During the undoubtedly slow economy of the next twelve months, it is likely to be the supermarkets, mobile phone operators, and DIY retailers that will be best placed to use their loyalty programmes to retain and develop their customers, according to research by GI Insight.
However, given several recent interim statements from major supermarket groups, there is apparently a performance disparity between value retailers and middle-market chains, suggesting not only that the value end of the sector is obtaining better returns from loyalty programmes but also that the revenue slide in the mid-market would be much more severe if it weren't for loyalty initiatives. As supermarkets are recognised pioneers of loyalty programmes, their first position is perhaps not surprising.
But the study also paid tribute to the work that mobile phone network operators have put into their customer management strategies over the past few years. This recognition was backed up by research earlier in 2008 that noted a sharp drop in mobile phone customer churn in the UK as a direct result of successful customer retention activity.
In contrast, loyalty programmes in the fashion, restaurant, and computer/electronics industries were found to be least likely to contribute to keeping customers and growing revenues during the coming year.
The research also found that the ability of loyalty programmes to influence customer retention and development in a recession diminishes with the customer's age. However, marketers still need to bear in mind that the disposable income and wealth of the 45+ age bracket is considerably higher than younger age groups. Consequently, although the influence of loyalty schemes may be somewhat lower, the proportionate effect on revenue can be significantly higher when dealing with older customers.
According to Andy Wood, managing director for GI Insight, "More than a year after the financial markets crisis began, economic fallout should surely have inspired the closure of at least some loyalty schemes if they were not considered valuable and contributing to the bottom line. But none of any significance has closed during this period which has actually seen net growth, with launches from organisations such as Silverjet, North Lanarkshire Libraries, Builders Merchants NMBS, National Express East Coast, and Green Rewards."