Less than one in five retailers focuses their loyalty program metrics on ROI, according to a new study from Accenture.

When asked to identify success metrics for their programs, only 19% of the retailers surveyed cited ROI.
The key areas that retailers focus most on in terms of their loyalty programs are program growth and revenue production metrics – such as membership growth rates (cited by 45% of respondents), share of transactions by members (42%) and number of transactions per year (36%) – as well member value metrics, such as retention rate (40%) and customer long-term value (37%). Fewer are focused on engagement metrics such as number of reward redemptions (cited by 32% of respondents), campaign response rates (27%) and customers engaged socially (16%).

“Given the maturity and sophistication of loyalty programs today, it’s surprising how little scrutiny retailers place on program ROI rather than just growing membership,” said Farrell Hudzik, managing director of Accenture Interactive’s Global Loyalty and Rewards practice.
Members of retailers’ customer loyalty programs generate between 12%-18% more revenue for retailers than do customers who are not members of the loyalty programs, the study noted.
according to new research from Accenture Interactive.

The research identified key trends and challenges of retailers’ loyalty programs.

“Today’s customer loyalty programs are an increasingly expensive, complex and expansive business that extend beyond the marketing team into the entire organization,” said Hudzik. “Given that loyalty program members generate significant incremental revenue compared with non-members, retail loyalty program leaders must anticipate future growth trends and capture the opportunity to differentiate in an increasingly fragmented marketplace.”

When asked to identify their biggest challenges, survey respondents cited:

Keeping up with the underlying technology (mobile and digital capabilities) or investing enough in technology (40%);

Keeping up with competing loyalty programs (33%);

Managing the liability and financial complexity of the program (33%);

and Having enough people and the right kind of talent required for today’s loyalty programs (30%).

Nearly all survey respondents (97%) said that their loyalty programs receive C-suite support, however, less than half (43%) said they received “strong” C-suite support, with slightly more than half (54%) saying their programs receive “moderate” C-suite support.

“As with nearly every other industry, digital technology is transforming how retailers are interacting with their customers, suppliers and other partners,” Hudzik added. “The success of any good loyalty program hinges on the ability to identify and understand one’s customers and then provide them with a seamless experience through multiple touchpoints. For a retailer to set itself apart with a compelling and accessible loyalty/rewards program, its marketing department must have the total commitment of the C-suite to ensure that it gets the resources necessary to develop leading-edge analytics, digital and other technological capabilities.”

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