In today's difficult financial climate, it is no surprise that loyalty programmes are popular among consumers.
Customers are cutting back on outgoings and are increasingly searching for the best deals.
And companies are finding that it isn't enough for them to cut prices – because everyone else is doing that, too.
So they look to give their customers a bit of added value in the form of loyalty schemes, programmes that enable them to retain, cross-sell and up-sell across their customer base.
Whether it's a points card, some promotional vouchers or some free goodies, loyalty gifts represent a simple and effective way to nurture relationships with consumers.
But according to new research, many brands frequently take a mismatched approach to customer loyalty strategies and, it is claimed, get it wrong by offering flawed programmes that fail to really inspire customers.
The study, by ICM Research, finds, perhaps unsurprisingly, that it is all down to relevance and personalisation.
Its poll of 2,012 adults found 86 per cent are signed up to at least one loyalty programme and 40 per cent are signed up to at least three.
All well and good, you might think.
But not so. Because despite this high uptake, many people don't actively use the schemes they are signed up to: two in five people (39 per cent) are not using all the loyalty programmes they are enrolled in, ICM found.
What's more, 33 per cent of the coveted and lucrative 18-24-year old market were not signed up to any loyalty schemes at all.
ICM found the biggest reasons for low take-up were offers never being relevant and programmes being difficult to understand or not user-friendly enough.
For example: the study found that when a mobile phone company offers rewards, most customers would like to receive something that doesn't have anything to do with mobile phones – they wanted something else.
Some 48 per cent said they'd prefer a voucher to spend on the high street against just 32 per cent who would opt for mobile-related rewards – like free minutes or free texts.
Moreover, the research also found that 77 per cent prefer small, guaranteed rewards on an ongoing basis, rather than the chance to win a big-ticket item.
Jamie Belnikoff, project director at ICM, said: “In addition to effective loyalty schemes increasing business profitability, marketers must ensure that schemes also strengthen customers' emotional commitment, from which positive recommendation will follow.”
“Relevance is fundamental.”
Note that customers prefer regular loyalty treats rather than one big item – so think about peppering your regular loyalty rewards with small branded items like printed USBs and promotional pens.
“What do customers really want from loyalty schemes?” ICM Research.