Loyalty programs not used properly – UltiSales

Steve Mallaby, MD of UltiSales Retail Software, part of the JSE listed UCS Group Ltd., says loyalty programs are not being used effectively.

UltiSales – which recently diversified into developing bespoke loyalty programs for clients – is one of SA’s oldest point-of-sale software developers, with more than 3000 installed outlets in South Africa, Botswana, Zimbabwe, Namibia and Lesotho. “As more marketers and companies turn to loyalty and rewards programs to spark business growth, many of these programs are still under-valued and not given enough attention, thereby falling short of the full potential they can bring to companies, including retailers.”

Mallaby said deeper engagement and personalized contact drives loyalty, not just a “mass introduction of communications gimmicks” – which often simply act to “confound things”. Citing research conducted in the USA by the CMO Council – which polled over 600 marketers – Mallaby said that loyal customers simply expect companies and marketers to understand them better, and to deliver more relevant and valued offers. But this, it appears, is not happening on the ground. According to the latest statistics, over $2 billion is spent annually in the USA in growing and running loyalty programs.

But questions are being raised about the value and return of investments in the areas of customer relationship and insight building.

“Each system is different. There shouldn’t be a one-size-fits-all approach,” said Mallaby. “But unfortunately this is often what is happening – certainly in SA.

“We are talking to a number of our clients – including some large retailers – and each client has different needs. The secret is to drive real benefits through to the client’s customers – just offering loyalty points and then redeeming them for rewards that aren’t really wanted just doesn’t cut it. To create increased loyalty from a customer’s perspective, the loyalty programs have to provide real rewards – on the ground.”

In the research conducted in the USA, only 13% of respondent believe that loyalty programs are highly effective in leveraging loyalty and brand preference among club members – and nearly 20% of those polled don’t even have a strategy for this.  But as much as 65%, interestingly enough, viewed customer loyalty programs as vital investments and a critical part of the overall marketing mix. When asked to outline typical customer complaints about loyalty programs, nearly 30% of marketers said that some customers feel that they are deriving little or no added value by becoming a loyalty member – “a damning point indeed,” said Mallaby. “It seems that somewhere between the actual development and implementation, critical factors are not being addressed – or are being lost.”