We’ve all heard that acquiring new customers costs between 4 to 6 times more than retaining an existing customer. Therefore a core belief within any business, large or small, is that establishing and maintaining customer loyalty is critical to a business’ financial success. Loyalty programs are becoming the norm for businesses statewide, but what do we know about the effectiveness of these programs?
A recent study called “Share the Love: 2014 consumer study into Australian loyalty programs” by Directivity and Citrus uncovered 7 defining insights that impact on the future success of loyalty programs. Interestingly one of the key insights was centralised around the theme of ‘trust’ which is a frequent hot topic here at the THINK office. The crucial component to any customer program is the accumulation of personal information and data that can range from basic demographics, to in depth information about purchase habits, preferred brands and spend. Consumers are becoming increasingly concerned about privacy and the sharing of data and this is reflected in the study where more than half (52%) of members were not keen to have their personal details shared with other organisations (third parties). However, if the use of this information is personally beneficial, almost three-quarters of members (73%) were happy to have their buying behaviour monitored in return for personalised offers.
So what should companies look out for in a loyalty program in 2014?
There is a large untapped opportunity for loyalty providers to give members the ability to share their benefits. 65 per cent of survey respondents wanted to share their benefits with family, friends or even a charity, and an equal number wanted to leave their rewards or points to someone else when they die.
Card over App: 57 per cent of members preferred a traditional loyalty card over an app, and only 12 per cent specifically wanted an app only. “There’s a status factor at play here,” Peter Noble, CEO of Citrus says. “Pulling out a card especially if it’s status based program like a Black AmEx or Myer Gold card is not the same as using an app.”
Who made Australia’s top 10 most recommended programs?
- Coles Flybuys
- Woolworths Everyday Rewards
- Qantas Frequent Flyer
- Velocity
- Myer One
- Commonwealth Bank
- Priceline
- Accor
- American Express
- IGA
By Kalai Chu, Senior Research Consultant
For further information on THINK Global Research, please contact Kristy Ihle (Managing Director): info@thinkglobalresearch.com.
