Loyalty Program Defection
Increases With Slow Rewards

September 2004 - When consumers leave a loyalty/rewards program, most (70 percent) cite the length of time it takes to build up points as the primary reason, according to a Maritz Poll commissioned by Maritz Loyalty Marketing. The number jumps to 79 percent, in the critical 18-24 age group.

"Marketers need to provide consumers with realistic and achievable goals," Gail Sneed, market development director at Maritz Loyalty Marketing, said in a press release. "Particularly with the crucial college-age demographic, it's the chance to win or lose a lifelong customer."

The Maritz Poll also found that customer defection resulted from other perceived problems with rewards programs, such as: "not being rewarded properly" (23 percent), "disliked the fee" (22 percent), "disliked the reward options" (20 percent), "program rules kept changing" (17 percent), "poor customer service" (16 percent), and "other programs seemed better" (18 percent).

High-income individuals ($125,000+) spend money and collect points at a faster rate, but they are particularly choosy and likely to comparison shop. More than a quarter (27 percent) of this demographic left a rewards program because "another company's program seemed better" or they didn't like the reward options, Maritz Loyalty Marketing says.

Says Sneed in the release, "The customer has to be able to believe that they can earn an appealing reward in a reasonable amount of time. Effective loyalty programs use analysis and modeling tools to ensure the right rewards are offered to the right customers and are achievable within a reasonable length of time. Programs that customize potential rewards based on the individual customer's hobbies and interests hugely increase reward program satisfaction."

The Maritz survey also revealed the importance of the Internet as a communication tool. When asked, most people prefer to be updated about their rewards programs through the Internet (58 percent), and some (9 percent) state that they have even stopped participating in a rewards program because they receive too much mail from the company.

This trend is even more common among customers in the 18-24 age group: 65 percent say they prefer communication about rewards programs via the Internet and 13 percent have stopped participating in a rewards program because they received too much mail from the company.

"A robust loyalty program will include a link on the company's Web site where customers can immediately access their reward points, easily determine required point values, and redeem points with the click of a mouse," Sneed said in the release, adding that when companies make the extra effort to determine what customers really want and how to communicate with them, "both parties win."

The survey was conducted earlier this year by Maritz Research to gauge attitudes and behaviors related to rewards/loyalty programs for retailers, hotels, airlines, credit cards, and restaurants. The data is based on 1047 interviews with randomly selected adult participants in an online panel. Total group comparisons have a confidence interval of +/- 3 percent.

from Direct Marketing Association

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