What’s the state of loyalty programs today? Are consumers loving them or leaving them? Some retail and e-commerce companies swear by them and others swear at them. Today, we’ve got an extensive, and sometimes conflicting, look at what’s working and what’s not in loyalty programs New research from Accenture shows that loyalty program members generate 12 to 18% more revenue than non-members. The same report says loyalty managers need to measure customer engagement in addition to financial metrics.
CrowdTwist reports more than half of marketers will increase loyalty program spending in 2017 and only 4% will reduce budgets. Forrester research shows more than 80% of marketing decision-makers plan to improve loyalty programs next year. Timi Garai profiles five prominent loyalty programs and how retailers are shifting quickly to meet new consumer interests. Starbucks has more than $1.2 billion of unspent cash on member loyalty program cards and mobile apps – an interesting measure of success. 80% of loyalty program members will continue doing business with brands offering loyalty programs, according to new research from Visa/Bond Brand Loyalty.
Members of Pepperidge Farms’ new digital loyalty program can earn experiential rewards such as manicures, spa visits and yoga classes. Wise Marketer looks at Chipotle’s new three-month loyalty program and wonders if it can be successful, by itself, in restoring the lost business and reputation damage due to the earlier E. coli outbreak. 90% of affluent Chinese Internet users say loyalty programs encourage them to spend more according to a Collinson Group study and three-quarters say they will spend more with brands and recommend them to their friends. Ironically, a Collinson Group report also shows a 20% drop in global loyalty program memberships caused by what it calls “generic” programs. What’s a marketing manager to do?
Loyalty Programs Participants Generate Significantly More Revenue for Retailers Than Non-Members
Members of retailers’ customer loyalty programs generate between 12 percent and 18 percent more revenue for retailers than do customers who are not members of the loyalty programs, according to new research from Accenture Interactive. This key finding was based on a survey of retailers across specialty, big-box, department, drug and convenience stores in the United States. The Accenture research sought to identify key trends and challenges of retailers’ loyalty programs.
“Today’s customer loyalty programs are an increasingly expensive, complex and expansive business that extend beyond the marketing team into the entire organization,” said Farrell Hudzik, managing director of Accenture Interactive’s Global Loyalty and Rewards practice. “Given that loyalty program members generate significant incremental revenue compared with non-members, retail loyalty program leaders must anticipate future growth trends and capture the opportunity to differentiate in an increasingly fragmented marketplace.”
Retailers more focused on boosting membership base than ROI
Beyond the incremental increase in revenue, the research identified another, and perhaps more surprising, finding: fewer than one in five retailers focuses on ROI as a key metric of the success of their loyalty program. Specifically, when asked to identify success metrics for their program, only 19 percent of the retailers surveyed cited ROI. Via fuelmarketernews.com
Accenture raises 4 challenges facing any retail loyalty program
Members of retailers’ customer loyalty programs generate between 12% and 18% more revenue for retailers than do customers who are not members of the loyalty programs, according to new research from Accenture Interactive.
“Today’s customer loyalty programs are an increasingly expensive, complex and expansive business that extend beyond the marketing team into the entire organization,” stated Farrell Hudzik, managing director of Accenture Interactive’s Global Loyalty and Rewards practice. “Given that loyalty program members generate significant incremental revenue compared with non-members, retail loyalty program leaders must anticipate future growth trends and capture the opportunity to differentiate in an increasingly fragmented marketplace.”
This key finding was based on a survey of retailers across specialty, big-box, department, drug and convenience stores in the United States. The Accenture research sought to identify key trends and challenges of retailers’ loyalty programs. Via drugstorenews.com
US Marketers Plan to Invest More in Loyalty Programs by 2017
The majority of US marketers intend to allocate more of their budgets to customer loyalty in 2017, according to research. And about 13% said they anticipate significant increases in spending on such programs.
Multichannel loyalty and analytics company CrowdTwist, in partnership with Brand Innovators surveyed 234 digital marketers about their customer loyalty programs in the US throughout March and April 2016.
According to the research, more than half of respondents said they plan to put more dollars into their loyalty programs next year. Almost half (44%) of all respondents said they will somewhat increase loyalty budgets, and 13% plan to significantly. Meanwhile, a mere 4% said they anticipate lowering investment.
In anticipation of having more dollars to play with for loyalty programs, marketers should think critically about what areas of their programs may attract increased participation rates. In a summer 2015 survey from Maritz Motivation Solutions, 43% of loyalty program members said the top reason for joining in summer 2015 was because of their desire to earn rewards. Via eMarketer
The State of Loyalty Strategies 2016
Forrester’s data shows that marketers have their sights set on improving loyalty in 2016. In fact, 80% of marketing decision-makers at large organizations call it a top marketing priority for the next year. And, my recent conversations with loyalty marketers reveal a desire to shift from transactional loyalty to more emotional loyalty. Marketers want a deeper, lasting relationship with customers that tugs on both emotions and purse strings. But are they actually executing on it? We surveyed 60 loyalty marketers from North America to find out.
From a strategy perspective, the marketers we surveyed aspire to, and are investing in, evolving their loyalty programs and initiatives. They turn to loyalty to drive multiple business outcomes, including retaining existing customers (of course), engaging customers, improving customer lifetime value, enriching relationships and even acquiring new customers.
Plus, they are invested in their current approach: literally and figuratively. Nearly 80% of survey respondents indicated that their programs and initiatives are effective at retaining existing customers, and a majority thinks they are effective at boosting customer profitability, improving share of wallet, enriching relationships and enhancing the customer experience. And, the majority of respondents plan to increase investments in important components of advanced loyalty, such as customer experience, analytics, innovation and mobile. Marketers are indeed thinking of loyalty beyond traditional discounts and points – with a handful even saying they plan to reduce funding for promotions and rewards – and planning their investments accordingly. Via colloquy.com
How Retail Giants Have Changed the World of Loyalty Programs So Far in 2016
Why is it worth connecting your loyalty program with a mobile app? How should brands focus more on what their customers really want from their loyalty programs?
I’m sure that you heard (or maybe even felt) the anxiety of customers who were angry about how Starbucks and American Airlines changed their reward mechanisms. Or maybe you were surprised about the sudden announcement that McDonald’s also wants to have their own slice of the loyalty program pie.
What’s happening out there?
At first, it may seem like these brands are just messing around with their programs, which causes more uproar than positive customer feedback. But you shouldn’t neglect one important thing: all of these brands’ efforts aim to satisfy their customers because this is how they will drive more sales in the long run.
And how exactly are they doing it? Before you judge them based on some negative social media noise, I would like to highlight why their decisions in the last few months were actually right. And what’s more, you can also learn about how to fine-tune your own loyalty program from their examples. Via business2community.com
Starbucks’ loyalty program now holds more money than some banks
Starbucks’ loyalty program, Starbucks Rewards, is thriving, and it just a hit a milestone.
As of the first quarter of 2016, Starbucks had $1.2 billion in customer funds loaded onto plastic and mobile Starbucks cards, according to data from S&P Global Market Intelligence analyzed by the Wall Street Journal.
Starbucks Rewards, the company’s loyalty program, operates on a prepaid system in which users load funds onto a Starbucks card, which they then use to purchase products. The $1.2 billion figure pales in comparison to the amount in deposits at major banks, but it’s worth noting for a sense of scale that this figure is larger than the amount held at many smaller regional banks or prepaid card firms, according to MarketWatch.
The $1.2 billion points to the success of Starbucks’ loyalty program, which had 12 million members in the U.S. as of Q1 2016. The $1.2 billion figure is almost double the $621 million it had it 2014, according to Bloomberg and Fortune. Via businessinsider.com
Loyalty Programs Effective, On the Rise
A new study from Visa and marketing research firm Bond Brand Loyalty finds that loyalty programs remain effective at attracting customers. About 80% of the roughly 19,000 consumers in the U.S. and Canada who responded to an online survey said they were more likely to continue doing business with brands that offered loyalty programs.
The data dovetails findings last year by loyalty marketing research company Colloquy that indicate loyalty programs are on the rise in the U.S. On average, households maintain membership in 29 loyalty programs, a total of 3.3 billion nationwide, and up 26% from 2013. However, most households use only 12 of those cards, a proportion that has dropped 4.5% from 2013.
The main reason that customers don’t participate in loyalty programs is that they’re apathetic toward or, worse, unaware of the campaign’s benefits. Anita Brooks, president of ASB Marketing, an affiliate of Geiger, says that lack of awareness falls on the client’s shoulders. Loyalty Programs Effective, On The Rise
US: Pepperidge Farm launches digital loyalty programme
US-based baked goods manufacturer Pepperidge Farm has launched its first digital rewards programme for consumers on PepperidgeFarmReward.com. The programme is heavy on experiential rewards, which means that Pepperidge Farm fans can now burn off some calories in yoga class after they avail themselves of some of that delicious Farmhouse bread.
The eight-week loyalty programme rewards Pepperidge Farm consumers with a local beauty treatment or health and wellness session when they purchase three loaves of Pepperidge Farm Farmhouse or Whole Grain sandwich bread between April 19 and June 19, 2016, and upload their receipts on the microsite. They will then receive a reward code via email that can be redeemed on the microsite.
The programme is in all markets where Pepperidge Farm Farmhouse and Whole Grain breads are distributed. Loyalty rewards include manicures/pedicures, hair styling, makeup applications, fitness classes, personal training sessions, yoga or Pilates classes, roller skating passes, nutritional consultations, and more. Money quote from Hector Briones-Sanchez, Business Director of Fresh and Frozen Bakery, Pepperidge Farm: Via thewisemarketer.com
US: More details on Chipotle’s loyalty promotion
As we reported back in May, troubled US-based fast-casual restaurant chain Chipotle is trying to reverse its flagging fortunes with a loyalty promotion. The program, called Chiptopia, is set to launch this week as a three-month summer program. Can a three-month loyalty push erase the bad taste of a dangerous e coli outbreak? Here’s a closer look at Chipotle’s strategy.
Chiptopia is a straight frequency program with three tiers – mild, medium, and hot – that allow Chipotle fans to earn free entrée items. Monthly bonus rewards increase the stakes for high-frequency customers. The program lasts for three months, beginning July 1, and purchase totals reset to zero each month. Registration requires a mobile number.
That’s it – a perfectly serviceable digital punch-card program with nothing else interesting to say about it. While the program may result in short-term gains, its basic punch-card structure and finite time-span virtually guarantees that any resulting behavior change will be short-lived as well. As we mentioned in May:
“Increased frequency is certainly a benefit of a loyalty program – but short-term behavior change is not the goal of a loyalty program. The goals are – increased relationship equity and lifetime customer value. It’s a long-term commitment to your best customers that results in a lifetime of loyalty.” Via thewisemarketer.com
In China, Many See an Increase in Value of Loyalty Programs
Nearly nine in 10 affluent internet users in China say loyalty programs encourage them to spend more, according to January 2016 research by Survey Sampling International for Collinson Group. But that doesn’t mean affluents believe programs are costing them money: 34% also believe that loyalty programs have increased in value over the past year.
Affluent internet users in China—those in the top 10% of 15% of earners—are more likely to feel that loyalty programs have increased in value than their counterparts in either Hong Kong or Singapore. In fact, those in China are more likely to reward companies toward which they feel loyal in general.
Three-quarters of those surveyed in China say they will make a purchase from such a company in the future—higher than Singapore or Hong Kong, as the pattern goes. And three-quarters of affluent internet users there also say they’ll recommend the companies in question to friends and family, which is, again, higher than their counterparts in the other markets studied. Via emarketer.com
Survey: Loyalty program membership declines globally
Is the loyalty industry in crisis? A new survey from Collinson Group blames “generic” loyalty programs on a reported 20% drop in membership of loyalty programs among the global affluent middle class since 2014. Collinson Group surveyed attitudes to programs run by supermarket and grocery stores, airlines, credit card providers, retailers, hotels, telecom and media companies, coffee shops, and banking. Membership was down across all industries in all countries surveyed. What does this news mean for the future of loyalty programs?
The Collinson numbers are dire, make no mistake. According to the survey, program membership numbers have declined as follows:
- 64% are members of supermarket loyalty programmes, down from 70%
- 55% hold frequent flyer memberships, down from 65%
- 48% participate in credit card programmes, down from 63%
- Banks fared the worst with their programmes now used by only 30% of respondents, down from 47%
According to Collinson, the affluent middle class is also now less likely to repeat purchase, recommend a brand to friends or refrain from switching to a competitor as a result of loyalty programs that are too generic. Via thewisemarketer.com
Loyalty program managers take heart
Our take on loyalty programs is that strategy and engagement are critical components of successful loyalty programs. Research shows that consumers will engage with brands when they have a good reason and the brands are listening and providing higher value.
The interesting thing about the research we highlighted is the conflicting trends on growth versus declines in loyalty program memberships. Loyalty programs aren’t going away but they are changing rapidly along with consumer preferences, technology and shopping patterns. Poorly-designed, generic loyalty programs will no longer cut it.
Coming up in Friday’s post is a fascinating update on Middle East e-commerce. You won’t want to miss it. And remember, you can get more news you can use like this in your inbox every Monday-Wednesday-Friday by subscribing at the top of the page right.