Loyalty programs drive participation and profit - study

Recent report reveals increased loyalty program activity amongst Australian consumers

Despite perceptions consumers are battling loyalty program fatigue, a recent study found 59 per cent of members are active in all of their programs, a 31 per cent increase from 2013.

Commissioned by strategic loyalty consultancy Directivity and retention agency Citrus, the study, for love or money 2015 revealed loyalty card members are also spending more, with 82 per cent buying more from brands with a program and 16 per cent purchasing items they didn’t need just to earn rewards.

According to the report, Australians – particularly men - are more active in loyalty programs than ever before, in turn boosting brand bottom lines, benchmark consumer research reveals.

Report co-author and CEO of Directivity, Adam Posner, said while some brands question the value of loyalty programs, the research confirms that successful programs have evolved from cost centres into key profit drivers, and provide a key competitive advantage for brands.

“This research is a good news story for CMOs," he said. "While consumers are telling us they’re more selective with their programs, they’re also more active and engaged."

Posner said loyalty programs are a real business imperative for driving brand loyalty and profitability.

“Programs also drive impulse purchasing as evidenced by 16 per cent of members who buy things they didn’t need just to earn rewards, which jumps to 26 per cent for men under 45,” he added. “If you do the maths, that’s a reasonable additional spend that goes straight to the bottom line,” he said.

The research also revealed 48 per cent of members believe programs have improved, up from 41 per cent in 2013. Additionally, fewer people are dropping out of programs, with member defection falling from 26 per cent in 2013 to 22 per cent this year.

“Reduced defection can be attributed to the fact that brands are keeping their programs simple, with only 12 per cent of people saying programs are too confusing, down from 19 per cent two years ago,” seport co-author and CEO of Citrus, aid Peter Noble, said.

The Coles flybuys program retained first place in the Top 10 unprompted most mentioned programs as ‘doing a very good job’ 33 per cent, increasing its lead over Woolworths everyday rewards 13 per cent. Qantas Frequent Flyer remained in third place since the first study in 2013.

Interestingly, 67 per cent of members said they still prefer a traditional loyalty card while only 10 per cent prefer a mobile app to interact with a program.

“We found this one of the most surprising findings of all,” Noble said. “It goes to show that getting the card into a person’s wallet or purse is a critical piece of brand real estate and connection.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Join the newsletter!

Error: Please check your email address.
Show Comments

Blog Posts

How challenger brands can win at biddable media

Challenger brands, especially in highly competitive markets, generally can’t match established players for media spend.

Chris Pittham

Managing director, Jaywing

The competitive advantage Australian retailers have over Amazon

With all of the hype around Amazon, many online retailers have been trying to understand how they can compete with the American retail giant.

Joel Milligan

Performance manager, Columbus Agency

How to become the customer experience custodian

The number one objective enterprises give for embarking on a digital transformation is to improve customer experiences with new engagement models, according to IDC’s 2017 global study.

It's all about the experience and it seems that understanding is finally full tilt!

Danny Mack

Building a robust digital customer experience

Read more

I am going to visit Australia))) nice place ... one of the most attractive

Carly Julia

Tourism Australia aims for youth travel market with dedicated news channel

Read more

An interesting article that touches on the importance of a name, and introduces the concept of naming categories. However, it doesn't liv...

Adam Diggens

Brand creation: It’s just a name…or is it?

Read more

I'd like to see moving forward, how retail factors into SalesForce with the premise of IoT. Things such as customer behavioural analytics...

Rachel Mackey

Salesforce looks to democratise AI, IoT with latest platform play

Read more

More disgusting outdoor advertising signage. Sick of our public spaces being used like this.

Guest

Telstra looks to transform the payphone into a digital advertising and connected community unit

Read more

Latest Podcast

More podcasts

Sign in