Consumers Like Loyalty Perks, But Marketers Unsure of Results: Study

Customers like the perks and rewards of loyalty schemes, but the programs aren't necessarily meeting marketers' business needs, according to a new study from the CMO Council.

Sponsored by InfoPrint Solutions Co., the study looked at over 600 different marketers and audited over 700 consumers.

Sixty-one percent of marketers surveyed believe loyalty program participants are their best customers. However, only 13% said their initiatives had been highly effective in leveraging loyalty and brand preference among club members—and nearly 20% don't even have a strategy in place to measure this.

What are marketers offering to induce loyalty? Thirty-nine percent of respondents view discounts and savings as the key benefits of their program; 34% said free products and premiums; and 33% looked to points redeemable for merchandise.

Consumer complaints about loyalty programs, reported marketers, included no added value (nearly 30%), rewards lacking substance or no personalized attention (24% each), too much spam or junk mail (21%) or trouble redeeming points or miles (18%).

Still, marketers are continuing to invest in loyalty initiatives: Nearly 80% of marketers surveyed are committed to funding their CRM programs. And over 34% are significantly increasing their spend, while 45.9% maintaining their current commitments. Just 4% expect to discontinue their programs.

But are marketers really getting what they need from loyalty program members? When it comes to in-depth profiling of customers, the vast majority of marketers still only aggregate and analyze limited customer data sets. Seventy-three percent are collecting basic demographics and 68% track the location of members. But critical insights—such as advocacy rates (14%), brand loyalty and attachment (27%), personal preferences (31%), satisfaction levels (33%) and product preferences (38%)—are not being leveraged.

Consumers, on the other hand, do value their loyalty program memberships. Seventy-nine percent of consumers surveyed said they are very, or pretty, satisfied with their experiences. But 70% want to see more discounts and savings, while 52% would like more compelling personal deals and offers. And 58% want more compelling personal benefits and services, as well as more individualized deals.

Point-of-sale information, service representative interactions, company Web sites and word-of-mouth are the primary sources for learning about loyalty clubs, according to consumers.

Surprisingly, soft economic conditions aren't necessarily inducing consumers to sign up for rewards programs. Only 22% said the economic climate had raised their interest in these programs compared to 41% who indicated it had no impact at all.

Despite spam and junk email concerns and irritations, over 64% of loyalty club members said want to receive information, notifications or updates electronically. Nearly 16% say they are comfortable visiting Web sites to source their loyalty information and about 14% prefer a monthly printed statement.