the logic group loyalty report 2010 · at consumer behaviour and attitudes during the depths of the...

The Logic Group Loyalty Report 2010 The British Customer in 2010

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2 © 2010 Ipsos MORI.

Introduction

The background

In 2009, the Logic Group commissioned Ipsos MORI to conduct a research study into the

“State of Loyalty” in Britain today. The report “The Imperatives for Customer Loyalty” looked

at consumer behaviour and attitudes during the depths of the recession towards the

companies we buy services or products from. This document presents an update, one year

on. As we look to the future, how can and should we be building loyalty among our

customers?

The questions

This year’s research addresses the following issues:

1. How do we feel – which businesses/organisations do we feel loyal towards?

2. How do we behave – which loyalty schemes have we joined?

3. What’s the verdict – are current loyalty schemes fit for purpose?

4. What do we as consumers think would make us spend more?

5. Do we think we get a fair deal from loyalty schemes?

6. …and what impact has the recession had on all this?

The research

We have drawn on existing Ipsos MORI research among relevant audiences – the general

public, marketing professionals, and British Captains of Industry – to paint a picture of the

prevailing mood in the home and in the boardroom.

We have built on this research by conducting this year’s Logic Group/Ipsos MORI Loyalty

survey - 2,154 adults aged 15+ interviewed in home across Britain between 23rd and 29th

April 2010. This follows on from the 2009 Loyalty survey, which comprised 1,999 interviews

among adults aged 15+ between 16th and 22nd January 2009. Data are weighted to be

regionally and nationally representative.


1. The economic outlook


The economic outlook

The public view

The banking crisis and recession has had a huge impact on the public’s economic outlook.

Over the last couple of years, the economy has become a more important issue for the

general public than it has been for many years. And in May 2010, public levels of concern

about the economy were at the highest levels Ipsos MORI has ever recorded – seven in ten

(71%) mention it as one of the most important issues facing Britain and for half it is the single

most important issue.

This is in sharp contrast to the past 10 years, where the economy has generally only been a

concern for around 10% of the public. 1997-2007 were years of economic confidence for

most of the British public – and consumers under the age of 35 had no real experience of

hard economic times before the credit crunch hit in 2008.

0

10

20

30

40

50

60

70

May1997

May1998

May1999

May2000

May2001

May2002

May2003

May2004

May2005

May2006

May2007

May2008

May2009

May2010

NHS

Crime/ Law & Order

Race/ immigration

Economy

Unemployment

What do you see as the most/other important issues facing Britain today?

Base: Representative sample of c.1,000 British adults age 18+ each month, interviewed face-to-face in home. Source: Ipsos MORI Issues Index April 2010


Economic optimism

Although concern about the economy may be growing, consumers remain more positive than

negative about the economic outlook for the country over the next 12 months, with more now

thinking the economic conditions will improve than did last year.

33%

29%

35%

3%

41%

22%

31%

6% ImproveDon’t know

May 2010

Get worse

Do you think that the general economic condition of the country will improve, stay the same or get worse over the next 12 months?

Base: 1,001 British adults, 29-31 May 2009. Source: Ipsos MORI Political MonitorBase: 1,023 British adults, 12-13 May 2010. Source: Ipsos MORI Political Monitor

ImproveDon’t know

Get worse

Stay the same

May 2009

Stay the same

How much is public confidence going to hold though? To what extent will cuts in public

spending – as well as wider convulsions in the global economy – undermine public

optimism? It remains to be seen whether we are on our way out of recession or if another

economic downturn is about to hit.


In the boardroom

At the end of 2009 the view from the boardroom was more positive than a year before, when

Britain’s top business people had taken an unprecedentedly negative view of their company’s

economic prospects.

39%

8%

53%

Get worseImprove

Stay the same

0102030405060708090

100

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09

Improve53%

Get worse

8%

General election

General election

General election

Do you think that business for your own company will improve, stay the same or get worse over the next 12 months?

Base: British Captains of Industry (100), interviewed Sep-Dec 2009

In late 2009 around half of Captains felt that business for their company would improve over

the next year, a lower level than in some previous years, but a considerable increase

compared to 2008. As with the general public, it remains to be seen whether this confidence

will be maintained.


2. How it feels post (?) recession


How it feels post (?) recession There seems to be a general feeling that the recession has changed things in both the

business and consumer environment – but we are unsure about the exact nature of these

changes. For Captains of Industry, the most important problem facing their company is an

imbalance and changes in consumer demand, which replace the financial crisis as the key

challenge.

29%

23%

21%

15%

14%

7%

7%

6%

5%

5%

5%

Availability of financing/credit

Long term business plan

Imbalance/changes in consumer demand

Over-regulation/inefficient regulatory system

Increased financial risk/uncertainty

International competition/new competitors

Credit crunch/financial crisis

Uncertainty about tax/tax system

Difficulty meeting labour demands/attracting and keeping staff

Political instabilities/concerns

Cost pressures/cutting costs

Top Mentions

And what are the most important problems facing your company today?


+10

-17

-1

+8

-11

-5

+14

+4

0

+1

0

Change‘08–’09

+/-

Captains appear to be worried about behavioural changes amongst consumers and there

does seem to be evidence that having to ‘rein in’ spending may impact on consumers longer-

term. Consumers tell us that they feel there will be enduring changes to how they behave.

“Definitely for me, I’ve changed food options and stuff; I’ve got no reason to go back to certain things. I buy Tesco’s tea and I find that just as nice as Tetley’s tea.” Source: Ipsos MORI, November 2009

“Once you go through these sorts of things about the recession or whatever and you really have to think about things then obviously when you come out on the other side, you think, well, we really managed without it”. Source: Ipsos MORI, November 2009


Another potential sign of a shift in consumer behaviour is seen when looking at the public’s

view of corporate social responsibility. For the last decade, around two in five consumers

have said social responsibility is ‘very important’ to them when making purchasing decisions.

In 2009, this dropped back to 1997 levels, before the boom of social and green

consumerism. This suggests that the value exchange consumers seek from companies now

has a harder edge.

24%

41%

46%

38%

40%

43%

26%

40%

48%

8%

10%

9%

12%

17%

35%

46%

41%

43%

46%

47%

45%

12%

11%

15%

3%

3%

3%

2%

5%

9%

4%

4%

1999

2003

2007

1997

2005

2001

Very important Fairly important Not very important Not at all important

2008

2009*

When forming a decision about buying a product or service from a particular company or organisation, how important is it that it shows a high degree of social responsibility?

Base: 1,011 GB adults 16+, 4 – 10 September 2009 * face-to-face methodology to provide consistent trends 1997-2008 c. 1,000 GB adults 16+ each year


As far as marketers are concerned, the recession has changed consumer behaviour. The

regular Marketing Trends Survey conducted by Ipsos MORI on behalf of the Chartered

Institute of Marketing among their members shows that nearly three quarters feel there has

been a fundamental shift in customers’ current behaviours and spending patterns since the

recession started.

“There has been a fundamental shift in our customers’ current behaviours and spending patterns since the start of the recession”

45%27% 9%2%

Strongly agree Tend to agree Tend to disagree Strongly disagree

72% 11%

15% Neither

2% Don’t know

To what extent do you agree or disagree with the following statements?

Base: All CIM members working 1,018. Source: Chartered Institute of Marketing Trends Survey


3. Loyalty in Britain in 2010


Loyalty in Britain in 2010

How loyal are we feeling in 2010?

In the 2009 Loyalty Report, we asked the general public to tell us whether they felt loyal to

any companies and organisations across a range of sectors. We repeated this question

again this year to see what has changed in the past 12 months.

Banks and building societies again attract the highest levels of loyalty in 2010. They sit at

the top of a group of three sectors which attract considerably higher levels of loyalty than the

other sectors asked about. Of these sectors, supermarkets follow closely behind banks and

building societies, while over half of the public say they are loyal customers of mobile

phone/land line companies.

71%63%

58%32%32%

30%27%

25%24%24%

21%17%

11%

For each one can you tell me if you feel you are a loyal customer to any business or organisation operating in the sector?

2009

Banks/Building societies 72%

Supermarkets 72%

Mobile phone/Land line companies -

Restaurants/Coffee shops -

Insurance companies 30%

Clothes shops 29%

Department stores 25%

Garden centres/DIY stores -

Bars/Pubs/Clubs 25%

Cinemas/Theatres -

Electrical and IT retailers -

Travel/Transport/Car hire -

Hotels -

Base All: 2010: 2,154; 2009: 1,999

This level of loyalty to banks and building societies could be seen as a surprise given the

negative publicity this sector has received over the past couple of years. There are a number

of factors are at play here:

Feelings of negativity towards the sector as a whole do not translate into people’s

attitudes towards their personal bank, where, for most, the day-in-day-out relationship


has not changed dramatically over the past couple of years. In other Ipsos MORI

research, we have found that banks’ overall ratings for treating customers fairly have

dropped by 20 percentage points between the years 2005 to 2009. However scores for

whether they personally feel treated fairly have remained stable

The barriers to exit in this sector are fairly high and staying with one bank for a long

period of time, particularly as far as current accounts are concerned, is not uncommon.

This may help explain the high levels of loyalty towards banks

Arguably banks play quite a fundamental role in our lives – they look after our money.

This may facilitate feelings of trust and loyalty

It is interesting to note that when we asked this question in Spain we saw that the same three

sectors top the loyalty table – banks still see the highest levels, followed again by

supermarkets and then mobile phone/land line companies.

At the other end of the spectrum, the travel and hotel sectors see much lower levels of

loyalty, which may come as a revelation to those admirers of their loyalty schemes.

However, lower levels of usage and immediacy are probably coming into play for both these

sectors.


Why are we less loyal to supermarkets in 2010?

The case of supermarkets is particularly interesting – three in five members of the public feel

loyal to a supermarket, a level that other sectors may envy. However, we have seen a

significant drop from the levels of loyalty recorded in this sector in 2009.

What makes this all the more surprising is that supermarkets have generally been seen to

have had a ‘good recession.’ In other research Ipsos MORI conducted in January 2009, we

found that consumers felt that supermarkets had responded particularly well to the economic

downturn when it comes to how they treat customers. They were also seen as most likely to

give consumers a fair deal. In both instances, consumers were noticeably more positive

about the response of supermarkets than any other sector. In an interesting comparison to

the levels of loyalty, banks and building societies are seen as having a fairly poor response

to the recession.

53%21%

15%9%8%7%

5%4%4%4%

28%

Supermarkets

High street chains

Small retail shops

Online retailers

Banks

Car sales

Energy companies

Mobile phone servce providers

Travel agents

Airlines

Don't know

Which industries, if any, would you say have responded particularly well to the economic downturn in the way they treat their customers?

Research conducted by Ipsos MORI on behalf of Consumer Focus, between Jan 23 and Jan 29 2009, among a sample of 1,988 adults in GB


57%

23%

18%

14%

12%

10%

6%

Supermarkets

Small retail shops

Online retailers

High street chains

Banks

Mobile phone service providers

Internet service providers

Among the following types of business which 3 in your experience are the most likely to give you a fair deal?

Research conducted by Ipsos MORI on behalf of Consumer Focus, between Jan 23 and Jan 29 2009, among a sample of 1,988 adults in GB

And from the boardroom, business leaders see retail as leading the way in terms of customer

service – with Tesco being particularly highly regarded.

25%20%

19%12%

11%

10%10%

9%

9%8%

5%

5%

HSBC

Apple

Tesco/Tesco Direct

Amazon

Barclays

Hiscox

John Lewis

British Airways

Virgin

Waitrose

Top Mentions

Sainsbury’s

M&S

Change‘08–’09

+/-

+6

+9

+3

+8

+6

+7

+3

+2

+2

-6

-2

+5

Which organisations and sectors do you see as leading the way in delivering excellent service to their customers?


So why do we see a decline in levels of loyalty towards supermarkets in 2010? One possible

cause is that the focus on price we have seen during the recession has undermined levels of

loyalty towards individual supermarkets. Consumers may be getting a better deal from

supermarkets, but this has come at a cost as far as the customer relationship is concerned.


Loyalty demographics

Our loyalty towards different sectors and companies is shaped by a range of factors. Among

these, are the type of people we are – our age, gender, social class and region for example.

The chart below illustrates some of the key demographic differences in our levels of loyalty

towards different sectors. For instance, members of the public who are older and ABs are

more likely to say they are loyal customers of a bank or building society. Younger age

groups, on the other hand, are more likely to be loyal to cinemas/theatres and clothes shops.

100%

0%

85% AB's 55+ loyal to a bank/building society

34% 15-24’s loyal to a bar/pub/club

15% AB's loyal to a hotel

46% AB's 35-54 loyal to a restaurant/coffee shop

6% DE’s loyal to a hotel

Men loyal to a department store 21%

14% DE’s 15-34 loyal to an insurance company

Women loyal to a supermarket 68%

DE’s 15-34’s loyal to a bank/building society 55%

15-24 loyal to a clothes shop 44%

Londoners loyal to a department store 37%

65+ loyal to a cinema/theatre 15%

DE’s 55+ loyal to a bar/pub/club 14%

15-24's loyal to a mobile phone/landline company 66%

DE’s 15-34 loyal to a Garden centre/DIY store 8%

65+ loyal to a supermarket 72%

65+ loyal to a clothes shop 24%

Londoners loyal to an electrical retailer 28%

22% Northerners loyal to a department store

55%15-24’s loyal to a supermarket

49% AB’s 55+ loyal to an insurance company

28% Londoners loyal to a travel/transport/car hire

37% 65+ loyal to a Garden centre/DIY store

40% 15-24’s who feel loyal to a cinema/theatre

58% Northerners loyal to a supermarket

DE’s 55+ loyal to a restaurant/coffee shop 20%

HighsLows


4. Loyalty schemes


Loyalty schemes

Membership of loyalty schemes

How do feelings of loyalty relate to the schemes operated by businesses to build customer

value?

The first thing to note is that most of us are members of loyalty schemes. Three in five would

say they are a member of a loyalty scheme; this has increased substantially since we first

measured this in 2009 (when the figure was 52% - although it is worth pointing out that we

added a new sector into the question in 2010 which means that the findings are not strictly

comparable).

Our research has also found that membership of loyalty schemes has increased across a

number of sectors:

56%

10%

9%

7%

10%

Are you currently a member of a loyalty scheme offered by a business or organisation operating in the following sectors?

2009

Shops 47%

Entertainment & going out 4%

Travel & Hotels -

Financial services 4%

Other -

Base All: 2010: 2,154; 2009: 1,999

More than half of consumers are now a member of at least one loyalty scheme in retail, still

the largest group by a considerable margin. One in ten are members of a loyalty scheme for

entertainment and going out and a similar proportion recognise membership in the travel and

hotel sector, while seven percent say they are members of a scheme in the financial services

arena.


And it appears that consumers might be members of more schemes – in 2010 more people

said they were members of schemes in two or three or more of the sectors asked about

compared to last year. The proportion confirming membership in just one sector has

remained relatively consistent.

6%1%Three or more

62%52%Member of any loyalty scheme

14%6%Two

42%45%One

38%46%None

20102009

Number of loyalty scheme memberships….

The situation differs somewhat in Spain. Although retail and shopping loyalty schemes still

see the highest levels of membership, the levels do not reach those seen in the UK (31%

compared to 56% in the UK) and overall levels of membership of loyalty schemes are lower

in Spain (43% are members of a loyalty scheme in any sector).

Who are members of loyalty schemes?

Some members of the public are more likely than others to be a member of a loyalty scheme:

Women (67%)

Those aged 35-44 (72%)

Workers (67%)

AB’s (77%)

The main shopper in the household (66%)

People living in either the Midlands (68%) or the South (69%)


Use of loyalty cards

But being a member of a loyalty scheme is only the first step – do the public consistently

remember to use their loyalty membership and collect points or rewards?

To what extent do you agree or disagree that... “I always remember to use loyalty cards”

70% 22%33% 5%

67% 24%29% 5%

64% 25%26% 7%

59% 29%29% 8%

Shops

Travel & Hotels

Entertainment & going out

Financial services

Base: All who are a member of each sector: Shopping and Retail, 2010 1195; Travel and hotels , 2010,167; Entertainment and going out, 2010, 199; Financial services, 2010, 148

Members of loyalty schemes with….

Agree (Strongly agree + tend to agree)

Disagree (Strongly disagree + tend to disagree)

Strongly agree Strongly disagree

When asked, 70% of consumers who are members of a shop’s loyalty scheme agree with

the statement ‘I always remember to use loyalty cards.’ Levels are similar, albeit a little lower,

for travel and hotels and entertainment and going out. Usage is lowest amongst those who

are members of financial services loyalty schemes – possibly indicating the lower frequency

of transactions in this sector but also potentially less embedded loyalty schemes.


Are loyalty schemes satisfying consumers?

The trend towards increased levels of membership of loyalty schemes has not been mirrored

in higher levels of satisfaction. Indeed the opposite has happened for two of the sectors

asked about, where levels of satisfaction have actually fallen.

Satisfaction with shopping and retail loyalty schemes, where three quarters of members were

satisfied with these schemes in 2009, has fallen to two thirds. Satisfaction is therefore even

more lukewarm than last year. Among the two thirds who are satisfied, just 15% would

describe themselves as ‘very satisfied’ (down from 24% last year).

24%15%

11%

37%16%

13%10%

51%52%

54%

41%48%

53%48%

5%6%

8%

3%7%

4%10%

And generally speaking, how satisfied or dissatisfied are you with the benefit….loyalty schemes offer to customers like you

Base All who are a member of each sector: Shopping and Retail, 2010, 1195; 2009, 875; Travel and hotels, 2010,167; Entertainment and going out, 2010, 199; 2009, 69; Financial services, 2010, 148; 2009, 75

2009 Question wasn’t asked last year

Shopping and Retail

Travel & Hotels

2010

2009

2010

2010

2009

2010

2009

Entertainment & going out

Financial services

1%

1%

1%

1%

1%

4%

Very satisfied Fairly satisfied Very dissatisfiedFairly dissatisfied

Entertainment and going out loyalty schemes have also seen a decline in satisfaction in the

past 12 months and the majority of members are ‘fairly’ rather than ‘very satisfied’ (16% ‘very

satisfied’ and 48% ‘fairly satisfied’).

Satisfaction with travel and hotel loyalty schemes, which might be seen by some in the

industry as examples of successful loyalty schemes, see similar levels of satisfaction to both

retail and entertainment and going out, at two thirds satisfied, but just 11% ‘very satisfied.’


5. Loyalty myths in 2010: attitudes towards loyalty

schemes


Loyalty myths in 2010

Loyalty schemes and the recession

As we have discussed, there is a growing feeling that the recession has changed the

consumer landscape. What do consumers have to tell us about their experience of loyalty

schemes and the recession?

We may expect that the recession would make people more savvy about loyalty schemes,

that consumers would be taking all the benefits and rewards that they could to help them in

difficult times. Even though the hard data collected by companies may suggest that this is the

case, most of the public do not feel that this is what is happening.

When asked whether they agree or disagree with the statement ‘since the recession started,

I have taken more advantage of the benefits from loyalty schemes’ just 18% agree. A

majority (55%) don’t feel this to be true. Whether this corresponds with actual behaviour is

another issue altogether, but the feeling amongst consumers is clear – they do not believe

loyalty schemes are helping them through the recession.

13%

13%

30%

30% 26%

25%


Since the recession started, I have taken more advantage of the benefits

from loyalty schemes

Since the recession started, loyalty schemes have had more influence on what I’ve chosen to spend money on

Base All: 2010: 2,154

4%

3%

Strongly agree Tend to agree Strongly disagreeTend to disagree

And have loyalty schemes influenced what consumers are spending their money on during

the recession? Again, the general public say they have not. When asked whether loyalty

schemes have had more influence on what they have chosen to spend money on since the


recession started, fewer than one in five (17%) members of the public agree and just 3%

strongly agree. So again, the public claim that loyalty schemes have not influenced their

behaviour in the recession.

Both these findings appear to contradict the perceived growth we have seen in membership

of loyalty schemes and leave companies with a dilemma. Are customers joining loyalty

schemes and then quickly losing interest in them? Have many loyalty schemes become just

another mechanism for promoting price reductions rather than building long-term customer

value? Or are consumers simply unwilling – or unable – to admit the influence of loyalty

schemes on their behaviour?

Do loyalty schemes translate into brand loyalty?

What do consumers feel about loyalty schemes and brand loyalty more generally? Again,

we see a clear message – half do not agree that loyalty schemes foster loyalty to a particular

brand – and this is split pretty evenly between those who tend to disagree (27%) and strongly

disagree (23%). Interestingly, younger consumers respond more positively, particularly

those in the 25-34 age group (where 36% agree).

22% 27% 23%


Base All: 2010: 2,154

Loyalty schemes make me more loyal to particular brands 4%



Loyalty schemes and personal data

Concerns about security of personal data have been increasing over the past few years,

heightened by well-publicised losses of data by both companies and Government. However,

it seems that the public are relatively unconcerned about this in terms of loyalty schemes –

around half agree that they trust companies who run loyalty schemes to keep their personal

data safe (48%) and a further one in five don’t have an opinion either way on this. It is

possible that given much of the focus of concern over fraud has been on payment that the

public are less concerned about the kind of personal data collected by loyalty schemes.

13% 34% 17% 12%


I trust companies who run loyalty schemes to keep my personal

information safe

Base All: 2010: 2,154



Are loyalty schemes seen to be a fair exchange of value?

Many companies would like to see loyalty schemes as mutually beneficial – consumers

benefit from the discounts, rewards and privileges that schemes offer, while companies gain

higher revenues and valuable data from their customers. But how do the public see this?

The public are again clear – they see the primary benefits of loyalty schemes lying with the

companies that operate them rather than consumers themselves. Three in five agree that

loyalty schemes often benefit companies more than customers. And this increases amongst

those who are members of a loyalty scheme to two-thirds (65%), so even those who are

experiencing the benefits of schemes still feel there is more in it for the company.

22% 38% 10%


I feel that loyalty schemes often benefit companies more than customers

Base All: 2010: 2,154

3%


As far as the general public are concerned then, loyalty schemes are not fair exchanges of

value. This perception that the value equation is loaded in the companies’ favour may help

explain the lukewarm levels of satisfaction we have seen with loyalty schemes.


6. Loyalty in 2010:

getting the strategy right


Loyalty in 2010: getting the strategy right

The perspective from the boardroom and marketing department

Our research suggests that customer strategy is getting a harder edge in the boardroom. We

have seen an increase in the proportion of Captains of Industry saying that measures of

customer satisfaction are regularly reported to board, as well as more saying that measures

of satisfaction and loyalty are used to set targets or bonuses.

84%

83%

65%

Measures of customer satisfaction or loyalty are regularly reported to the

board

Measures of customer satisfaction or loyalty are used to set performance

targets or bonuses

Measures of employee satisfaction or engagement are regularly reported to

the board

% yes

Change‘08–’09

+/-

+10

+14

+18

Thinking about your business, which, if any, of these apply?


Turning to Captains’ strategic imperatives for their customers, our research has found that

retention remains a greater priority than acquisition for most Captains.


23%

25%

57%

49%

18%

24% 2%

2%

% Customer acquisition will be a greater priority

% Customer retention will be a greater priority

% Both will be equally important

% Don’t know/no answer

2008

2009

Again, thinking about your business, would you say that customer acquisition will be a greater priority over the next 12 months, or will customer retention be a greater priority?

Base: 2009: British Captains of Industry 100. 2008: British Captains of Industry 100.

When we drill down into more detail about Captains’ customer strategy, we see that a

majority believe that they and their team are strongest in ‘believing that meeting customer

needs is the best path to a sustainable competitive advantage’ (59%) and ‘developing

enduring relationships with your most profitable customers (45%).’

Strongest Most challenging

A. In which two or three of the following areas do you think you and your top team are strongest?

B. Which two or three do you think you and your top team will find most challenging in 2010?


Offering customers the best possible value compared with our competitors

Believing that meeting customer needs is the best path to a sustainable competitive advantage

Having consistency in what we say and what we do when dealing with customers

Putting long term customers before short term customer acquisition

Don’t know/not stated

Ensuring that the actions we take do not have a negative impacton our customers

Developing enduring relationships with your most profitable customers

Ensuring that every action is geared towards meeting the needs of different types of customers

Agreeing that customer feedback or satisfaction measures are as important for performance bonuses as financial results

59%

45%

39%

37%

32%

24%

15%

15%

3%

45%

11%

17%

24%

24%

44%

38%

17%

4%


But business leaders see some difficulties around executing their customer strategies, with

45% saying that ‘offering customers the best possible value compared with our competitors’

and 44% that ‘ensuring that every action is geared towards meeting the needs of different

types of customers’ will be most challenging to them in 2010. In both cases, loyalty schemes

can play a role in helping to meet these challenges.

From the marketing perspective, a key advantage of CRM is that it delivers the best ROI on

the marketing mix.

Best ROIWorst ROI

A. Which one of these activities do you believe delivers the best ROI? B. And which one delivers the worst ROI?

Base: All using each area Source: Chartered Institute of Marketing Trends Survey

Internal marketing

Other

Sponsorship

Telephone marketing

Online activities

Field marketing

Direct mail

Sales promotion

Branding

Advertising (excl online)

Email

Public relations

Online advertising

CRM

7%

2%

21%

12%

11%

11%

7%

6%

6%

4%

4%

2%

1%

7%

3%

8%

6%

22%

4%

9%

3%

5%

9%

4%

10%

2%

8%

6%

But the Chartered Institute of Marketing Trends survey finds that many businesses are not

making as much of their customer data as they would like. Fewer than one in ten marketers

believe that their CRM systems or customer databases are ‘very effective’ at allowing

accurate analysis and profiling of customers. Nearly half (46%) actually say these systems

are ineffective. Marketing teams also struggle to bring together all the relevant information –

only a quarter feel they have the highest levels of visibility over customer data.


18%

8%8%

40%

26%

Base: All using CRM as marketing method (787). Source: Chartered Institute of Marketing Trends Survey

How effective are your customer databases or CRM systems at allowing accurate analysis and profiling of customers and customer segments?

What level of visibility does your marketing function have over all your organisation’s

relevant customer data?

27%

19%

7%

39%

9%

Very effective

Don’t know/not applicable

Fairly effective

Fairly ineffective

Very ineffective

Very high

Fairly high

Fairly low

Very low

Don’t know/not applicable

These operational issues can hamper even the best thought out loyalty strategy.


What’s the consumer view?

As we have seen, Captains of Industry are more likely to be focusing on customer retention

than customer acquisition. This is not how it feels from the consumer perspective though. For

three years in a row, the public have told us that they feel companies care more about

attracting new customers than keeping their existing customers happy. And the proportion

agreeing that companies care more about keeping their existing customers happy has

declined over the past three years.

29%

23%

20%

43%

49%

48%

% Agree % Disagree

2008

2010

To what extent do you agree or disagree that... Most companies care more about keeping their existing customers happy than attracting new ones

Base All: 2010: 2,154 The Logic Group Loyalty Survey. 2009: British adults: 1,026 Ipsos MORI. 2008: British adults: 2,054 Ipsos MORI

2009

Turning to look at loyalty schemes, what do consumers say would make them most likely to

spend more with a business or organisation?

The key attraction of loyalty schemes for consumers is the ability to achieve money off or

discounts on products and services. Consumers would rather have something concrete in

their pocket that they can clearly understand the value of. Another key priority is relevance –

consumers want offers that are relevant to them.

There is some desire to be able to access rewards immediately, but features of schemes

such as using a mobile phone to earn and use points are not a consumer priority.

Some of these key features may translate to other markets – when the same question was

asked in Spain, the desire for money off products and services along with relevant rewards

were again the top factors that would encourage people to spend more with a company.


61%

48%

20%

15%

14%

8%

5%

1%

From this list, which 2 or 3 aspects of a loyalty scheme, if any, are most likely to encourage you to spend more with a business or organisation?

Rewards which give me money off products or services

Offers that are relevant to me

The ability to access my loyalty rewards immediately

It’s easy to understand how I earn my rewards

Earn and use my points or rewards with my payment or credit card

Benefits and dedicated customer service that are available to members of a loyalty scheme only

Earn and use my points or rewards with my mobile phone

Nothing

Base All: 2010: 2,154

Two groups who are more likely to be members of loyalty schemes – AB’s and those aged

35-44 – are also more likely than average to cite money off (69% and 68% respectively) and

relevant offers (54% and 55%) as most likely to encourage them to spend more, indicating

that these are key priorities for existing members of schemes. Those who are members of a

loyalty scheme in the retail sector are also more likely to mention these two factors (71% and

55%), along with the ability to access rewards instantly (24%) and the chance to earn and

use rewards points on a payment card (17%).

Factors that are less associated with traditional loyalty schemes – particularly dedicated

customer service – are more likely to be mentioned by those who are members of loyalty

schemes in the hotel and travel sector (19%). This probably reflects the greater experience

they may have of this kind of benefit.

Consumers aged 15 – 24 are more likely to see the ability to earn and use points with a

mobile phone as a factor that would encourage them to spend more (chosen by 12%). It

may be that although the desire for more radical changes to how loyalty schemes operate is

not currently that strong, this may change going forwards.

Even so, our research suggests that the value a loyalty scheme delivers to the customer –

both in terms of hard rewards and relevance – is always going to be more important than the

mechanisms by which the scheme operates.


7. Final Thoughts


Some final thoughts

Ipsos MORI and the Logic Group have had the opportunity to discuss the findings of this

research with a number of loyalty practitioners in a series of seminars. The key conclusions

which arose from these discussions were:

We continue to live in uncertain economic times. While consumers and businesses

are more optimistic about the economy than last year, how long is this confidence

going to last? As spending cuts start to bite, is economic confidence about to plummet

again?

It is too soon to judge the long-term impact of the recession on consumer behaviour,

but the verdict seems to be that something has changed – however we are still trying

to work out exactly what this is. Ipsos MORI’s research suggests that the value

consumers are looking for from companies has become harder edged

We see a ‘loyalty paradox.’ Our research shows that membership of loyalty schemes

has gone up. Most of the practitioners we spoke to report higher levels of usage of

their loyalty schemes. However attitudinally, consumers appear to be less loyal. Has

the recession eroded levels of loyalty because consumers have been encouraged to

shop around more?

From the consumer perspective, it could be argued that loyalty schemes are not delivering sufficient value. Most say loyalty schemes have not helped them in the

recession, levels of satisfaction are down and schemes are seen to be run more for the

benefit of companies than customers. Some practitioners suggest that the benefits of

loyalty schemes are being drowned out by aggressive price promotions open to all

customers or, worse still, targeted at new customers only

From the perspective of the practitioner, how can a loyalty scheme break through the

cynicism and offer customers something different both in terms of value and relevance? At the same time, any scheme which is not clear and simple to consumers

is going to struggle to get off the starting blocks

Responding to different customer needs is recognised as a key business challenge

and one which an effective loyalty scheme should be able to deliver. However this is

much easier said than done. The practitioners we spoke to were relieved to hear that

theirs was not the only organisation struggling to make the most of their customer data due to inadequate databases and organisational silos


Contact details

79-81 Borough Road

London

SE1 1FY

www.ipsos-mori.com

Robert Adams

Director of Customer Insight and Loyalty

direct +44 1252 644 092

email [email protected]

Anamaria Chiuzan

Customer Insight and Loyalty – Senior Marketing Manager

direct +44 1252 644 086

email [email protected]

Simon Atkinson Assistant Chief Executive Ipsos MORI T +44 20 7347 3376 E [email protected]

Kate Bewick Research Manager Ipsos MORI T +44 20 7347 3005 E [email protected]

the logic group loyalty report 2010 · at consumer behaviour and attitudes during the depths of the...

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