• December 24, 2002
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

How to Improve Customer Loyalty

Despite being among the earliest companies to implement loyalty programs, the airline industry is losing ground to credit card companies when it comes to customer loyalty, according to a recent survey conducted by InsightExpress LLC, an online marketing research firm based in Stamford, CT. The survey states that out of 500 American consumers who responded, 56 percent participate in loyalty or affiliate programs. Credit card companies lead the way with 27 percent participating. The airlines, restaurants, hotel, and rental car companies follow at 19, 16, 12, and 6 percent respectively. "In a troubled economy customer loyalty and reward programs clearly make a significant impact on merchants' bottom lines, increasing revenue opportunities and improving customer retention," said Lee Smith, president of InsightExpress, in a statement. How have credit card companies trumped other industry loyalty programs? According to the study, the trick is to give consumers what they want. Fifty-four percent of respondents say they participate in loyalty programs for the benefit of being rewarded for products and services frequently used, 49 percent claim to participate to receive greater discounts on products and services, while 42 percent state that special member-only perks encourage them to participate. Not surprisingly, the study also advises that merchants should make the sign-up process as convenient as possible for customers. Nearly two thirds--63 percent--of the survey participants say they prefer to sign up online, 15 percent prefer in-store sign-up campaigns, and 14 percent say the mail is the preferred way to sign up. "Loyalty programs have come of age. People are much more willing to part with personal demographic information if the reward perceived is valuable," Smith said. If the reward is not generally perceived as valuable, consumers walk. The study maintains that 35 percent of the respondents claim they will not participate in a loyalty/reward program if the rewards generally lack any value. "Cash-back offers, free products or gifts, and airline miles are the clear winners when it comes to customer rewards," Smith said.
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