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How Can We Encourage Customers to Participate in Loyalty Programs?
It is imperative for retailers to engage customers at every point of contact--otherwise a great rewards program sits idle, and so does merchandise.
Posted Jun 14, 2004
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Almost 40 percent of consumers have never redeemed rewards earned for retail programs they have been enrolled in the longest. Yet, nearly half (49 percent) of retail rewards program participants say such programs have an influence on where they decide to spend their retail dollars, according to a Maritz survey. Most retailers recognize the value of having a consumer rewards program, yet many stop short of consistently connecting with customers after they have signed on. Our research found that most consumers stay enrolled in loyalty programs for years. However, there is a disconnect when you look at the low number of reward redemptions. It is imperative for retailers to engage customers at every point of contact: at the cash register, by phone, and by email. Otherwise a great rewards program sits idle, and so does merchandise at the store. In addition to their desire to shop more at retailers who offer rewards programs, the majority of consumers are faithful to the loyalty/rewards programs they choose to join. Maritz Loyalty found that 24 percent of consumers joined their retail rewards program (the one they have been in the longest) one to two years ago, 19 percent joined two to three years ago, and 29 percent joined three or more years ago. However, 21 percent of consumers who once participated in a retail rewards program have opted out. Again, the disconnect. Rewards programs are designed to attract new customers and reward and retain loyal ones. What's missing here is the continuity of outreach to customers. It makes sense to add value for customers who have stayed with you the longest, yet that is simply not happening. When consumers were asked what types of reward they prefer to redeem their retail points for the response was cash back (61 percent); free merchandise (57 percent); gift certificates (46 percent); special members only offers or discounts (38 percent); special benefit or upgrades (13 percent); free travel (11 percent); and free tickets to events (10 percent). Interestingly, more women (61 percent) prefer to redeem their rewards for merchandise compared to men (50 percent).
Rewards and loyalty programs have grown increasingly popular among consumers and there are a variety of reasons why they join. With so much competition it is not enough to offer a reward--retailers have to remind consumers that participating in the program is of value, too.
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