The BIG Blog

Loyalty Programs – Should Retailers Re-Sign or Resign?

June 10, 2008 12:44 am Esmart BI Theory, Data

Retail and consumer companies are reviewing customer loyalty programmes as economic conditions threaten profit margins. Analysis as to whether the retailers are getting a good return on the schemes is being undertaken before retailers commit to signing up for a further agreement term with the program provider.

Retailers who subscribe to programs that are up for renegotiation are reevaluating the merits of such schemes.

Overall, it appears that such loyalty program are still performing but analysis has found that some customers who are not profitable are being rewarded under some schemes and that some retailers are carrying a high cost of retaining. Loyalty programs need to be managed correctly to gain the full return of their value.

Some programs – such as the petrol discount vouchers issued by supermarkets are not strictly loyalty programmes but a short-term inducement to customers.

The decision for retailers is in either accepting loyalty programmes as a business overhead or dropping them at the risk of losing business.

In spite of direct marketing being somewhate expensive, data extracted from loyalty programs allows client microsegments to be identified faster and cheaper.

No related posts.