Improving loyalty schemes to revive retail business

WM Circle Logo

By: Wise Marketer Staff |

Posted on March 6, 2003

With the global economy under-performing for almost three years, gaining a competitive edge in the retail environment can be difficult, according to Michael Sewell of Maritz Loyalty Marketing, who offers four simple pointers for improving in-store loyalty programmes to achieve that goal.

According to Michael Sewell, director of retail market development for Maritz, as retailers around the world search for strategies that will revive their in-store sales, many are missing the most obvious opportunity: the expansion of their existing loyalty marketing programmes.

"While many retailers have a loyalty programme, many limit participation to purchases made with the store's co-branded or private label credit card," explained Sewell.

But, while store credit card programmes are a good start, by limiting programme participation to one form of payment, retailers are often missing the chance to grow customer lifetime value through other payment methods.

Sewell offers four simple suggestions to help retailers improve their rewards-based customer loyalty programmes:

  1. Charge the customer a fee to join the loyalty programme, pre-qualifying their interest, and deepening their commitment to the scheme.
  2. Compare the return on investment on your advertising and discounting with the potential return on applying that same investment to loyalty marketing.
  3. Do some research into how low-cost, highly-perceived rewards could motivate customers to shop more.
  4. Carefully track the loyalty programme's performance to identify where additional efficiencies can be gained.

A recent national Maritz Poll of 1002 retail consumers in the US revealed that 64% were aware of retailers offering a loyalty programme. However, although the primary purpose of a loyalty programme is actually to 'buy data' about consumers and their buying patterns (to support related marketing and expansion efforts), only 24% of consumers said they were more likely to shop with merchants who have loyalty programmes.

According to Sewell, much of the observed disparity between consumers' awareness of loyalty programmes and their likeliness to shop more may be due to limitations on participation, such as being restricted to purchases made using a store's co-branded credit card.

"Retailers can grow sales more robustly and smoothly by extending their credit card-based loyalty marketing programmes to include multi-tender participation," concluded Sewell.

More Info: