Do discounts play a key role in loyalty membership?

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By: Wise Marketer Staff |

Posted on September 21, 2004

Two thirds (66%) of consumers say that discounts are the reason they participate in the loyalty programmes they join, according to a recent Maritz Poll commissioned by Maritz Loyalty Marketing.

But, when they come to collect their rewards, discounts were found not to be the main choice at all: in fact, most consumers choose to redeem their points for gift certificates, according to actual customer behaviour patterns tracked in loyalty marketing programmes operated by Maritz.

The Maritz Poll also found that, after discounts, consumers say that cash back is the next most popular reason (54%), followed by merchandise (49%), gift certificates (34%), and travel (29%). But there is a disparity between what the poll respondents said and the way they behave: When actually redeeming rewards they have earned, Maritz says that consumers redeem for gift certificates most often, followed by cash back, discounts, merchandise, and finally travel.

Key information
"Consumers' stated preferences and their actual behaviour in loyalty rewards programmes do not always match," noted Gail Sneed, director of market development for Maritz Loyalty Marketing. "With complex rewards programmes it is important to understand consumer behaviour patterns and motivations - otherwise programmes could fail to accomplish their intended goals."

According to Sneed, it is critical for companies operating loyalty programmes to avoid making assumptions about their target audience's preferences and desires, instead employing a more strategic approach to understanding customer behaviour. This should put companies in a better position to develop customised and relevant loyalty programmes that genuinely increase customer loyalty and satisfaction.

Income and age?
Respondents' reward preferences also varied significantly with income level and age. Younger respondents (73%, aged 18 to 34) were more likely to favour discounts than older consumers (54%, aged 45 to 54). Discounts were also more appealing to consumers with income levels under US$60,000 (71%).

"Consumer targeting is key when designing a loyalty reward programme," said Sneed. "Demographics can impact programme design significantly, in terms of what is offered as well as the method and vehicle for communication."

Maritz Loyalty Marketing provides full-service loyalty solutions, including rewards-based schemes and one-to-one communications programmes. A unit of Maritz Inc., it deploys strategic, operational, technology, communications, rewards and fulfilment services that support customer loyalty programmes throughout the USA. The Maritz Poll is a US consumer opinion survey conducted periodically by Maritz Research.

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