Commentary

U.S. Consumers Feel Loyalty Reward Programs Not Relevant

by Jack Loechner , Staff Writer, August 26, 2009

According to consumer survey research released by Direct Antidote, far too many mailings, emails and Facebook messages that companies send to their loyalty reward program members miss the mark. Only 32% of U.S. consumers rated reward program communications 8 or higher on a 1 to 10 scale for measuring relevancy to their personal needs, with 68% giving a score of 7 or below.

Centered on loyalty rewards communications, such as annual points balance reports, special earning offers and program information. Despite marketers devotion to customized messaging, the study results across all demographics surveyed showed average relevance scores, with Seniors reporting the lowest perceived relevance at a 5.7 mean score, and Young Adults and Hispanics tied for the highest at 6.9.

Di Cullen, president of Direct Antidote, posits that " ... the loyalty industry is falling short on delivering the highly-personalized, relevant communications that consumers expect... in the era of enhanced customer expectations, where the empowered consumer has a strong desire for engagement... "

Cullen cited the following strategies to improve communication relevance:

Create offers that appeal to the trends and values of the times, such as the green movement or consumer frugality
Leverage partnerships with other brands to share data, drive down costs and drive up the value proposition to the consumer
Find new ways to mine for information that is compelling to customers

The Senior demographic reported a spike in engagement with rewards programs since the same questions were asked in 2007, says the report. Over the two-year period the amount of Seniors that reported reading special offers sent via mail increased 64%, the amount saying that they read mailed statements was up 21%, and the amount responding to member surveys increased 21%.

At the other end of the spectrum, the survey found that 52% of Millennials strongly appreciate communication via cell phone or text message and 55% said the same about social networking sites. This compares with the General Population at 38% and 39%, respectively.

And Cullen concludes that "... the stats are indicators that the loyalty business enjoys appeal across the span of demographics... fostering engaged, loyal customers within the Young Adult demo means approaching them on emerging channels... (and) communications that appeal to (Boomers) new lifestyle... (represents the) opportunity to engage these veteran loyalty players... "

For more information, please visit Direct Antidote here.

loyalty, research

3 comments about "U.S. Consumers Feel Loyalty Reward Programs Not Relevant ".

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Howie Goldfarb from Blue Star Strategic Marketing, August 26, 2009 at 5:25 p.m.
I did a research paper for an Organizational Behavior class in college that relates to this research. The question is does money motivate employees. And the research showed that end of year bonuses motivate people less than quarterly or even monthly rewards.
The same with loyalty programs. If it takes me a year to get something back the program becomes irrelevant. Airline miles is maybe the only exception to this rule. And even then people won't steer business to a company unless they are close to a reward if the flight costs a few dollars more. So I feel loyalty programs that give back smaller rewards more frequently will keep people's attentions. Supermarkets do a great job of this. But very few businesses get it.
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Jr Randall from VivaKi Nerve Center, August 28, 2009 at 4:11 p.m.

Surprisingly low top-line relevancy numbers. One would expect consumers to feel that loyalty program communications would be highly relevant to them. Loyalty programs offer marketers the opportunity to collect data on the preferences of their customers and optimize communications and offers based on those preferences. Studies like this make me what, if anything, marketers are doing to mine that data. What are best practices in learning about the customer and personalizing the message?

JR
http://theoriginaljr.com/

Jeffrey Summers from Restaurant Coaching Solutions, August 28, 2009 at 5:27 p.m.

Maybe you should stop and think that it's not the way you communicate or what you communicate about the status of the frequency scheme you're running, but rather the program itself. You can't buy loyalty. You have to earn that through a better brand experience. Short of that, you're wasting their time and yours.