Is anybody really using loyalty programs?

Written by Mark Weinstein, President

Is anybody really using loyalty programs?

Before there were frequent-flyer programs, there were (remember?) Raleigh cigarette coupons and S&H Green Stamps. The idea was similar: encourage repeat business by rewarding customers for their loyalty. (In case you don’t remember, supermarket customers earned Green Stamps according to the amount of their purchases. The Green Stamps were pasted into books, and the books could be redeemed for various types of merchandise. In other words, the more you purchased, the greater your reward.)

The modern rewards programs started in 1981 when American Airlines launched its AAdvantage Rewards with ability to track member activity through computerized methods.  The goal: Retain AA’s most frequent customers by rewarding them for their loyalty.

That was then.  Are loyalty programs still popular and who is using them?

Yes.  And, Millennials (20-34 year olds) are a top target for loyalty programs with offers and deals the top desired benefits.

Membership in US retail loyalty programs has grown to more than 1 billion, and based on data released in June 2014 by Bond Brand Loyalty, monetary rewards are the most desired benefits for program members.

Specifically, Discounts, Cash Back and Rebates are the benefits cited as most important, with Discounts listed as the most important benefit nearly 8 out of 10 times.

Millennials were highlighted as a key segment for loyalty programs, with 68% of 20- to 34-year-olds saying they would change where they shopped if it meant getting more program rewards and one-third reporting buying something they didn’t need or want just to earn points or increase membership status.

What are you doing to do to retain your best customers and keep them purchasing with greater frequency?  Could you be doing more?

It isn’t necessary to have a sophisticated airline-like program.  What is important is to recognize your best customers, market to them with greater frequency and give them special treatment.  For those customers who are Millennials, monetary rewards are where you should find the greatest return.