The highest level of customer loyalty programme involvement comes from affluent consumers, with this group having been saturated by the travel industry. But the new loyalty battleground is in the retail arena, according to research from loyalty marketing consultancy and publisher, Colloquy.
The research identified several factors affecting loyalty marketing in the US, including the fact that a surprisingly high percentage of young adults and middle-income Hispanics identify themselves as loyalty programme participants. At over 40% participation for each of these segments, both groups are aware of loyalty schemes and appear to be looking for added value. Growth in both segments is predicted, as retailers, e-commerce web sites, and telecoms-related loyalty programmes drive further participation.
Charity isn't always first
Despite much media attention focusing on loyalty programmes that offer charitable rewards (such as gifting to pro-environment causes) consumers across all demographic groups were found to be relatively self-centred when it comes to loyalty programme redemptions.
Nine out of ten redeemers reported being the primary beneficiary of their own redemptions, and cited family members as the primary recipient less than 20% of the time for all segments (except women and the affluent).
Soft benefits craved
A significant gap apparently exists between consumers' desire for the special access and member-only privileges associated with loyalty offers, and the actual delivery of these soft benefits by loyalty programme operators. In fact, 73% of Hispanics rated soft benefits as extremely important, while only 17% could actually confirm the delivery of those benefits.
For women, the gap was 64% to 14%, suggesting that these benefits are often either absent or hidden from programme members. Senior citizens were the exception, with only 47% identifying preferential treatment as being important to them.
According to Colloquy director, Kelly Hlavinka, "Companies need to make a concerted effort to collect demographic, lifestyle and attitudinal information and merge it with their transactional databases. With each customer carrying a unique set of values, those marketers who use data to deliver relevant rewards, relevant recognition benefits and relevant communications will capture customer engagement, spend and advocacy."
Other key findings from the research included:
- The highest level of loyalty involvement rests with the Affluent, who have an 80% participation rate, although this level is unlikely to grow much.
- The new battleground is the retail landscape. Consumers' introduction to loyalty programmes will become less a function of frequent business travel, and retailers will have an opportunity to make inroads in all demographic segments.
- Some 67% of consumers say they are very likely to keep shopping at a retailer as a result of the retailer's loyalty programme, with only 38% of Hispanics (the highest of any group) saying they became a customer due to a loyalty programme. Next came young adults (35%).
- Young adults tend to prefer electronic communication, and loyalty programmes have generally failed to break through to this audience with either e-communications or traditional communications channels.
- Women reported a high level of travel non-redemption, leading Colloquy to suggest that women may perhaps bank points for aspirational rewards at a higher rate than other segments.
- Young adults and Hispanics exceed the general population's incidence for redemption of electronic goods, magazine subscriptions, and entertainment-related rewards.
- Consumer likelihood to recommend a financial services provider because of a reward programme is especially strong among the affluent and Hispanic audiences, and especially weak among seniors.
- Women and young adults reported the least satisfaction with the value they receive from travel-related reward programmes.
The research has been published in a white paper entitled 'Segment Talk: The Difference Engine - A Comparison of Loyalty Marketing Perceptions Among Specific US Consumer Segments', which has been made available for free download from Colloquy's web site - click here.