Many retailers rely on their loyalty programs to retain their most frequent shoppers.  However, a recent survey by Edgell Knowledge Network, found that retailer loyalty programs are still failing to emotionally engage with customers.  The report found that retailers expect revenue from loyalty programs to increase from 40% in 2012 to 58% in 2015.  And of those retailers that don’t have loyalty programs, 32% plan to launch one in the next year.

However, the survey also found that customers of retailers who offer a loyalty program are not any more loyal than customers of retailers who do not offer a loyalty program.  The average customer is enrolled in 18 loyalty programs, and 81% of loyalty members don’t actually know the benefits of the loyalty programs they are enrolled in.  While the focus of loyalty programs should be on the emotional engagement of customers, most retailers believe that personalized promotions and social media engagement are unnecessary for supporting customer loyalty.

In order for loyalty programs to capture the attention of consumers, the report suggests that retailers focus less on the transactional frequency as an indicator of loyalty and more on the engagement of the customer.  Furthermore retailers should look at engagement across channels and develop structures that provide customers with seamless multi-channel experiences.   Finally, retailers should use their analytics to have a better understanding of the shopper.

Discussion Questions:

1. Do loyalty programs make customers loyal?

2. What can retailers do to make their customers more loyal?

 

SOURCE: Tom Ryan, Retail Wire, January 21, 2013