Loyalty programs are missing the mark on what members actually want from a brand experience, according to a new Colloquy study.

Based on the study completed in December 2011, Canadians aren’t content with rebates and cash-back rewards from their loyalty programs. They want better engagement, VIP treatment and tailored messaging and promotions, says Kelly Hlavinka, managing partner of Colloquy.

Only 22% of Canadians found communication with loyalty programs “extremely relevant,” which points to a trend that brands and retailers aren’t meeting the increased expectations of consumers, she says.

Most programs only offer a points reward system that allows customers to earn “free” merchandise or cash-off future purchases. But this doesn’t always resonate with consumers. More relevant rewards can include specific offers based on shopping habits, such as receiving discounts on regular purchases or free samples of new products from lines the customer often buys. It can also include invitations to private events or express check-out.

By not offering VIP treatment and specialized communication, the brands are losing loyalty, adds Brian Ross, president of Precima, partner agency on the survey.

“It’s not a question of ‘if,’ it’s a question of ‘when,’” he says. “Customers are only going to start to engage with, and give loyalty to brands that have demonstrated that they can be relevant.”

Engagement with loyalty programs in Canada is already on a downward trend, Hlavinka adds, with engagement on the web, social media and mobile devices down an average of 4% from 2009. This comes despite the proliferation of all three in the past two years. (Indeed, smartphone and social media penetration is at an all-time high in Canada, with Canadians being some of the most social and web-engaged people on the planet.)

Hlavinka says brands need to start tapping into the wealth of knowledge at their fingertips and tailoring messages to individual shoppers – rather than on a storewide basis.

“It’s about customizing offers based on the actual member’s needs,” she says. “So if you don’t have children, you aren’t getting the diaper offers.”