KPMG: Customer loyalty goes beyond points programs

Sixty percent of Canadians say points programs aren’t important in keeping them loyal to a brand, according to KPMG. The consulting firm’s report – “Redefining customer loyalty: Beyond the points” – polled 876 Canadian consumers.

Cards, clubs, points, and rewards are only one piece of the loyalty puzzle, the report found.

“A loyalty program is one lever in a company’s arsenal. It creates transactions, but it won’t make up for poor products or inferior customer service,” Kostya Polyakov, partner and national industry leader for KPMG’s consumer and retail group, said. “Where it really matters is when the program helps you better understand your customers’ needs and expectations and provides you the information needed to drive tailored offers.”

To the respondents, loyalty meant how likely they were to recommend a brand to friends and family (88%), or if they wanted to buy from a particular company instead of needing to buy from them (77%).

Canadian respondents ranked product quality (74%), product consistency (71%), and value for money (60%) as their top three brand loyalty considerations. An increasing number also cared about social responsibility, with nearly 60% saying it’s important to them that a company is committed to sustainability and the environment.

“More and more, people are making values-based purchasing decisions. This is a trend retailers need to pay attention to,” Katie Bolla, a partner in KPMG’s customer and digital group, said.

Loyalty programs do have their place, however, with 40% of Canadians saying loyalty points and rewards were very or extremely important to keeping them loyal to their favourite retailers. The average Canadian consumer was part of up to five different loyalty programs.

The goal should points-free loyalty, however, with programs driving the initial transaction and starting a longer-term relationship with the consumer. Data capture is another key goal of loyalty programs, enabling better and more customized customer experiences.

The report also found that Canadians weren’t particularly swayed by influencers. Only 14% said that “endorsed by my favourite influencers” is very or extremely important to their loyalty to a brand, compared to 23% of global consumers.

KPMG’s report recommends three key strategies to build loyalty that lasts. First, companies should gather data that helps them truly understand their customer. They should also ensure they have analytic capabilities to use that data to promptly generate insights. Finally, companies should reshape their organization to act on those data-driven insights.