Survey: Loyalty Programme members generate significantly more revenue than non-members

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By: RickFerguson |

Posted on June 21, 2016

According to new research from Accenture Interactive, retail loyalty programme members generate between 12% and 18% more revenue for retailers than do customers who are not members of the loyalty programmes. Beyond the incremental increase in revenue, the research identified another, and perhaps more surprising, finding: fewer than one in five retailers focuses on ROI as a key metric of the success of their loyalty programme.

Specifically, when asked to identify success metrics for their programme, only 19% of retailers surveyed cited ROI as a key metric.

These key findings were based on a survey of retailers across specialty, big-box, department, drug and convenience stores in the United States. The Accenture research sought to identify key trends and challenges of retailers� loyalty programmes. Money quote from Farrell Hudzik, managing director of Accenture Interactive�s Global Loyalty and Rewards practice:

�Today�s customer loyalty programmes are an increasingly expensive, complex and expansive business that extend beyond the marketing team into the entire organisation. Given that loyalty programme members generate significant incremental revenue compared with non-members, retail loyalty programme leaders must anticipate future growth trends and capture the opportunity to differentiate in an increasingly fragmented marketplace. Given the maturity and sophistication of loyalty programmes today, it�s surprising how little scrutiny retailers place on programme ROI rather than just growing membership.�

The key areas that retailers focus most on in terms of their loyalty programmes are:

  • programme growth and revenue production metrics � such as membership growth rates (cited by 45% of respondents)
  • Share of transactions by members (42%)
  • Number of transactions per year (36%)
  • Retention rate (40%)
  • Customer long-term value (37%)

Fewer retailers are focused on engagement metrics such as number of reward redemptions (cited by 32% of respondents), campaign response rates (27%) and customers engaged socially (16%).

According to Accenture�s research, the biggest challenges retailers face regarding their loyalty programmes relate to technology, strategy, financial management and people/talent. When asked to identify their biggest challenges, respondents most often cited:

  • Keeping up with the underlying technology (mobile and digital capabilities) or investing enough in technology (40%)
  • Keeping up with competing loyalty programmes (33%)
  • Managing the liability and financial complexity of the programme (33%)
  • Having enough people and the right kind of talent required for today�s loyalty programmes (30%)

While retailers believe that their loyalty/rewards programmes are differentiated from those of their competitors, customers don�t. For instance, more than two-thirds (71%) of retailers surveyed said that their programme was �differentiated� or �significantly differentiated� from those of their competitors. However, research by Kantar Retail has found that roughly one-third of each retailer�s loyalty members cross-shop at another key competitor within the same channel. According to last year's Bond Loyalty Report, nearly half (44%) of consumers believe that it would be easy to replace a retailer�s loyalty programme with a competitor�s programme.

Nearly all respondents (97%) in Accenture�s research said that their loyalty programmes receive C-suite support. However, fewer than half (43%) said they received �strong� C-suite support, with slightly more than half (54%) saying their programmes receive �moderate� C-suite support.

As part of a larger study on customer loyalty across a wide range of industries, Accenture interviewed 106 retail industry loyalty professionals across specialty retail stores, big-box/department stores, and drug/convenience stores to understand their current sentiment and future outlook on their loyalty programmes. Respondents held primary accountability for the loyalty programme or efforts within the organisation, with common titles being VP of Loyalty, VP of Customer Relationship Management, and VP of Customer Experience. The research was conducted online in March 2016.

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