Members of Customer Loyalty Programs Generate More Revenue for Retailers Than Non-Members

Members of retailers’ customer loyalty programs are said to generate between 12 and 18 percent more revenue for retailers than customers who are not program members, according to new research conducted by Accenture Interactive.

This statistic was based on a survey of retailers across certain specialty, big-box, department, drug and convenience stores in the U.S.

The Accenture research attempted to identify key trends and challenges of retailers’ loyalty programs.

“Today’s customer loyalty programs are an increasingly expensive, complex and expansive business that extend beyond the marketing team into the entire organization,” said Farrell Hudzik, managing director of Accenture Interactive’s Global Loyalty and Rewards practice. “Given that loyalty program members generate significant incremental revenue compared with non-members, retail loyalty program leaders must anticipate future growth trends and capture the opportunity to differentiate in an increasingly fragmented marketplace.”

Also according to the research, retailers are more focused on boosting membership base than ROI

Less than one in five retailers focuses on ROI as a key metric of the success of their loyalty program.

“Given the maturity and sophistication of loyalty programs today, it’s surprising how little scrutiny retailers place on program ROI rather than just growing membership,” Hudzik said.

Other findings include the challenges to loyalty growth: technology, competition, financial, talent.

The biggest challenges according to Accenture are:

• Keeping up with the underlying technology (mobile and digital capabilities) or investing enough in technology (40 percent);
• Keeping up with competing loyalty programs (33 percent);
• Managing the liability and financial complexity of the program (33 percent); and
• Having enough people and the right kind of talent required for today’s loyalty programs (30 percent).

Also, retailers are thinking their loyalty programs are differentiated whilst customers do not. On top of this, C-suite support is considered critical, but could be stronger still.

“As with nearly every other industry, digital technology is transforming how retailers are interacting with their customers, suppliers and other partners,” Hudzik said. “The success of any good loyalty program hinges on the ability to identify and understand one’s customers and then provide them with a seamless experience through multiple touchpoints. For a retailer to set itself apart with a compelling and accessible loyalty/rewards program, its marketing department must have the total commitment of the C-suite to ensure that it gets the resources necessary to develop leading-edge analytics, digital and other technological capabilities.”