Loyalty Programs: a cross-industry analysis of usage & effectiveness.

The Direct Marketing Association released “Loyalty Programs: A Cross-Industry Analysis of Usage and Effectiveness.” This first-ever report, which focuses solely on loyalty marketing, is designed to provide marketers with a snapshot view of loyalty marketing strategies as a whole, as well as within different industry segments.

In producing this inaugural report, DMA partnered with loyalty marketing publisher, COLLOQUY. Drawing from their own research and experience, COLLOQUY presents their reactions to DMA’s findings as well as provides extensive and insightful commentary throughout each of the six chapters of the report.

“The DMA Loyalty Marketing Survey presents a vivid snapshot of how businesses are deploying loyalty programs and strategies,” said Michelle Tiletnick, DMA research manager and author of the report. “Combining insights from this survey with COLLOQUY insights about consumer attitudes and perceptions of loyalty programs reveal significant opportunities for improvement and program performance. DMA’s survey demonstrates that loyalty programs play a particularly important role in the marketing mix and are rising in popularity among consumers”

The new 157-page report has two parts. Part one analyzes five industry segments: Supermarket & Grocery Stores; Hotels & Restaurants; Retail & Department Stores; Banks & Credit Cards; and Catalog Companies. Part two of the report explores two award winning ECHO campaigns that utilized loyalty programs: Holland America Line and MBNA Travel + Rewards WorldPoints, winners of the 2007 and 2006 DMA International ECHO Awards, respectively.

Additionally, the report revealed:

· When it comes to pricing a loyalty program, more than 7 out of 10 respondents offer free enrollment to their customers.

· 15.5 percent of respondents tier their fee structure and rewards program.

· The use of loyalty programs in the financial services sector is surging, due in part to the expanded range of “premium” or “black” reward card products designed to build loyalty among affluent consumers. These card products provide extensive experiential reward benefits and are often co-marketed with other luxury brands.

· According to retail and department store respondents, member upgrades are the rewards most likely to be redeemed, with an average rating of 6 out of a possible 7.

· 73.7 of supermarket and grocery store respondents use face-to-face interactions to invite customers into their loyalty programs, making it the most used channel.

· The majority (64.7 percent) of hotel and restaurant respondents have a proprietary loyalty program in place, meaning they reward customers with their own products/services.

· 66.7 percent of catalog respondents offer their loyalty programs for free; one quarter charge different membership fees depending on the level of the program, and less than 10 percent charge one nominal fee to customers who join.

DMA conducted this survey in June of 2008 through an email invitation sent to a target audience of DMA’s in-house list as well as a targeted audience of COLLOQUY’s subscribers. When the survey was closed, 250 responses were included for tabulation.

For more information at http://www.the-dma.org/>