A majority of customer loyalty accounts are inactive, with the number of consumers not engaging with rewards programmes increasing year-on-year, new research shows.
Some 58 per cent of customers who have signed up to loyalty schemes do not use their accounts at all, research from the Norwegian Business School has found.
In the pan-European analysis as to whether money spent on loyalty schemes by companies is a waste, Prof Matilda Dorotic found that the difficulty of earning points, the irrelevance of rewards and poor company interaction mean that more than half of customers do not use their rewards at all.
Having reviewed programmes from a variety of industries, including the fast-moving consumer goods sector and airlines, Prof Dorotic said: “Ineffective loyalty programmes are failing to engage with customers and understand their needs, with many falling into the trap of believing that once a customer joins a loyalty programme their job is done. However, businesses must constantly engage with their customers, offering new and relevant rewards to them, in order to create value.”
Suggesting that these programmes should be used for business to collect information on their customers, Prof Dorotic said that some businesses could actually be losing an average of 4 per cent in sales by offering discounted prices rather than building brand loyalty.
However, she pointed out some schemes that could be of benefit to both the consumer and businesses. “Schemes that give people the option to choose the rewards they can receive, as well as understanding what customers value, are more likely to boost the activity of loyalty programme members, which in turn will increase sales.”