumers feeling loyal to brands for rewarding them with personal tokens, such as personalised discounts and special offers.

Moreover, 77 percent are loyal to brands that protect their personal information, and 74 percent are loyal to brands that are there when they need them, but leave them alone otherwise.

Despite the ongoing industry buzz around social influencers, just 26 percent of Singapore consumers feel loyal to brands that partner with them. Far more important is that 53 percent are more loyal to brands that their friends and family do business with.

Kennedy added: “Organisations need to understand the loyalty languages of their most profitable customers and implement the optimal mix to ensure they’re delivering the experiences that drive advocacy, retention and growth.

“An appetite for extraordinary, multi-sensory experiences, hyper-personalisation and co-creation, are changing consumer dynamics around loyalty and forcing brands and organisations to shift their approaches and programmes.”

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