Marketers to Invest in More Membership/​Loyalty Programs

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  eachconsumer household belongs to has increased 50%. Industry-​wide, there are over 2 billion memberships.

When looked at from a numbers perspective, loyalty programs are a significant marketing cost for merchants. When all rewards and discounts are taken into account, research from Swift Exchange – a partner from Colloquy for this study – indicates they total  nearly $48 billion annually. Of these, about $16 billion are not used. Analysts at Colloqoy call this buried treasure and point out the average U.S. household is not spending over $400 they’re given in merchant rewards and discounts.

Marketers with the largest numbers of consumers participating in loyalty programs include:

  • Retail: 40%
  • Travel/​hospitality: 32%
  • Financial services: 20%

Analysts expect to see more program growth in only certain sectors of the retail industry. They point to specialty retailers such as Toys ‘R Us and Best Buy as examples. Because these retailers are battling against Walmart for market share, they have introduced rewards programs to improve their value proposition. In addition, analysts believe restaurant owners will roll out more loyalty programs as operators look for new ways to drive traffic. And the gaming industry might also see growth as more states legalize gambling

While marketers might launch new rewards programs, opportunities exist for merchants to improve their current offerings. The average U.S. household belongs to 18 membership programs. But consumers are only active in 8.5 programs which might explain why so many consumers aren't using all the rewards they're given. Direct, customized marketing messages about new features and benefits could get consumers to re-​engage with a dormant loyalty program and increase sales for the long term.

[Source: the 2011 Colloquy Loyalty Census. Colloquy​.com. April 2011. Web. 6 Jun. 2011] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.