Loyalty Programs Drive Incremental Sales: Study

Customers do have relationships with retailers, but there is work to be done to strengthen those ties, a new study has found.

Barnes & Noble, Hallmark, Bath & Body Works, Best Buy, Old Navy and Target had the highest level of relationship strength. However, in all cases, there was substantial room for improvement, according to the study by Carlson Marketing Worldwide.

“There is an opportunity to raise the bar on an overall basis, and individually based on the variances in relationship strength among customers within retailers,” the company said.

The study also found:

*Loyalty programs drive incremental purchases. One-third (33%) of customers said that direct participation in a loyalty program has resulted in the purchase of additional products.

*Some 41% of customers are at least as satisfied with other retailers as with their primary retailer.

*51% said that there are many other good retailers, any one of which could work as an alternative to their primary retailer.

*Customers agree that “being easy to do business with” (89%) and having “good customer service” (90%) are important attributes in preferring one retailer over another.

*Almost two-thirds (64%) agreed that familiarity with a brand name plays a role in the choice of a retailer.

*Courtesy (59%), apologizing when something goes wrong (32%) and being empathetic (28%) were among the top three considerations when dealing with customers.

*The reputation (70%) and the moral values (50%) of the retailer are important when choosing where to spend their cash.

*Almost two-thirds of customers (65%) use a retailer’s Web site for activities such as searching for merchandise, learning more about the store and reading about news or offers.

*Having the best price (93%) and a good selection/availability of merchandise (93%) play a role in determining where to shop.

“We all know that building better relationships in retail certainly makes common sense, but at the end of the day, does it actually enhance customer recommendations, retention and intent to shop more with a specific retailer?´ asked Luc Bondar, vice president of loyalty marketing for Carlson Marketing, in a statement. “The answer is a resounding ‘yes.’ Thriving and not just surviving in the retail marketplace requires more than just executing the basics. It requires building strong relationships that in-turn enhance customer recommendations, retention and shopping.”

This Carlson Relationship Builder 2007 study was conducted in partnership with MarketTools, a research organization, using their Zoomerang online survey software and sample consumer panel that consists of more than 2.5 million opt-in U.S. participants. Data was gathered from Oct. 18-25, 2006.