Retailers keen to foster a deeper relationship with customers should take a broader view of “loyalty” beyond points and cards, says a new study from KPMG.
Redefining customer loyalty: Beyond the points, suggests that loyalty is defined by more than points, with Canadian respondents indicating that product quality (cited by 74% of people), product consistency (71%), and value for money (60%) were the key factors in ensuring their loyalty.
Still, Canadians are enthusiastic supporters of loyalty programs. According to a 2019 study by KPMG, 56% of Canadians make a purchase that earns rewards/benefits at least several times a week. That trails only Australia (61%) and is tied with Italy, ranking ahead of the U.K. (45%) and the U.S. (42%).
The average Canadian participates in five loyalty programs, according to KPMG (although one study pegs the number much higher), although it notes that they are costly to build and maintain.
It suggests that running a loyalty program is now table stakes (“you need to have one, because your competitors have one”) but warns that constantly trying to entice customers through short-term benefits such as those based on discounts or promotions can quickly result in a “race to the bottom.”
Canadians are also less likely than people in other countries to be swayed by popular opinion, with only 13% indicating that social media popularity was a factor in their loyalty. That compares with a global average of 24%.
Influencers and popularity among friends and family also scored lower—14% and 17% respectively—than the global averages of 23% and 27%.
Corporate social responsibility, particularly around areas like sustainability, is also playing an increasingly important role in generating customer loyalty. Nearly two-thirds (60%) of Canadian consumers indicated that it is “important, very important or extremely important” to be committed to sustainability/the environment.
“This is not something retailers should ignore, at any level of their business,” KPMG concluded. “Customers want a values-based connection with their retailers.” Among the study’s other findings:
- 57% of Canadians believe that as a loyal customer they should receive special or personalized treatment;
- 62% say that the ability to trust a company with their personal information and purchase history data is a very or extremely important part of their loyalty;
- 66% believe product consistency is very or extremely important to ensuring they remain loyal;
- 65% of respondents say that customer service is a very or extremely important driver of loyalty;
- 51% feel that an easy shopping experience is very or extremely important to maintaining loyalty;
- 57% of respondents agree that feeling a strong personal connection with a retailer is key to driving loyalty.
The study says that loyalty stems from three key factors:
1. Gather data to really understand the consumer
Customer preferences are constantly changing, says KPMG, urging retailers to use data rather than intuition to determine customer attitudes.
2. Use that data to derive insight
Too many retailers are drowning in unused and unanalyzed data because they haven’t put the appropriate capabilities in place to handle it, says KPMG. “The organization that can quickly produce valuable analytical insights based on up-to-date data will win every time.”
3. Build an organization that acts on it.
Customer knowledge should influence all areas of a business, says KPMG, from purchasing to product development and innovation.
“A lot of organizations assume that that customer-related topics are the exclusive purview of the front office. But to truly deliver an exceptional customer experience, you need to make sure the whole organization is working in lockstep,” says Katie Bolla, partner, customer and digital with KPMG.
The survey findings are based on an online survey of 18,520 consumers in more than 20 countries, including 876 Canadian respondents across genders and generations (35% millnennials, 35% GenX, 20% Baby Boomers and 5% each of Generation Z and the Silent Generation).
