94% of consumers join loyalty schemes, less than half use them

28th Aug 2014

There’s a Goldwynism that goes something along the lines of, “I’d take 50% efficiency to get 100% loyalty”. 

According to a new study, with the exception of major supermarkets, consumer loyalty schemes are currently running to roughly the same measurement.

In a benchmarking survey of 1,000 UK consumers, the marketing and data specialists GI Insight found that 94% of people belong to at least one brand loyalty programme, yet roughly half of those signed up admitted to never actually using them. 

An issue for a 25% of loyalty programme members appears to be the lack of offers they receive after signing up to a scheme. However, the supermarket sector is an exception to the rules – 79% of respondents say they belong to at least one supermarket loyalty scheme, with 88% of those stating they “use the scheme frequently” and 71% content with the offers their supermarkets were delivering.

“The results show that, while loyalty schemes have become pervasive marketing tools, too many companies operating them struggle to fully engage their members – and thus fully utilise the potential insight and gains to be made from better understanding customers,” says Andy Wood, managing director for GI Insights.

These issues exist despite there being no shortage of loyalty programmes to choose from. According to statistics from McKinsey, between 2008 and 2012, memberships increased by 10% per year, averaging 23 loyalty programme memberships per household. The biggest issue isn’t just the engagement, but trying to find novel ways of keeping those who sign up to loyalty schemes loyal:

“It’s so easy for customers to be disloyal these days,” Richard Madden, chief strategy officer of Kitcatt Nohr recently told MyCustomer. “Probably even as recently as five or ten years ago there was much more friction in the market, holding customers and stopping them moving between brands quite so easily. But now you have price comparison websites, and a very active customer culture of comparing reviews and sharing reviews with each other. And you also have emerging technologies like [mobile shopping and scanning app] RedLaser and its successors, which obviously make point-of-purchase comparison possible. So it’s a battle between the technology that’s enabling disloyalty and the technology that’s enabling loyalty.”

GI Insight’s study also found that the drop-off from supermarket loyalty schemes to other sectors is significant. Multi-brand programmes such as Nectar and Avios gain some respectable ownership figures (40%), however, beyond this, schemes within sectors most would expect to position strongly such as fashion, cinema and restaurants all score disappointingly.  

“These are surprisingly low membership figures given the relatively high purchase frequency, emotional interest and potential for creative rewards and extras to be earned though these programmes,” Andy Wood adds.

“These findings highlight how important it is to not just have a loyalty programme but to use the data properly to send appropriate offers and deals to customers. The sectors doing it best – supermarkets and multiple brand schemes – prove the effectiveness of these programmes, but others such as fashion and children’s and DIY/ home furnishings retailers are missing a trick.”

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