Customer Expectations Outstrip Loyalty Program Evolution

Beyond basic discounts, shoppers are on the lookout for exclusive offers and rewards that align their own needs and values, and relevance isn’t optional.

Traditional approaches to loyalty are falling short, according to the findings of “How to Keep Hold of Your Customers,” a recently released global study from dunnhumby, a global provider of AI and customer data science.

Leveraging perspectives from senior retail leaders throughout North America and Europe; in-depth interviews with Tesco UK CEO Ashwin Prasad, IGD’s Bryan Roberts and Synerise’s Marek Świderski; and insights from thousands of grocery shoppers, the report reveals an industry at a pivotal moment. As shoppers call for relevance and recognition, retailers are reconsidering what loyalty means and how their programs need to change to meet expectations in the future.

Key findings of the study include:

Customer retention remains retailers’ No. 1 concern. For many, price sensitivity and limited insight into “less loyal” shoppers are viewed as some of the biggest issues.
Traditional approaches are declining in effectiveness. In the face of potential budget cuts, retailers said that they would cut generic rebates and coupons, opting to protect their personalization efforts instead.
Shoppers agree that loyalty needs to change. Basic discounts are no longer sufficient. Shoppers are on the lookout for exclusive offers and rewards that align their own needs and values, and relevance isn’t optional.
Effective loyalty programs spur business performance. Successful retailers have a deeper emotional connection with customers, experience stronger commercial performance, and tend to achieve a higher CAGR than their competitors.
Retailers are seeking inspiration beyond grocery. Beauty and lifestyle brands were commonly identified as innovation inspirations.

Along with delving into current approaches to loyalty, “How to Keep Hold of Your Customers” spotlights three future focal points for retailers. From addressing the threat of loyalty program homogenization to developing the necessary capabilities for meaningful personalization, the study offers advice for those that want to position themselves effectively for the next iteration of loyalty and personalization.

“Loyalty isn’t broken, but it does need to change,” noted Ben Snowman, global head of loyalty and personalization at dunnhumby’s Cincinnati office. “Shoppers now expect more than ever in terms of relevance and personalization, and that requires retailers to ask some difficult questions about their own approach. As technology makes it easier for retailers to deliver true one-to-one personalization, they’ll need to work smarter than ever to stand out.”

“Loyalty is about all the little things, every single day, every interaction and showing customers that we’re listening, we care, and we’re reliable,” observed Prasad. “At Tesco, we bring loyalty back to what really matters: serving customers better. Loyalty and personalization aren’t abstract — they’re about earning respect by being useful, relevant and fair.”

dunnhumby employs more than 2,500 experts in offices across Europe, Asia, Africa and the Americas working for such brands as Tesco, Coca-Cola, Meijer, Procter & Gamble, Raley’s, and L’Oréal.