Personalization to Drive Value of Loyalty Programs

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Mar­keters believe the $2 bil­lion they spend annu­al­ly on loy­al­ty pro­grams ensures par­tic­i­pa­tion by their best cus­tomers and builds the plat­form for high­er sales. But 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.

Accord­ing to the report,  con­sumers had the fol­low­ing com­plaints about loy­al­ty pro­grams:

  • Too much email/junk mail gen­er­at­ed by these pro­grams 44%
  • Too many conditions/restrictions 38%
  • Rewards have lit­tle or no val­ue 37%
  • Had trou­ble redeem­ing points/miles 35%
  • Lit­tle or no added val­ue because of mem­ber­ship 35%
  • Com­mu­ni­ca­tion not per­son­al­ized 19%
  • Lit­tle per­son­al­ized atten­tion 16%

The report reveals that near­ly 8 out of 10 mar­keters say loy­al­ty pro­grams are so impor­tant that they will con­tin­ue either level-funding or will increase the size of these pro­grams.  Mar­keters also under­stand the need for increased per­son­al­iza­tion and at least 51% will engage in this way with con­sumers from now on.

Mar­keters use the fol­low­ing meth­ods to com­mu­ni­cate with mem­bers of loy­al­ty pro­grams:

  • Email 84%
  • Print­ed mailings/statements 51%
  • Cor­po­rate Web site 45%
  • Club sites 32%
  • SMS Text mes­sag­ing 24%
  • Social net­works 16%

Over half of con­sumers say mem­ber­ship in these pro­grams strong­ly influ­ences their buy­ing deci­sions. The same per­cent­age indi­cates that they would ter­mi­nate mem­ber­ship after a poor expe­ri­ence with a prod­uct or ser­vice. As a result of these find­ings and a desire to improve con­sumer sat­is­fac­tion, mar­keter focus on per­son­al­iz­ing loy­al­ty pro­grams is like­ly to grow.

[Source: Feel­ing the Love from the Loy­al­ty Clubs, CMO Coun­cil, Feb­ru­ary 2010]
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.