Who holds all the loyalty cards, who doesn't, and why

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By: Wise Marketer Staff |

Posted on August 3, 2006

Loyalty programme members are more likely to have spent a greater amount of money in the past six months across eleven specific retail categories - including home improvement, electronics, grocery and book stores - than non-members, according to a study by market research and loyalty programme provider Maritz.

According to Tim Crank, director of product management for Maritz Loyalty Marketing, "It is interesting to see that rewards programme members are spending more. However, we need to keep in mind that the programmes might not directly cause shoppers to increase their purchases. It could be that those who spend more join programmes to obtain rewards for purchases they would have made even if they weren't members."

But whatever the reason, Crank asserts, enrolling shoppers who are spending more is a good idea for retailers because it allows them to mine the data collected from loyalty programmes to identify and create an ongoing dialogue - and a relationship - with profitable customers.

Demographic characteristics
Maritz Loyalty Marketing examined various demographic characteristics, including rural vs. city living, marital status, income levels and gender, for significant differences to determine what types of people are carrying consumer loyalty programme cards in their wallets.

The study of American consumers found that loyalty programme members are more likely to be one or more of the following: female, young, living with children under the age of 18 in the household or from the Northeast.

Gender bias
Not surprisingly, women (62%) are significantly more likely to belong to a store or membership loyalty programme than men. However, more than half of the men surveyed (54%) say they are part of a programme.

"The significant difference between the number of men and women who belong to a store or membership programme isn't shocking because most people expect moms to be the primary purchaser in the household," said Crank. "What should be of interest for retailers is that more than half of the male population carries around plastic loyalty programme cards in their wallets. Based on this finding, retailers should tell their employees not to hesitate to ask men about joining a programme."

Age bias
Customer loyalty programme members also tend to be younger than those who aren't members, with 71% of 25- to 34-year-olds belonging to store or membership programmes. And survey respondents older than 55 comprised the highest percentage of non-programme members.

According to Crank, one logical assumption is that those in or approaching retirement anticipate they won't be spending as much money as younger shoppers and might not feel that they'll reap the benefits of loyalty programmes. The challenge for retailers is to recognise that customers can be valuable to them in all life stages, and that they can keep all shoppers enrolled and active in loyalty programmes by offering rewards that are meaningful to them throughout their lives.

Simply having children is another influencing factor. Those who have children under the age of 18 in their household are significantly more likely to have a store or membership programme card or a co-branded credit card.

Regional bias
Regardless of the fact that many stores are national chains, the study found, members of customer rewards programmes tend to be clustered by region. The Northeast (70%) and West (63%) have the highest concentration of store or membership loyalty programme participants. People in the South (37%) and the Midwest (42%) are significantly more likely to not belong to any type of consumer loyalty programme.

Who isn't holding all the cards?
It is important to know who is likely to join a programme so that stores can adjust their merchandise offerings, layout and product adjacencies, and customer service to cater to their most loyal customers. So knowing which demographic groups are likely not to be members of a loyalty programme can offer retailers the ability to identify and interact with other potentially valuable customers who may not be interested in being a part of such a programme.

Non-members in the survey tended to exhibit one or more of the following significantly relevant characteristics (by retail category):

  • Specialty apparel & large premium specialty stores (e.g. Nordstrom, Gap) - From the South.
  • Home improvement (e.g. Home Depot, Lowes) � Single/widowed/divorced; no children under the age of 18 in the household; women.
  • Electronics (e.g. Best Buy, Circuit City) � 65 years old and older; no children under the age of 18 in the household; women.
  • Department store or mass merchandiser (e.g. Macy's, Sears) � Older (age 35 and over); from the West, South and Midwest.
  • Drug stores (e.g. Walgreens, Medicine Shoppe) � Men; from the West; living in a suburb, town or rural area.
  • Discount mass merchandisers (e.g. Target, Wal-Mart) � Single, widowed or divorced; no children under the age of 18 in the household.
  • Grocery stores (e.g. Kroger, Safeway) � From the Midwest.
  • Toy stores (e.g. Toys R Us; FAO Schwarz) � Women.
  • Office supply stores (e.g. Office Depot, Staples) � From the Midwest.
  • Book stores (e.g. Barnes & Noble, Borders) � Women; with incomes less than US$30,000 per year.
  • Home furnishing stores (e.g. Pottery Barn, Linens 'n Things) � Women; with children under the age of 18.

One additional item of note was that the majority of respondents (77%) said they are members of grocery store loyalty programmes.

The study
The online study included 2,178 adult shoppers who had made a purchase in the past six months from at least one of eleven retail categories included in the study. For the purpose of the study, rewards programmes were defined as either a store or membership programme or a private or co-labelled credit card, which award customers points for purchases or other behaviours, that they can later redeem for various rewards including discounts, gift certificates, merchandise, cash back or travel. The study was conducted by Maritz Research for Maritz Loyalty Marketing.

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