Looking at Loyalty through the Demographics Prism
The article is based on a new study that analyzed six consumer segments and their perception of loyalty programs with some surprising and instructive findings:
- Over 40% of Young Adults and middle-income Hispanics identify themselves as loyalty program participants. Growth in both segments is predicted, as retailers, e-commerce web sites and telecom programs drive participation.
- Nine out of 10 redeemers reported themselves as the primary beneficiary of their redemption events. Family members were cited as a primary recipient less than 20% of the time for all segments except Women and the Affluent. Among redeemers, the "me" factor far outweighs the "we" factor.
- 73% of Hispanics rated soft benefits as extremely important, but only 17% could actually confirm delivery of such benefits. For Women, 64% vs. 14%. The benefits are either absent or invisible to consumers. Seniors are the exception, with just 47% identifying preferential treatment as important.
Bottom-line: Marketers need to make a concerted effort to collect demographic, lifestyle and attitudinal information and merge it with their transactional databases. Those marketers who use data to deliver relevant rewards, recognition benefits and communications will capture customer engagement, spend and advocacy.
The second article from Multichannel Merchant discusses the issue of loyalty ecosystems. According to the article, high-frequency merchant environments with consumer loyalty programs are perhaps the strongest customer ecologies, and thus present a profound opportunity to redefine how retailers go to market by building an ecosystem based on insight into their customers' needs as derived from analysis of purchase behavior.To do this retailers have to implement
best-in-class enterprise customer-management programs. The article outlines three best practices required to "create an information and
segmentation structure that makes your loyalty ecosystem come alive."
- Understand your segments - What are your customer segments and
their current and potential value? What profitability drivers will
truly impact your ROI? What categories of products do consumers buy? What
product and service solutions do valuable customers seek? Can we
identify life stages and lifestyle elements by virtue of customer
activity? Does the store format or layout itself reveal activity based
on need?
- Segment ahead of the curve - What offers can you
deliver that anticipate what products a consumer might purchase for the
first time? This approach creates symbiosis by returning emotional
value to the customer.
- Enhance the customer environment - Is your retail biosphere designed to grow the quality of your customer relationships? Needs-based segmentation offers a solution. For example, why not design cross-functional strategies to drive a better experience for customers who aren't going to spend a lot of time impulse shopping?
The article goes into much more detail in how to implement these best practices, but the bottom-line is that "within the loyalty ecosystem, needs-based segmentation is a triple-win: it creates relevance, builds relationship value and drives profit into the business. Such a retail environment, one that balances mutual benefit and fulfills mutual need, one that nurtures and adjusts dynamically, will elevate your loyalty efforts from mere programs to customer-centric ecosystems that thrive in the business biosphere."
The third article, from Promo, highlights a study comparing perceptions of loyalty programs in the US and Canada. It turns out that Canadian consumers use loyalty cards much more frequently than US consumers (75% of Canadians are active participants in loyalty programs vs 39.5% in the US). The reasons - Canadians are more patient and participate more in points programs, while in the US people are looking for "immediate gratification". Additionally, the Canadian market is a little more concentrated because of the prominent presence of national retailers. Finally, Canadians are also savvier loyalty players who are more likely to participate in competing programs.Posted by Universal Ad
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