Are loyalty programs the new must-have marketing tool for businesses? In the era of personalized marketing, these programs seem to be mandatory.
Tag: loyalty programs
Your clients likely know that keeping a customer is less costly than scoring a new one. If your clients want to keep customers AND add new ones, they need to enhance and promote their loyalty programs.
As we enter the busy travel season, hotels and motels will be competing for their share of the leisure travel market. One form of industry marketing, loyalty rewards programs, has been particularly popular among providers recently. But, are these programs delivering benefits that add to the bottom line? Research from Cornell University’s Center for Hospitality Research suggests these programs are yielding big returns, especially when they target a specific type of guest.
While enrollment in loyalty programs continue to rise across all retail categories, relevant communications are increasingly essential. Participation in loyalty programs does not necessarily translate to genuine loyalty. Consumers are also concerned about privacy when weighing whether or not to sign up for a loyalty program.
Retailers see it every day. A shopper comes into the store, takes out his mobile phone and starts comparing prices. In too many cases, the showrooming behavior leads the shopper to buy the product online. But retailers have ways to fight back, say the analysts at Aimia.
One way for marketers to position themselves favorably with consumers is to offer loyalty or membership programs. In the past 10 years, marketers have nearly doubled membership programs while the number of programs each consumer household belongs to has increased 50%. Industry-wide, there are over 2 billion memberships.
Marketers in industries ranging from shoe stores to automotive services have launched loyalty programs to induce consumers to keep shopping with them. Many loyalty programs also offer marketers valuable insights into consumer behavior. But a newly released study finds consumers may be on the verge of reaching loyalty program burnout. Marketers will likely be taking steps to improve their programs to retain their more loyal customers.
When it comes to consumers choosing one loyalty program over another, nearly half (47%) of consumers polled said that instant redemption opportunities – such as cash back at the register – were an incentive that could potentially entice them to use a particular loyalty program more than others, according to recent research by Mintel. Sixty-one percent of respondents say lower overall costs for merchandise they would have purchased anyway is an important attribute of a loyalty or rewards program. “In any sector that utilizes loyalty marketing, loyalty programs are fast becoming a very important part of the relationship with the customer,” says Susan Menke, VP, behavioral economist at Mintel Comperemedia. “It seems that now is the time to focus on adding or improving loyalty programs to help engage customers and maintain and even grow their relationship with the post-recession consumer.”
Marketers believe the $2 billion they spend annually on loyalty programs ensures participation by their best customers and builds the platform for higher sales. A report by the Chief Marketing Officer Council shows there is room for improvement. Marketers are not always measuring the results of their expenditures on these programs and they aren’t always listening to what the customer is saying.
For many years, women who wanted quality makeup and perfume products had to endure the high-pressure sales pitch from the person behind the counter at upscale department stores. These days, women have less time than ever to shop for beauty products but doesn’t mean they don’t want access to a wide range of products. Several retailers have obliged time-pressed shoppers with new delivery models for cosmetics and they have found that tweaking marketing efforts such as loyalty programs makes a difference when it comes to increasing sales.
Loyalty programs – consumers encounter them everywhere. Stay 5 nights at a hotel and get a 6th night free. Spend $150 on groceries and pick up a free turkey on the way out of the supermarket. These programs have proven to be an extremely popular marketing tool and the typical U.S. household belongs to about 12 customer loyalty programs. But they can also be costly, especially when consumers stop being so loyal. Is there any way for a business to win in this situation?