The good news is that people are joining loyalty programs in pretty big numbers, seeking added value in a tough economy. The bad news is that activity remains flat with two years ago. The take away: marketers need to shift focus from growing membership to increasing the value of the programs.
Membership in U.S. loyalty rewards programs jumped 24% to 1.8 billion, from 1.3 billion two years ago, according to the 2009 Colloquy Loyalty Census.
The average U.S. household signed up for 14.1 loyalty programs, but actively participates in only 6.2. The corresponding numbers in 2007 were 12 and 4.7.
The number of active memberships—a member with at least one instance of activity in a 12-month period—is 792.8 million or 43.8%, compared to 39.5% in 2007.
“Given the bursting of the credit bubble, the recession and pressure to control program costs, loyalty marketers must turn to growing program value, not the size of their membership base,” Colloquy Editorial Director Rick Ferguson said. “Conditions are ripe for marketers to use loyalty data across the enterprise, enhance value propositions and adopt innovative loyalty models such as coalitions, as they seek to revive lapsed members and turn engaged members into profitable, loyal customers.”
The top five U.S. loyalty program market sectors represent 63% of total U.S. loyalty program memberships. Memberships ranked by industry are as follows (in millions):
Financial Services 422.0
Airline 277.4
Specialty Retail 191.3
Hotel 161.8
Grocery 153.3
Mass Merchants 124.8
Gaming 106.0
Department Stores 92.8
Drug Stores 73.9
Fuel Convenience 51.2
Restaurant 13.7
Car Rental and Cruises 10.7
Other 127.9
Financial services took over the top spot from airlines, after seeing a 77% increase in credit and debit reward card program memberships in just two years. The growth was fueled by the dramatic expansion in consumer credit. This is expected to change, however, as consumer credit has tightened as issuers cut program benefits and increase fees, Colloquy said.
Colloquy suggested the following tips to boost return-on-investment in loyalty programs:
Find the sweet spot: Trade a little member acquisition for offers that reach and influence current high-value or high-potential members.
Explore partnerships: Seek out partners who want to access your membership in exchange for shared program costs, or play as a partner in another company’s program.
Practice enterprise loyalty: Leverage customer data and apply it at every customer touch point: in-store, online, through the call center and at point of sale.
Identify and nurture you champion customers: These members are 70% more likely to recommend your products and services than non-members. Give them the tools and platforms to advocate on your behalf and reward them for their advocacy.
The 2009 census covers three industry segments not included in the 2007 version: car rentals, cruise lines and mass merchandisers. If these new industries are removed, the adjusted 2009 U.S. census total stands at 1.673 billion. To properly compute growth trends, Colloquy used the adjusted 2009 membership total as its data point.
The 2009 census is based on information from Colloquy’s archives, program Web sites, sponsor-company press releases, annual report filings, third party publications and research reports.
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