94% of consumers join loyalty schemes but only half are active users
A new benchmarking survey by customer insight specialist GI Insight shows that, while 94% of consumers belong to at least one loyalty programme, just under half of scheme members on average are actually active users and just a quarter see companies effectively analysing their needs and sending them relevant offers.
The research, based on a survey of more than 1,000 UK consumers on their participation in loyalty programmes across various industry sectors, confirmed that supermarkets remain by far the most popular scheme providers with 79% of respondents saying they belong to at least one. Of the consumers belonging to supermarket schemes, 88% say they use the scheme frequently, while 71% feel their retailer is using their data effectively to evaluate their needs and send them offers that are pertinent to them.
Andy Wood, GI Insights managing director, observes:” The results show that, while loyalty schemes have become pervasive marketing tools, too many companies operating them struggle to fully engage their members – and thus fully utilise the potential insight and gains to be made from better understanding customers.”
The report, Loyalty Frequency: Who’s Tuning In?, shows that many consumers belong to multiple programmes across different sectors. The findings on respondents belonging to at least one scheme reveal 47% actively participate on average, but providers are efficiently reading the needs and sending appropriate commercial messages to only 27% of members on average.
When it comes to loyalty scheme membership, there is a huge drop-off between supermarkets and the rest of the pack – a distant second were schemes in the multi-brand category (such as Nectar and Avios), with just under 40% holding a membership in this type of loyalty programme, followed by businesses in other sectors centred on high-frequency and relatively low-value transactions: chemist/ beauty/ health retailers, department stores, and fast food/ restaurant/ café chains.
Some of the more unexpectedly low results in terms of membership are for schemes run by fashion retailers, cinema/ theatre operators, book/ music/ video/ computer game sellers, toy/ hobby shops and, child/ baby/ maternity brands.
Wood notes: “These are surprisingly low membership figures given the relatively high purchase frequency, emotional interest and potential for creative rewards and extras to be earned though these programmes.”
When it comes to analysing consumer needs and sending relevant offers to the members they do have, however, child/ baby/ maternity loyalty schemes were second only to supermarket programmes in assessing their customers’ needs and sending out the right messages, with 40% of members saying they do this successfully.
With active participation in loyalty schemes across sectors at roughly the 50% rate, the numbers were encouraging for programme operators in most sectors, as the majority now compete for use among consumers with multiple memberships. Multiple brand schemes run a very strong second to supermarkets, while petrol stations, chemist/ beauty/ health retailers, and banks all have well over 50% active members but still lag behind supermarkets by a considerable margin.
The research shows that women are more likely to be members of loyalty schemes than men (97% versus 93%), with programmes in the chemist/ beauty/ health, department store and fashion categories significantly more likely to attract female customers, while men gravitated to hotel and computer/ consumer electronics/ appliance schemes.
The age group that leads scheme membership in the most sectors is the 25-34 demographic, but consumers aged 18-24 years lead the pack when it comes to membership in fun and trendy loyalty schemes – those centred on food, fashion and personal entertainment purchases. When it comes to active participation, on average 54% of the loyalty scheme members in the 25-44-year-old age range use them frequently – a greater proportion than all other demographics.
Wood concludes: “These findings highlight how important it is to not just have a loyalty programme but to use the data properly to send appropriate offers and deals to customers. The sectors doing it best – supermarkets and multiple brand schemes – prove the effectiveness of these programmes, but others such as fashion and children’s and DIY/ home furnishings retailers are missing a trick.”
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