According to Colloquy, the number of people signing up for loyalty programs grew by 25%, driven primarily by discounts. Unfortunately after the discount, most programs deliver spam, not value:
“Did you earn points this holiday season? Did you use some to stretch your holiday spending?
If not, you just left free money on the table. November and December are two of the biggest months for earning rewards and cashing in on loyalty programs.
Offers to pay you for spending range from drink punch cards at 7-Eleven to triple points from Neiman Marcus.
Add in grocery and fuel rewards, airline miles, hotel programs and game-changer Amazon Prime, and a typical household belonged to 29 programs in 2014. They were active in only 12.
Membership in U.S. loyalty programs jumped 25.5 percent to 3.3 billion from 2012 to 2014, “but more than half of them don’t even bother to participate in those memberships, much less become loyal, engaged and enthusiastic program members,” according to a census released earlier this year by Colloquy, a pioneer firm in loyalty research.
It takes a little work to reap the benefits of some of these sophisticated programs.
1. Not all membership programs are worth the effort.
When only 42 percent of people enrolled in programs actively use them, that’s an issue, said Jeff Berry, Colloquy research director. “Cards are sitting in junk drawers because it’s very easy for consumers to enroll in these programs.”
The No. 1 reason (73 percent) people gave for not using a program is that the cards aren’t creating any relevant value, he said, “plus I’m getting spammed with the same mass offers they are giving everyone else.”
Participation is trending downward from 46 percent in 2010.
“A program doing it right is offering me something I want in my stage of life,” Berry said. That may be why drugstore program participation shot up 88 percent from 2012 to 2014 and restaurant participation doubled during the same time.
Walgreens and Rite Aid launched programs since 2012, and CVS has expanded its program. Drugstores now have more than 267 million members, according to Colloquy.”
The article offers more insights regarding loyalty programsdone right, but perhaps most interesting is the perspective that Amazon hasdriven a new loyalty program that shoppers must buy:
“Amazon.com is changing our views about loyalty and how to get it.
The online behemoth’s Amazon Prime has ushered in a change in the way people think about membership. It’s one of the first programs that young people join once they go off to college and may be the reason millennials are more accepting of the idea of paying for a loyalty program.
A recent LoyaltyOne survey found that:
62 percent of shoppers said they would consider joining a fee-based rewards program if their favorite retailer offered one.
That rate is higher among millennials, with 75 percent of 18- to 24-year-olds and 77 percent of older millennials from 25 to 34 saying they would consider a fee-based rewards program.
Wal-Mart has a new $50-a-year, fee-based delivery program called ShippingPass. It’s half the price of Amazon’s $99 Prime membership and offers three-day free shipping.
The paid membership scene is worth watching.
Bottom line: You are leaving money on the table if you don’t consider some programs that pay you to shop. If you start now, you could be redeeming rewards this time next year.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
