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Keeping Loyalty Programs Relevant

Keeping Loyalty Programs Relevant

By | 10.21.15
Keeping Loyalty Programs Relevant

Loyalty programs continue to show healthy growth, increasing by 26 percent to 3.3 billion members in 2014, according to a survey conducted by the loyalty research firm Colloquy. “Customer Loyalty in 2015 and Beyond” analyzed data collected from more than 2000 respondents in the United States and Canada.

The study covered a range of questions centered on loyalty programs, their demographics, and their use. Among the results:

  • Overall, 55 percent joined at least one loyalty program in the last year; 60 percent of millennials had done so;
  • More than 90 percent said they participate in loyalty programs because they are “fun” or “economical”;
  • 56 percent participate in loyalty program if they can earn points or miles based on purchases;
  • 55 percent participate because of product offers or discounts; and
  • 42 percent engage with at least one program a week.

The study also found that many loyalty programs quickly lose their luster as 58 percent said they are not active in all the programs they have joined. The reason behind this was a shift in perception; consumers join a program on a transactional basis, but continue to participate only if there is an emotional benefit. The primary causes for customer dormancy were:

  • The program did not provide offers or rewards that were of interest (56 percent) or
  • Earning rewards or points was too difficult (54 percent).

When asked what motivated them to remain active in a program

  • 81 percent cited a program was easy to understand;
  • 75 percent said the rewards were relevant to them; and
  • 54 percent said the program supported their personal preferences or lifestyle.

Building an emotional trust with consumers by meeting their expectations regarding usefulness, value, and benefits is what will keep loyalty programs vibrant and vital.

Based on the results, the study’s authors looked at those loyalty programs with high percentages of ongoing active participation and found key elements including:

  • Benefits that are simple and clear;
  • A consistent earnings structure;
  • Easy-to-understand guidelines on earnings and advancing to different levels;
  • Having short term goals within tiers that motivate members to ongoing participation; and
  • Using data to offer personalized rewards.

By focusing on retaining membership and encouraging active, continued participation, the benefits of a loyalty program will be realized by both parties, thereby solidifying the relationship between them.

References:

Berry, Jeff. “Customer Loyalty in 2015 and Beyond,” Colloquy, October 2015.

MarketingCharts. “Top Reasons Consumers Continue to Participate in Loyalty Programs,” October 19, 2015.

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