Gaining Wallet Share Amidst Loyalty Program Consolidation

In my first post for CMA, I blogged about how loyalty programs are largely becoming a commodity due to their ubiquity and lack of creative differentiation. At a time when consumer demand and expectations are on the rise, program innovation just isn’t keeping up. And the reaction of consumers is a marketer’s worst nightmare … loss of interest.

It’s been five years since COLLOQUY, the research arm of LoyaltyOne, conducted its first study of the loyalty marketing industry in Canada. Back in 2008, Canadian households were involved in an average of 9.2 loyalty programs. This year, the soon-to-be-released 2013 COLLOQUY Loyalty Census found that there has been a nearly 11% drop in the number of memberships per household. At 8.2 memberships per household, this is further proof that marketers are creating loyalty plans that underwhelm and, in response, Canadians are consolidating their portfolio of programs in which they are willing to engage.

And as disgruntled consumers demand more tailored, immediate and relevant rewards and recognition, it’s likely that this trend of consolidation will continue. So what can marketers do in a saturated, sophisticated loyalty marketplace to gain wallet share? Make use of the collected data to garner insights that will enhance the value proposition and relevance to consumers. Not all customers are equal; therefore not all offers and communications should be the same.

And no, I’m not talking solely about Big Data. In the past decade, massive shifts in both technology and consumer behavior have provided marketers with oceans of data about the actions of consumers. While this trove of information may be the hype, marketers must go a step further.

By taking that data and improving predictive analytics capabilities, valuable insights can be achieved that allow marketers to take action towards better serving customers as individuals and not as one mass unit. Filtering and processing of data is, put simply, the game changer. And through the use of Right Data, instead of Big Data, businesses can plan and execute a strategy to close performance gaps in the delivery and perception of the customer experience.

Analytics 2.0, says Harvard Business Review in a March 2013 article, is here and in use. Through a set of capabilities that can run through terabytes of data and a plethora of variables in real time, companies can form uber elaborate dashboards of their marketing performance and make required shifts in marketing strategies as needed. Talk about nimble.

Data insights have the potential to transform the customer experience by delivering more relevant, targeted offerings. By delivering an experience that is custom-made marketers can maintain program excitement and ensure their organization’s loyalty program card remains active in that crowded wallet.

Stay tuned for more on the 2013 COLLOQUY Loyalty Census in my next post.

Carlos Dunlap

 

 

1 Comment

  • Jonathan Blaine said

    As someone who spent years as a consumer in the US, and as a marketer there, I find most Canadian loyalty programs to be a big yawn. Gee, collect points for 10 years to get a free baseball hat? No thanks. Most Canadian programs are almost that bad.

    Here are my favourites (favorites?) from south of the border...

    CVS/Pharmacy: receiving a $ off item cash register coupon for a future visit when I buy something that lowers the net cost. The benefit to the retailer is that it prompts return visits because the coupons expire within 30 days.

    Staples Rewards: 5% off pretty much everything and free shipping for all US Rewards members. The old Canadian program that was killed a few weeks ago induced comas, but even that was better than the awful current AirMiles program Staples Canada has adopted (likely due to no real office store competition here). And $2 each for recycling ink cartridges or tanks (up to 10 per month) in the US. In Canada? Nothing. Also, US Staples sends me $ off coupons (sometimes substantial) sent to me regularly. In Canada, never. Plus, free-after-rebate paper, batteries, pens and other stuff.

    Grocery stores (Kroger and Harris Teeter spring to mind, but there are many others with similar programs): double coupons, and sometimes triple during sales. Special prices for members by flashing my key tag at the register, and even better deals for email subscribers. In Canada? Nothing. Nada. Zilch. Kroger reminded me on each receipt that "You saved __% with your Kroger Plus Card!"

    Sobey’s has a percentage-back program for gasoline... buy their gas and get a coupon for grocery shopping. Kroger goes one better for loyalty purposes: buy a certain amount of groceries each month and get __ cents off at the pump. Probably much better for loyalty than the Sobey’s program, as I was reminded on each grocery receipt how close I was to the next reward.

    This is just the tip of the US loyalty program iceberg where points that take forever to accumulate and are impossible to relate as a dollar value take a back seat to immediate monetary gratification. Canadians are seeing a hint of this via PetSmart and Bed Bath & Beyond, which mirror their US programs. See, competition works!

    Oh, and most had key tags attached to the cards that I threw in a drawer. Most Canadian retailers are out to lunch on even this simple convenience concept, too.

Tell Us What You Think
  1. If you haven't left a comment here before, you may need to be approved by CMA before your comment will appear. Until then, it won't appear on the entry.
    Thanks for waiting. View CMA's Blogging Policy.

Tags: Loyalty, Branding, Customer Insights, Analytics, Research, Strategy