Time to look "beyond the points" as Canadians redefine customer loyalty

Three in five Canadians don't regard points programs as important to brand loyalty, new KPMG in Canada report finds

TORONTO, March 10, 2020 /CNW/ - While loyalty points programs have been a staple for many Canadian retailers, a new report from KPMG in Canada finds these programs do little to drive customer loyalty. As many as 60 per cent of Canadians say points programs and rewards are not important in keeping them steadfast to a brand, finds the KPMG report, called Redefining customer loyalty: Beyond the points.

"Canadians told us they look for quality, consistency, value, and personalized service from their preferred brands and retailers," says Kostya Polyakov, Partner and National Industry Leader for KPMG's Consumer and Retail group. "A loyalty program is one lever in a company's arsenal. It creates transactions, but it won't make up for poor products or inferior customer service. Where it really matters is when the program helps you better understand your customers' needs and expectations and provides you the information needed to drive tailored offers."

For the vast majority of consumers, loyalty means how likely they are to recommend a company or brand to friends and family (88 per cent), or that they want to – not need to - buy from a specific company (77 per cent).

The factors driving customer loyalty include:

• Traditional standards: Canadians rank product quality (74 per cent), product consistency (71 per cent), and value for money (60 per cent) as their top three brand loyalty considerations.
• New expectations: A company's commitment to social responsibility is emerging as something that matters to consumers, with nearly 60 per cent of Canadians saying that it's important, very important, or extremely important to them that a company be "committed to sustainability/environment."
• Loyalty programs: Loyalty programs do retain a place in Canadians' hearts, as 40 per cent say that program points and rewards were very or extremely important to their loyalty, with the average shopper participating in up to five different loyalty programs.

"We're starting to see Canadians care deeply about ethical, sustainable practices," says Katie Bolla, a partner in KPMG's Customer and Digital group. "They want to shop with retailers who treat their employees well, who use real people in their ads, who have a strong environmental record. More and more, people are making values-based purchasing decisions. This is a trend retailers need to pay attention to."

Influencers aren't so influential

Canadians are not easily swayed by what other people think, and much less so than consumers in the rest of the world, the report finds.

Only 14 per cent agree that "endorsed by my favourite influencers" is very or extremely important to their loyalty to a brand, compared to 23 per cent of global consumers. Similarly, 13 per cent say "popularity on social media" is very or extremely important to brand loyalty, versus 24 per cent globally.

Building loyalty that lasts

As many as 57 per cent Canadians expect to receive special, or personalized treatment for being a loyal customer. An equal number also agreed that having a "strong personal connection with the company" helps to keep them loyal.

To build loyalty that lasts, the report advises three main steps: 1) gather data to really understand your customer, 2) build analytics capabilities that allow you to use that data quickly to generate insights, and 3) build an organization that acts on those insights.

"The whole organization needs to work in lockstep in order to deliver a truly exceptional and seamless customer experience," says Ms. Bolla. "A loyalty program is only the first step to building a deeper, more meaningful and longer term relationship with customers. Retailers risk missing the opportunity to convert transactions into points-free relationships so strong that even if the program disappears, customers will still come back. That's true loyalty." 

The report analyzed responses from 876 Canadian consumers in KPMG International's The truth about customer loyalty survey.

ABOUT KPMG IN CANADA

KPMG LLP, an Audit, Tax and Advisory firm (home.kpmg.ca) is a limited liability partnership, established under the laws of Ontario, and the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG has more than 7,000 professionals/employees in over 40 locations across Canada serving private- and public-sector clients. KPMG is consistently recognized as an employer of choice and one of the best places to work in the country.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

SOURCE KPMG LLP