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Successful loyalty schemes influence spending

By Peter Clark, Marketing Factbook

 

Successful loyalty programmes are having a positive influence on consumer spending, and increased competition is driving those loyalty programmes to offer more than simple reward points, according to a survey by Maritz Research in Canada.

The study, entitled 'Maritz Insights: The loyalty report', examined how loyalty programmes influence consumers' shopping and purchasing behaviour, and found that most Canadian consumers (92%) are a member of at least one loyalty programme, and that consumers hold an average of 6.4 loyalty cards, while those earning more than Can$125,000 per year hold an average of 12.3 loyalty cards.

However, it was the affluent consumer group that were found to be most likely to change their shopping patterns to accommodate loyalty programmes, and the same group was also most likely to think that loyalty programmes are valuable to them.

The effect of a valuable and desirable loyalty programme on customer retention is profound, with 63% of consumers saying they are more likely to continue doing business with a company that offers a loyalty programme.

A large proportion (78%) of the consumers surveyed also said they shop strategically to earn the most loyalty points possible, with 35% saying they had previously driven past a closer retailer to get to one where they could earn loyalty points.

According to the survey, consumers' satisfaction with loyalty programmes is driven primarily by three factors: the pace/speed of earning points, the rewards catalogue, and personally tailored communications. In terms of consumers' overall satisfaction with loyalty reward programmes, TD Bank's First Class Travel Visa Infinite credit card was rated best, with 92% member satisfaction. In the retail loyalty arena, the SCENE programme was rated best with 70% member satisfaction.

The survey examined the opinions and behaviours of more than 6,500 consumers and covered 59 loyalty programmes throughout Canada, and the results suggest that the growing influence and relevance of loyalty programmes means that programme operators should focus more on value, getting to know their customers, and personally tailoring offers and messages.

Consumers said that they are particularly loyal to programmes which make them feel special, and that offer non-monetary privileges for members only, and that communicate often in ways that consumers find personally relevant and interesting.

"Canadians have become so accustomed to loyalty benefits and rewards that many retail categories such as gas, grocery, home improvement and pharmacies have reached a point where companies can't compete without a loyalty offering," concluded Rob Daniel, vice president of loyalty and research for Maritz Canada. "But what sets the most popular programmes apart is their ability to offer meaningful value by going beyond points and simple discounts."

The study also examined the issues of privacy and consumer willingness to participate in programmes that focus on gaining a better view of their shopping preferences. While the majority of consumers said they would prefer more tailored communications with brands that they have a relationship with, some still have privacy concerns. According to Daniel, "Brands are encouraged to build better relationships with consumers but they must be very transparent about how they collect and store consumer data, and also be very specific about the resulting value that the consumer will realise."

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Sources: Maritz Research; Maritz Canada
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