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Customer Loyalty Programs: Stats, Facts and Opinions

By on Apr 25, 2012 Editor's Pick 3 Comments

For this last week in April, the final week of International Customer Loyalty Month, I want to share several more interesting statistics about customer loyalty. These statistics focus mostly on Business to Consumer types of businesses, and while the numbers may not apply to Business to Business, the concepts do. Read them with the idea of how the concepts apply to your industry and company.

Ed Hadley, Senior Marketing Manger of Neolane, Inc. posts in Cross Channel Conversation Blog the following statistics:

The average U.S. household has enrolled in more than 18 customer loyalty programs, but is only active in 8.4. (Colloquy, “The Billion Member March: The 2011 COLLOQUY Loyalty Census”) My take: Just because someone signs up for your loyalty program, it doesn’t mean they will ever do business with you again, at least in the somewhat near future.

Of the roughly $48 billion in reward points and miles issued annually, at least one third ($16 billion) goes unredeemed by consumers. (Colloquy, “The Billion Member March: The 2011 Colloquy Loyalty Census,” April 2011) My take: I’m not convinced that the $16 billion points and miles go unused. The customer may be accumulating versus spending them. That said, there are points that will never be redeemed or will expire, just not all $16 billion of them.

85% of loyalty program members haven’t heard a single word since the day they signed up. (Colloquy, “The Rules of Engagement: Loyalty in the U.S. and Canada,” 2011). My take: I’m betting that this number is somewhat accurate. There are a few programs I’ve joined that the company doesn’t contact me, but those are the minority. Most companies do reach out to their customers, however their emails or letters look like spam or junk mail.

The following stats and facts come from ClickFox’s Recent Loyalty Report. They make a good case that customers want to be loyal, and would like a good loyalty program, but the companies aren’t doing enough to follow through on their programs.

Let’s start with a quote from Marco Pacelli, CEO of ClickFox. “Customers are demanding quality products and top-notch customer service, and they’re willing to pay for it. Companies need to differentiate themselves by producing quality products and exceptional customer experiences — it is up to them to deliver on their promises by regularly evaluating customer satisfaction and making decisions in real time.” My Take: Mr. Pacelli is spot on. Consider the stats mentioned above with ClickFox’s findings below.

88% of respondents indicated that quality is a key factor in their decision to remain loyal to a brand; 72% identified customer service as a top priority. My take: These stats make a pretty strong case that loyalty comes from the combination of a high quality product and excellent customer experience. I’ve preached this for years. When you combine a quality product with quality service, one plus one is much more than two.

48% of respondents said that the most critical time for a company to gain their loyalty was when they make their first purchase or begin service. My take: First impressions count. It can be the first time you meet or work with a customer, or the 500th time. Set the tone for the first impression of that particular interaction, which sets the tone for what’s to follow.

54% of respondents would consider increasing the amount of business they do with a company for a loyalty reward, and 46 % said they already have. However, the majority of consumers (62%) don’t believe that the brands they’re most loyal to are doing enough to reward them. My take: Customers want to be loyal. They would like some type of loyalty program, but do it right. Follow through after the customer signs up or commits to your program.

Don’t let your loyalty program be gimmick, just to get customers to sign up. You can have a million card carrying members in your program, but don’t be fooled into thinking you have a million loyal customers. Unless you engage with these customers, follow through with them and make them feel special, you will only retain a percentage of these customers. And it starts with a great product that is combined with a great customer service experience.

Happy Customer Loyalty Month!

Republished with author's permission from original post.

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3 Responses to Customer Loyalty Programs: Stats, Facts and Opinions

  1. Dan Towers April 26, 2012 at 9:19 am #

    Don’t you find that too many so called Loyalty programs are really just sales incentives acting like Loyalty programs? Most of the consumer programs (supermarket programs, CVS program, Best Buy, etc.) either require you to sign up to get a discount or offer you a cash back award once you accumulate enough dollar spend.

    Those programs don’t really engage consumers and create loyalty. They only force you into the program so they can track your buying habits. That is far from creating Loyalty.

  2. Michael Lowenstein, Ph.D., CMC April 26, 2012 at 12:10 pm #

    This blog reads almost identically to one I posted a short while ago: http://www.customerthink.com/blog/ongoing_loyalty_program_value_challenges_and_how_to_fix_them Companies need a more in-depth understanding of how their loyalty program elements and communications, like other initiatives and drivers of customer behavior, can either add or detract to loyalty and market activity levels. Most companies have relatively little understanding of this. Effective customer-centric experience management requires that insight into loyalty program component value be generated, similar to research conducted around every other element of the customer relationship.

  3. Shep Hyken April 26, 2012 at 1:27 pm #

    Great comment/question, Dan. A customer loyalty program is a form of marketing and sales. However, it shouldn’t feel that way.

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