Studies Show Traditional Customer Loyalty Programs Are Ineffective

Studies show that customer loyalty programs are quickly becoming obsolete and ineffective. Todays' customers want experiential and personal rewards.

According to studies, traditional customer loyalty programs are not working and haven’t been for quite a while.  In reports conducted by the Colloquy Firm and Fanxchange, the majority of Americans polled stated that they were unsatisfied with the reward choices offered in loyalty programs. 

Over 1,000 consumers participated in the survey and almost half reported frustration with redemption processes.  A study by JWT Worldwide concluded that up to 72 percent of millennials would rather spend money on experiences than products, which strongly indicates more rewards like airline flights, tickets to live shows, food gifts and similar rewards are more likely to resonate with an audience. 

One particularly interesting study was quoted by Hanover Research, stating that “basic rewards programs were no longer enough…” and that successful rewards programs connected with the “lifestyle of the typical consumer.”  Fashion retailers saw a huge increase in the preference of experiential benefits in favor of cash or product prizes. 

"Companies that go the extra mile and give a lifestyle experience to their most loyal customers have the most to gain."

Freeman Lewin, CEO, Gimmee Jimmy's Cookies

In addition to experiential rewards, consistent engagement continues to grow as a priority for consumers.  According to customer loyalty statistics for 2015, frequency of interaction builds loyalty and advocacy.  Almost 87 percent want daily interaction, while 64 percent prefer weekly and only 33 percent want interaction a few times a year. 

This isn’t merely a trend observed in high sales retailers and brands, but even a preference by smaller companies, including startups and individual entrepreneurs.

Freeman Lewin, CEO of Gimmee Jimmy's Cookies states that some of his company’s best success has come from reaching out to smaller companies who realize that reward investment strategy is possibly more important to them than to larger corporations.  “Small companies have everything to lose.  [They] need constant customer engagement just to stay in the game and don’t have the luxury of falling back on decades of brand awareness.  Companies that go the extra mile and give a lifestyle experience to their most loyal customers have the most to gain.”

GJ Cookies corporate gift program, has taken off in recent months, especially for small to moderately sized companies who want to offer more lifestyle-appropriate rewards that connect with the targeted consumer and the product itself.  The corporate rewards program offers gifts of custom, fresh baked cookies, which can be used for customer thank you gifts, holidays, fundraising benefits, and other business events. 

Looking after customers and keeping discussion going is quickly becoming a staple of modern business, as merchants continue to keep up with the fast-paced and pleasure-seeking mindset of social media and the new face of the Internet.


Categories: e-Commerce, Entrepreneurship, Business

Tags: business success, corporate gifts, customer loyalty, customer turnover, entrepreneurs, loyalty programs, retention


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