Loyalty increases with shareholding programme

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By: Wise Marketer Staff |

Posted on August 18, 2003

Loyalty increases with shareholding programme

Customers who are also investors (share equity owners) are up to 50% more loyal to the companies they invest in than ordinary non-investing customers, according to international loyalty consultancy, Prism, which offers its own white-label investment loyalty programme.

As consumers become more sophisticated, more price sensitive, and more aware of value for money, they tend to become less loyal if they are not provided with a value proposition beyond simple product and service satisfaction. And, according to Prism, Bain & Company's research (in a 2001 survey of more 1,200 customers of leading companies in the US) proves that share equity ownership leads to higher customer loyalty and spend. The Bain survey showed that active investors were up to 50% more loyal to the company than ordinary customers.

Prism also maintains that a share-based loyalty programme can help boost revenues by as much as 81%, and more than double profitability. Going back to Bain & Company's survey, 80% of share holders said that owning shares positively impacted their purchase decisions. Investors also showed a tendency to refer their friends and relatives to the company 2 - 3 times more often than other retailers, and to visit that company's outlets or web site up to 66% more often.

Conversions Converting customers into shareholders could also increase customer loyalty, product relationships, and subsequently decrease customer attrition. Prism's Investomer loyalty programme represents a loyalty management model that focuses on turning customers into long-term investors in the business by offering shares, and by giving customers special privileges for their relationship with the business.

For qualifying customers, the programme provides the opportunity to acquire shares in the business by exchanging 'kick-back' points earned from repeat purchases, as well as dividend payments from their share investment.

According to Prism's Dr Sandro Cassar, "The programme increases both awareness and interest in the company by investors and targeted customers through a structured communication approach, and provides sustainable loyalty due to members' dual interest as customers and investors."

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