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Loyalty and rewards programs are going out of style

Customer Service Chart
Customer Service Chart

BII

This story was delivered to BI Intelligence "E-Commerce Briefing" subscribers. To learn more and subscribe, please click here.

Loyalty and rewards programs provide reasons for consumers to routinely shop at one retailer, but these programs are falling out of favor with one important group.

Affluent middle-class shoppers worldwide (those in the top 10%-15% of earners in each country)  are reducing their signups to loyalty programs, according to a Collinson Group survey. This drop took place across the retail, grocery, airline, and banking industries.

Overall, 35% of global affluent customers responded that they "can't be bothered" with loyalty programs, an increase from 18% in 2014, the last year in which Collinson Group conducted this survey.

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The survey demonstrates the need for brands and retailers to do more than simply offer discounts through these programs. Almost 70% of respondents said they expect high-quality and consistent customer service whenever they engage with a brand, so this is one factor retailers need to consider when crafting their loyalty programs.

A more robust relationship with the consumer through personalized email campaigns, recommendations, and additional perks could encourage more customers to sign up for loyalty programs.

The quality of customer service consumers experience through all channels (email, phone, etc.) can significantly impact a retailer's bottom line. In fact, 66% of US consumers are willing to spend more money with a company that provides them with excellent customer service, according to Microsoft, while 60% of consumers say they have not completed an intended purchase due to a poor customer service experience.

As consumers increasingly buy products online that they haven't seen in person — leaving room for purchasing errors and buyer's remorse — it's now more important than ever to provide customers with positive customer service experiences.

Nancee Halpin, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on customer service that looks at why customer service matters, which stalwart channels are still top performers, and which new channels have the most potential. It also takes a look at why luxury retailers, or even just retailers with high-income consumers, need to be especially attuned to providing solid customer service help.

Here are some key takeaways from the report:

  • Even a single negative customer service experience can deter potential customers from spending money with a company. 60% of US consumers have not completed an intended purchase based on a poor customer service experience. That translates into an estimated $83 billion in lost sales for US retailers.

  • Negative customer service experiences loom larger than positive ones. It takes 12 positive customer experiences to negate the poor impression left behind from one unresolved, bad experience.

  • Lack of effective customer service on social media seems to be spilling over into users' willingness to interact with brands at all on the channel. Just over half of consumers plan on either not contacting or reducing their contact with brands through social media this year.

  • Providing the best-quality customer service is especially important to luxury retailers, whose customers expect a personalized experience to enhance the exclusivity that comes with luxury retail. Nearly half of all luxury consumers demand an apology, refund, or incentives following a poor customer service experience.

  • Traditional channels like phone and email are still preferred by consumers, but new technologies — like messaging apps and live chat — are beginning to take off.

In full, the report:

  • Examines why customer service matters more for e-commerce retailers.

  • Explains the consequences of both positive and negative customer service experiences for retailers.

  • Compares various channels for customer service and discusses which ones perform best.

  • Assesses the future of customer service for a digitally native consumer audience.

  • Discusses which retailers and industries are affected most by customer service experiences.

To get your copy of this invaluable guide, choose one of these options:

  1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP

  2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the importance of customer service.

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