While U.S. loyalty memberships have increased significantly, fewer than half are active, according to a recent report by retention services firm Colloquy.
U.S. loyalty program memberships increased from 1.341 billion in 2006 to 1.807 billion in 2008, according to Colloquy. This is also a significant jump from 973 million in 2000, the report said.
Also, each U.S. household has an average of 14.1 loyalty program memberships, up from about a dozen in 2006, the firm reported.
However, just 43.8% of those programs are active, translating into 6.2 average active memberships per household, the company reported in its 2009 Colloquy Loyalty Marketing Census.
“The relative ratio of active to inactive loyalty program members suggests that more than half of all program memberships are merely names in the database,” said the report. “The implication for marketers is clear—the era of growing membership rolls just for the sake of growth is over.”
And with the current economic climate, marketers must shift focus from growing their loyalty programs’ size to growing their value, the report added.
This is the same advice Colloquy gave to the industry when it published its last report in 2007.
“This is a wake-up call to the industry,” said Kelly Hlavinka, a Colloquy partner, in a 2007 interview. “Companies may be doing things to sign up millions of customers, but they're not focusing on program engagement.”
Moreover, Colloquy defines “active” extremely loosely—one instance of activity in the preceding year. And even with such a generous definition of “active,” some sectors achieve an average active rate of just 25%, according to Colloquy.
“These numbers tell us that all the problems that bedeviled the industry in 2006—bloated membership rolls, program saturation, moribund value propositions, and few attempts to mine program data to fundamentally transform the customer experience—remain problems in 2009,” said Colloquy’s 2009 report.
“Given that the economy has left many long-standing consumer buying patterns in tatters, the onus is now more than ever on loyalty marketers to prove program ROI, integrate loyalty data at the enterprise level, and design value propositions that will engage customers of high current and high potential value,” the report continued.
In other findings, the financial services sector had the most loyalty memberships in 2008, accounting for 422 million, according to Colloquy.
Car rentals and cruises had the fewest, accounting for 10.7 million, according to the report.
Also, Canada beat the U.S. in terms of active loyalty memberships with an average 9.2 per household, compared to 6.2 in the U.S., according to Colloquy.
However, not surprisingly given the population difference, Canada’s loyalty membership numbers overall are much smaller than those in the U.S.
There are more than 114 million loyalty memberships in Canada, according to the report.
