Loyalty schemes seen as 'recession busters'

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By: Wise Marketer Staff |

Posted on February 4, 2010

Loyalty programmes have become more important to 71% of marketers during two years of recession because they enable communication with an established and willing database of customers, according to a report by GI Insight.

Marketing decision makers from utilities and telecoms firms (97%), banks (82%) and retailers (74%) were particularly supportive of loyalty schemes during the recession.

However, the company's study also found that a worrying 50% of marketing professionals thought that their loyalty schemes were fully integrated with other marketing activities.

Many businesses that do not yet operate a loyalty scheme still carry out database marketing activities (such as one-to-one communications, targeted direct marketing and customer insight activities). In fact, 27% of 500 marketers surveyed said that their firm had become more reliant upon database marketing as the recession progressed. And 37% said that communicating with a database of known customers had been vital in helping their company weather the recession.

According to Andy Wood, managing director for GI Insight, "Loyalty has been put to the test during the recession as consumers have sought out the cheapest deals. As a result, customer retention has been a clear focus for most businesses over the past two years, and many have realised the importance of loyalty schemes in helping them to achieve this. A significant proportion of marketers have also recognised the value of database marketing."

But, Wood warned, one danger that marketers face is a lack of commitment to marketing integration. If marketing activities are not integrated, the business is less able to ensure the consistency of its message and could potentially waste money on redundant communications, which is likely to reduce marketing ROI and cost companies any competitive advantage they may already have.

"With the UK starting to emerge from the recession, many businesses will see the recovery period as an opportunity to prospect for new customers," concluded Wood. "But the risk is that the existing customer base may be neglected in favour of attracting new customers, whereas management of existing customers should always come first no matter what level of attention is being paid to acquisition."

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