[Posted by Ed Hadley
Senior Marketing Manager, Neolane, Inc.]

According to one definition, customer loyalty is “the extent to which your customers continue with key loyalty behavior when competitors offer more attractive prices, products, and/or services.”¹  In other words, customer loyalty is continuing to buy products from brand A even though brand B offers similar (or better) products at a lower price.

If cultivating loyalty is in fact the mission of loyalty/rewards programs, then most fail to live up to their name.  We uncovered 11 startling stats that point to increasingly disengaged and disloyal members, unclear program benefits, and irrelevant offers—all of which underscore the urgent need for a new approach to loyalty management.

1. The number of loyalty memberships in the U.S. is 2.1 billion, exceeding 2 billion for first time.²
2. While the average U.S. household has enrolled in more than 18 loyalty programs, they are active in only 8.4.³
3. Of the roughly $48 billion in reward points and miles issued annually, at least one-third ($16 billion) goes unredeemed by consumers.⁴
4. Only 17% of U.S. respondents say that loyalty programs are “very influential” in their purchase decisions.⁵
5. Only 31% of Americans find loyalty program communications “extremely relevant.”⁶
6. 85% of loyalty program members haven’t heard a single word since the day they signed up.⁷
7. 81% of loyalty member don’t know the program benefits or how/when they will receive rewards.⁸
8. 44% of consumers have had a negative experience with a loyalty program.⁹
9. Only 36% of consumers received a reward or promotion that made them come back to the store.¹⁰
10. 1 in 4 consumers have received a reward or promotion for something they would never buy.¹¹
11. Only 1 in 4 consumers feels “very loyal” to his or her providers across industries, and just as many profess no loyalty at all.¹²

In the coming weeks, we plan on covering loyalty program best practices in greater depth to help marketers can buck these trends and cultivate radical loyalty that transcends transactions.  In an era of increasingly empowered—and fickle—customers, brands can’t survive without it.

Leave a comment below with your greatest loyalty program challenges or concerns.

Sources:

¹ Customer Loyalty Research Center, 2001
² Colloquy, “The Billion Member March: The 2011 COLLOQUY Loyalty Census,” April 2011
³ Ibid.
⁴ Ibid.
⁵ Colloquy, The Rules of Engagement: Loyalty in the U.S. and Canada,” December 2011
⁶ Ibid.
⁷ ACI Worldwide Study, March 15, 2011
⁸ Ibid.