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Loyalty Programs’ Lackluster Performance
Organizations must stop neglecting this valuable interaction channel as a customer engagement tool and start tailoring their loyalty programs to match consumers’ changing needs.
1to1 Magazine
May 30, 2011 - Today's consumers are inundated with loyalty cards. In fact, a 2009 loyalty census from Colloquy estimated that membership in U.S. rewards programs was about 2 billion. Despite the swell, companies have long ignored loyalty programs as a valuable interaction channel. But as the importance of customer engagement increases, businesses are starting to see past basic point schemes and recognize the critical nature of their loyalty programs as mechanisms for engaging customers in unique ways to foster retention and sales growth.
The timing is right for this new approach. According to a study from ACI Worldwide, nearly half of the 2 billion loyalty program members never take advantage of their loyalty program perks; 85 percent said they haven't heard from their loyalty program provider since the day they signed up; and 27 percent said that they receive rewards for a promotion they would never buy. "Retailers are missing out on the positive customer interaction from the programs," says Rob Seward, director, product line manager, ACI Worldwide. "These programs are being set up to generate buying events that aren't designed with the consumer expectation."
