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More than 50% of marketers that took part in a Forrester Research study saw their loyalty budgets rise during the past two years, while only 10% saw a reduction in budget. This reflects the increase of loyalty programs attracting frequent buyers for everything from food to clothing to entertainment.
According to the Forrester study, “The State of Loyalty Programs 2013,” the top three business objectives for customer loyalty programs are customer retention (70%); customer engagement (64%); and revenue (34%). Only 14% cited customer experience as an objective. For nearly 60% of firms, loyalty is considered a top three strategic priority and 56% of marketers agree that loyalty has support from all parts of the organization.
The study reveals that, on average, only 45% of customers enroll in loyalty programs and 35% redeem rewards. The most popular channels for reaching consumers are email, 92%; Website, 82%; call center, 64%; and social media, 54%.
The study surveyed 50 loyalty program marketers about their strategies in an effort to understand the size, structure and performance of their programs. This report benchmarks customer insights from executives working to drive customer loyalty. Some 30% of respondents are from retail; 14%, travel; 12%, financial services; and 12%, media and entertainment.
The Forrester study suggests marketers focus on benchmarking loyalty campaigns, reassessing how consumers mature and expand their use of the cards, and invest in analysis technology to analyze customer data, trends and behavior.
During the Sept. 26 Loyalty 360 webinar titled, “How to Identify and Drive Profitable Customer Behaviors Using Intelligent Loyalty (Plus 5 Key Steps to Get You Started),” Forrester analyst Emily Collins stated to attendees that “the age of the customer is here to stay.”
“Consumers are increasingly interacting with brands,” Collins said during the webinar. “Marketers turn to loyalty to deepen customer relationships because they can better identify and more easily reward customer behavior.”
Customer retention, profitability, and engagement are the top three business objectives for a brand’s customer loyalty program, Collins said.
“Loyalty isn’t just for marketing,” she said. “It touches every part of the organization. Programs that ignore customer lifetime value and aren’t tailoring their offers are wasting times with rewards because they fail to drive behavioral changes in wallet spend and redemption frequency.”
Brands cannot have a successful loyalty program if they fail to engage beyond the purchase, Collins said.
“Loyalty program customers are willing to raise their hands and identify themselves and fill out information about themselves,” Collins said. “It has to be about more than just dishing out rewards.”
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