Loyalty Programs: Who Has What Cards in Their Wallet?
ST. LOUIS -- Consumers who are rewards program members are more likely to have spent a greater amount of money at retail during the past six months according to a study by loyalty marketing consulting firm Maritz Loyalty Marketing.
"It is interesting to see that rewards program members are spending more," said Tim Crank, director of product management, Maritz. "However, we need to keep in mind that the programs might not directly cause shoppers to increase their purchases. It could be that those who spend more join programs to obtain rewards for purchases they would have made even if they weren't members. But whatever the reason, enrolling shoppers who are spending more is a great tool for retailers because it allows them to mine the data collected from loyalty programs to identify and create a dialogue with profitable customers."
The study also examined various demographic characteristics -- including rural vs. city living, marital status, income levels, and gender, for significant differences -- to determine what types of people are carrying consumer loyalty program cards in their wallets. It revealed that loyalty program members are more likely to be one or more of the following: female, young, living with children under the age of 18 in the household, or from the Northeast.
Not surprisingly, women (62 percent) are significantly more likely to belong to a store or membership loyalty program than men. However, more than half of the men surveyed (54 percent) say they are part of a program.
"The significant difference between the number of men and women who belong to a store or membership program isn't shocking because most people expect moms to be the primary purchaser in the household," said Crank. "What should be of interest for retailers is that more than half of the male population carries around plastic loyalty program cards in their wallets. Based on this finding, retailers should tell their employees not to hesitate to ask men about joining a program."
Customer loyalty program members tend to be younger than those who aren't members, with 71 percent of 25- to 34-year-olds belonging to store or membership programs. And survey respondents older than 55 comprised the highest percentage of non-program members.
"A logical assumption is that those in or approaching retirement anticipate they won't be spending as much money as younger shoppers and might not feel that they'll reap the benefits of loyalty programs," said Crank. "The challenge for retailers is to recognize that customers can be valuable to them in all life stages, and that they can keep all shoppers enrolled and active in loyalty programs by offering rewards that are meaningful to them throughout their lives."
Simply having kids is another influencing factor. Those who have children under the age of 18 in their household are significantly more likely to have a store or membership program card or a co-branded credit card.
According to the study, members of customer rewards programs tend to be clustered by region. The Northeast (70 percent) and West (63 percent) have the highest concentration of store or membership loyalty program participants. People in the South (37 percent) and the Midwest (42 percent) are significantly more likely to not belong to any type of consumer loyalty program.
"It's important to know who is likely to join a program so that stores can adjust their merchandise offerings, layout and product adjacencies, and customer service to cater to their most loyal customers," said Crank. "However, knowing which demographic groups are likely not to be members offers retailers an opportunity to identify and interact with other potentially valuable customers who may not be interested in being a part of a loyalty program."
Nonmembers tend to have one or more of the following characteristics (by retail category):
--Drug stores (e.g., Walgreens, Medicine Shoppe): Men; from the West; living in a suburb, town, or rural area.
--Discount mass merchandisers (e.g., Target, Wal-Mart): Single/widowed/divorced; no children under the age of 18 in the household.
--Grocery stores (e.g., Kroger, Safeway): From the Midwest.
The online study consisted of 2,178 adult shoppers who have made a purchase in the six months prior to the study from at least one of 11 retail categories included in this study.
The margin of error for this study was +/- 2 percent. For the purpose of this study, rewards programs are defined as either a store or membership program or a private or co-labeled credit card, which award customers points for purchases or other behaviors that they can later redeem for various rewards including discounts, gift certificates, merchandise, cash back or travel.
Maritz Loyalty Marketing designs, launches and operates full-service loyalty marketing solutions. In addition to loyalty strategy, planning and consulting, its loyalty solutions include rewards-based loyalty programs and one-to-one communications programs.
"It is interesting to see that rewards program members are spending more," said Tim Crank, director of product management, Maritz. "However, we need to keep in mind that the programs might not directly cause shoppers to increase their purchases. It could be that those who spend more join programs to obtain rewards for purchases they would have made even if they weren't members. But whatever the reason, enrolling shoppers who are spending more is a great tool for retailers because it allows them to mine the data collected from loyalty programs to identify and create a dialogue with profitable customers."
The study also examined various demographic characteristics -- including rural vs. city living, marital status, income levels, and gender, for significant differences -- to determine what types of people are carrying consumer loyalty program cards in their wallets. It revealed that loyalty program members are more likely to be one or more of the following: female, young, living with children under the age of 18 in the household, or from the Northeast.
Not surprisingly, women (62 percent) are significantly more likely to belong to a store or membership loyalty program than men. However, more than half of the men surveyed (54 percent) say they are part of a program.
"The significant difference between the number of men and women who belong to a store or membership program isn't shocking because most people expect moms to be the primary purchaser in the household," said Crank. "What should be of interest for retailers is that more than half of the male population carries around plastic loyalty program cards in their wallets. Based on this finding, retailers should tell their employees not to hesitate to ask men about joining a program."
Customer loyalty program members tend to be younger than those who aren't members, with 71 percent of 25- to 34-year-olds belonging to store or membership programs. And survey respondents older than 55 comprised the highest percentage of non-program members.
"A logical assumption is that those in or approaching retirement anticipate they won't be spending as much money as younger shoppers and might not feel that they'll reap the benefits of loyalty programs," said Crank. "The challenge for retailers is to recognize that customers can be valuable to them in all life stages, and that they can keep all shoppers enrolled and active in loyalty programs by offering rewards that are meaningful to them throughout their lives."
Simply having kids is another influencing factor. Those who have children under the age of 18 in their household are significantly more likely to have a store or membership program card or a co-branded credit card.
According to the study, members of customer rewards programs tend to be clustered by region. The Northeast (70 percent) and West (63 percent) have the highest concentration of store or membership loyalty program participants. People in the South (37 percent) and the Midwest (42 percent) are significantly more likely to not belong to any type of consumer loyalty program.
"It's important to know who is likely to join a program so that stores can adjust their merchandise offerings, layout and product adjacencies, and customer service to cater to their most loyal customers," said Crank. "However, knowing which demographic groups are likely not to be members offers retailers an opportunity to identify and interact with other potentially valuable customers who may not be interested in being a part of a loyalty program."
Nonmembers tend to have one or more of the following characteristics (by retail category):
--Drug stores (e.g., Walgreens, Medicine Shoppe): Men; from the West; living in a suburb, town, or rural area.
--Discount mass merchandisers (e.g., Target, Wal-Mart): Single/widowed/divorced; no children under the age of 18 in the household.
--Grocery stores (e.g., Kroger, Safeway): From the Midwest.
The online study consisted of 2,178 adult shoppers who have made a purchase in the six months prior to the study from at least one of 11 retail categories included in this study.
The margin of error for this study was +/- 2 percent. For the purpose of this study, rewards programs are defined as either a store or membership program or a private or co-labeled credit card, which award customers points for purchases or other behaviors that they can later redeem for various rewards including discounts, gift certificates, merchandise, cash back or travel.
Maritz Loyalty Marketing designs, launches and operates full-service loyalty marketing solutions. In addition to loyalty strategy, planning and consulting, its loyalty solutions include rewards-based loyalty programs and one-to-one communications programs.