What Effective Loyalty Marketing Programs Rely On


by Nathan Roberson

Some interesting statistics have been unearthed over the last several years concerning utilization and participation in loyalty rewards programs. It goes without saying, effective loyalty management relies on data that serves the interests of both the business and consumer alike. Without a win-win for each player, the value of the program becomes suspect, losing sight of its end goal in the first place. Since most businesses these days operate some kind of loyalty rewards program, it is essential to identify what works and what does not so that resources can be allocated appropriately while gaining loyalty market share in the process.

Some Of The Numbers

Forrester Research tabulated that out of12 industries, retailers in general inspire the greatest loyalty with 80% of respondents being reluctant to change stores in which they shop. When retailers are broken down even further, Northwestern University discovered that when 12 to 15% of customers remain loyal to an individual retailer, they account for a stunning 55 to 70% of business sales. That is significant. For food retailers the figure is even higher with 65 to 95% of purchases being sold to loyalty rewards participants.

Other industries don't fare so well. The insurance and financial industry, including banks and credit card providers, only has 72%, 71% and 70% loyalty respectively. Wireless providers also rest at about 70% loyalty, while hotels and PC manufacturers have approximately 65% loyalty among their customers. Of the top 10 surveyed, airlines fared the worst with 62% loyalty among their participants.

Besides overall product and service quality (which is critical), the loyalty rewards value must be clear and compelling to the consumer, as well as be consistent with the industry in which the company resides. Further, innovation is key. Some long-standing rewards programs have become stale, nearly commonplace, with parallel companies providing the same rewards and incentives as all the rest. The airline industry is a classic example of this difficulty.

Enter Effective Loyalty Management

With everyone getting on in the loyalty rewards act, it is vital to establish clear objectives, not just for your particular company but equally important for industry consistency and the consumer. This is not to suggest a loyalty program be the same as everyone else. On the contrary, it should be consistent with data gleaned about what the customers want, expect or will benefit from within the industry.

Since changing lifestyles and attitudes about experiences has increased, some industries will likely want to include that in their rewards offerings. Diversity in merchandise, discounts, experiences and access to coalition loyalty programs goes a long way in keeping the consumer coming back for more.

About the Author

Visit us at http://www.kobie.com to learn more on how you can acquire and retain high valued customers with our innovative rewards technology and loyalty programs.

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