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Do Consumers Value Loyalty Programs?

[Brandweek, February, 2010]

Marketers have clearly realized the value of customer insight and retention through loyalty programs, but are consumers still responding to the value-added benefits?

A recent poll conducted by the CMO Council discovers a “yes, but” attitude:

  • 67.7% of consumers belonged to loyalty programs in 2009, up nearly 20% from 2007.
  • 16.4 percent are actively looking for a rewards program to join.
  • 69% of respondents said their loyalty program experiences have been “pretty good.”
  • 10% said they have been “very satisfied.”
  • 50% said loyalty programs either “strongly motivate repeat visits” or is “usually a big factor in decision making.”
  • But… 32% of respondents felt their loyalty program participation held little value.

Additionally, the survey found that the average household is enrolled in 14 loyalty programs, but participates in just 6.2. Marketers need to be thinking about how to enhance their value proposition and communicate program benefits for their most profitable customers.

Liz Miller, VP of Programs for the CMO Council, responded to these results in stating that, “…there are a lot of programs out there that only exist because of some brands viewing loyalty programs through what I call a ‘Field of Dreams’ lens — the ‘if you build it, they will come’ mentality.” This is not an effective or sustainable strategy for building customer loyalty.

Rather, at the heart of all loyalty programs is the relationship between the brand and the customer. Marketers must understand that in order to consistently meet the needs and desires of their customers, loyalty programs need continual care and nurturing. This is evident by some of the most popular and successful loyalty programs that look dramatically different then they did when initially introduced. These organizations have recognized the importance of evolving with their audience, their behaviors, and desired benefits.

When poll respondents were asked about the top benefits of loyalty program membership, the following were cited as the most valuable to consumers:

  • Discounts and savings
  • Better deals and offers
  • Free products or premiums
  • Perks and privileges
  • Cash back

By continually utilizing customer insight and program feedback, loyalty programs can prove highly valuable to both the brand and the customer. Learn more about how to refresh your loyalty program to achieve profitable, long-term customer relationships.