Loyalty Programs Boom in Challenging Economy

Membership in U.S. loyalty rewards programs has reached 1.81 billion according to the 2009 Colloquy Loyalty Census. A loyalty marketing program recognizes and rewards the best customers of a business. The adjusted total represents a 24 percent growth from the 1.3 billion tally in Colloquy last loyalty marketing industry census, published two years ago in 2007. The average U.S. household has signed up for 14.1 loyalty programs but actively participates in only 6.2 of them. The corresponding numbers in 2007 were 12 and 4.7.

In another key finding from the research, Colloquy pegs the number of active memberships in U.S. loyalty programs at 792.8 million - a number that the study's authors characterize as "one of the worst-kept dirty secrets of the industry."

Definitions of active memberships vary from company to company; but a typical example is a member that has at least one instance of activity, such as earning points on a purchase or redeeming for a reward, within a 12-month period. The 792.8 million number means the rate of active membership is relatively flat at 43.8 percent, compared to 39.5 percent in 2007.

"With roughly one billion inactive memberships, essentially names in databases, it's fair to say the U.S. loyalty industry has reached the middle-age bloat stage," says Kelly Hlavinka, partner, Colloquy.

"Given the bursting of the credit bubble, the recession and pressure to control program costs, loyalty marketers must turn to growing program value, not the size of their membership base," says Rick Ferguson, editorial director, Colloquy. "Conditions are ripe for marketers to use loyalty data across the enterprise, enhance value propositions and adopt innovative loyalty models such as coalitions, as they seek to revive lapsed members and turn engaged members into profitable, loyal customers."

U.S. loyalty program memberships ranked by industry are as follows (in millions): Financial Services 422.0; Airline 277.4; Specialty Retail 191.3; Hotel 161.8; Grocery 153.3; Mass Merchants 124.8; Gaming 106.0; Dept. Stores 92.8; Drug Stores 73.9; Fuel Convenience 51.2; Restaurant 13.7; Car Rental and Cruises 10.7; and Other 127.9.

The results of this study will be presented in a Webinar cosponsored by The Direct Marketing Association on June 25, 2009. Click here to register.
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