Companies wasting billions on customer loyalty programmes

NEW DELHI: Traditional ‘low price’ and ‘reliable service’ mechanics are no longer as effective at driving customer loyalty as they used to be, and organisations that stick to traditional approaches and don’t explore the new drivers influencing loyalty risk draining profitability and pushing customers away, a new study by consulting firm Accenture Strategy said. “It’s time for organisations to take a fresh look at loyalty… they are wasting billions every year on customer loyalty programmes that don’t create impact like they used to,” according to the study. With millions of loyalty points sitting dormant and 85% Indian consumers retracting loyalty at profit-crushing rates, organisations must pay attention to new factors driving customer loyalty in the digital age or risk losing customers for good, Accenture said.

The report, called ‘Seeing beyond the loyalty illusion’, gauges the experiences and attitudes of 25,426 consumers around the world, including 562 Indian consumers, about their loyalty relationship with brands and organisations. According to Accenture, the report found that 86% Indian consumers have switched providers over the past year, while 43% confirmed that their expectations from brand loyalty have ‘completely changed’.

Accenture India managing director (advanced customer strategy) Vineet Ahuja said: “New ‘languages of loyalty have emerged, driven by brands experimenting with creative digital experiences, which have changed the dynamics of customer loyalty today.”

Among Indian consumers, 33% have a negative or non-existent reaction when brands try to earn their loyalty, while a 25% think brands should do everything possible to earn their loyalty, the study adds.