Are Loyalty Card Schemes Missing A Trick?

Research released today carried out by MORI on behalf of Black Sun — the loyalty consultancy — reveals the scoop on consumer habits towards loyalty cards. The findings provide a basis for businesses to re-think expensive loyalty programmes, as research shows that current programmes offered by retailers are missing the mark with consumers.

Over half (57%) of British adults are holders of loyalty cards. More than 8 out of 10 loyalty cardholders claim to be more concerned with getting a better price than collecting loyalty points. This sentiment is consistent amongst all age, social and income groups. Furthermore, 7 in 10 say that they are not swayed by loyalty cards when deciding at which store they should shop.

Just under half (46%) of loyalty cardholders say that in the current economic climate, they don't feel that having a loyalty card from a particular store makes them more likely to shop there, leading to the conclusion that these consumers are not always swayed by the collection of loyalty points but by other factors, which could include location and price.

When asked about redemption habits, over a quarter of loyalty cardholders 'rarely' or 'never' redeem their points, with men less likely to redeem than women.

Attitudes of many of those surveyed indicate that loyalty programmes are not working sufficiently well. Ranging from the fact that many loyalty cardholders don't redeem points, to the preference for getting a better price than collecting points, leads to the conclusion that loyalty programmes, in their current state, are not working as well as they should.

The loyalty consultancy that commissioned the research, Black Sun, has developed a different approach to loyalty programmes, one that extends beyond the points for prizes model. These models traditionally do far more to promote promiscuous shopping than encourage loyalty. The Black Sun method is based on a value exchange model, where loyalty is built upon four key drivers: affiliation, recognition, aspiration and reward. This fosters two-way, mutually beneficial relationships between retailers and customers, creating real lasting relationships. Customers gain access to information and services to which they normally wouldn't have access, and retailers gain customer data. Black Sun works with blue chip companies to develop relationship programmes for customers, employees, and investors to encourage retention whilst cutting the costs of establishing and managing the relationships.

Other survey highlights:

• Women are considerably more likely to be loyalty cardholders than men (67% versus 46%).
• Loyalty cards are more popular amongst the 35-45 year olds than younger and older age groups.
• People living in the North are less likely to hold loyalty cards (49%) than those in the Midlands (58%) or the South (63%).
• Those with household incomes under £17,500 are also less likely to have a loyalty card (54%).

Technical details

A nationally representative sample of 2,046 British adults aged 16+ were interviewed throughout Great Britain on the MORI Financial Services Omnibus across 186 constituency based sampling points. Interviews were carried out using CAPI (Computer Assisted Personal Interviewing), face-to-face in respondents homes between 3 — 8 January 2002. Data have been weighted to reflect the known national population profile.