Vectia study maps out the trends and challenges of customer loyalty programmes
Author Nina Olin
Published on December 14th in categories News.
The decrease in customer loyalty concerns several Finnish firms. Consequently, the aim is to find complements to existing customer loyalty programmes in order to strengthen loyalty as customers expect increasingly individual communication, benefits as well as surprises.
Vectia has recently conducted a study on customer loyalty programmes in Finland. The aim of the study was to map out trends and challenges of loyalty programmes today: How do loyalty programmes address changes in consumer behaviour? Are the programmes based mainly on loyalty or remuneration? What kind of results have the programmes achieved? How do new and established programmes differ from each other? What makes a customer loyalty programme lasting and successful?
The results of the study can be summarized as follows:
- Need for renewal. Customer loyalty programmes have a strong need to renew their concept on order to meet customer needs and ensure business benefits.This means that loyalty programmes need to evolve from being remuneration programmes to becoming loyalty programmes. This, in turn, requires indentifying what drives customer loyalty: what is loyalty based on and what are their main leverages? How do customer loyalty programmes truly increase customer base value?
- The meaning of services will increase. According to the study results the focus of the loyalty programmes still lay in financial benefits. However, customers increasingly expect more individual communication and benefits that ease everyday practices.Companies hence need to create new, valuable services along traditional financial benefits. This requires comprehensive insight of the customers’ practices as well as an ability to turn services that facilitate everyday life into concepts.
- Customer experiences guide development work. Firms need to develop other means to enhance loyalty alongside customer loyalty programmes. So far this is mainly pursued through experiments in social media. Genuine loyalty, however, arises from the sum of all meaningful customer encounters. Developing these requires systematic management of customer encounters as well as creating a service culture that bridges organizational silos.
Today, customer loyalty programmes are seen as a means to increasing customer base value. The customer insight gained through the programmes is used in strategy work, business management as well as when developing the product and service offering. This is a significant change from the corresponding study conducted in 2007, when customer loyalty programmes were mainly seen as a marketing tool.