Less is less? What’s happening with customer loyalty programs.

CustomersWhen it comes to customer loyalty programs, here’s a sobering statistic: Only about 15% of consumers redeem loyalty rewards.

This finding comes from a report by Forrester Research, based on results from an in-depth survey it conducted last fall of 50 member companies of Loyalty360, a major loyalty marketing association.

What Forrester found is that fewer than half of the surveyed companies’ customers are enrolled in their loyalty programs. And of those customers, only about 35% of them are actually redeeming their loyalty awards.

Hence the 15% “effective” participation rate.

At first blush, the paltry participation makes one wonder what all the fuss is about when it comes to loyalty marketing.  But more than half of the companies surveyed by Forrester reported that they view their loyalty program as a strategic priority, not merely a marketing afterthought..

Clearly, there seems to be a bit of a “disconnect” between those lofty aims and the not-so-airborne reality. The question is how companies can encourage greater participation in their loyalty programs, thereby using them to improve consumer brand loyalty in addition to retaining customers over time.

Forrester offered several recommendations in its report:

1. Use advances in analytics to act on customer insights, rather than just relying on the purchase transactional history of loyalty program members. 

2. Balance the “reward mix” with personalized offers that present rewards program customers with unique experiences that are different from simply offering “more of the same.” (In many cases, offering discounts on more of the same merchandise a customer has already purchased won’t qualify as anything particularly special.) 

3. Break out from the traditional e-mail/web portal/call center communication vehicles to embrace more social media channels featuring two-way interaction. (Surprisingly, only about half of Forrester’s survey respondents reported that social media is an important part of their loyalty programs’ methods of communication.)

Speaking personally, I’m not particularly surprised at the relatively low engagement levels reported in this study. Many companies and brands have reached out to me over the years with offers to join loyalty programs, using various incentives – often purchase discounts or sign-on points as an incentive for joining.

apathyFor me, it’s a matter of “time” and “mindshare” as to which of these programs qualify for my participation. If a brand isn’t that important to me in terms of how I live my daily life, it – and its loyalty program – isn’t ever going to be big on my radar screen.

I suspect there are quite a few other consumers like me. But if you have different take, leave a comment and share your perspective with other readers.

 

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