Tuesday, May 28, 2024

Study shows true value of loyalty programs

The majority of retailers are seeing increased sales from loyalty programs, but a failure to focus on the needs of the customer means their full potential has not been reached, according to new research from the Commonwealth Bank.

The ‘Retail Insights Report’ revealed that 79 per cent of retailers derive commercial benefits from the program, with 36 per cent seeing significant sales increases. Previous research has shown 77 per cent of customers were more likely to return to a store with a loyalty program, while 82 per cent were likely to spend more if they feel valued.

“Despite the benefit to retailers and support to consumers, there is a lot of noise to suggest that neither party are getting as much value as they expected,” Commonwealth Bank Executive General Manager, Corporate Financial Services, Michael Cant said. “We think it’s because some loyalty programs are designed to meet the needs of retailers rather than the customers.”

The report shows more retailers plan to introduce loyalty programs (20 per cent), while 44 per cent have them in place already. The nature of programs is changing, with benefits at POS the main consideration of retailers who introduce programs, whereas existing programs are more likely to feature points accrued for future benefit.

Personalisation is a concern for retailers and customers alike. Sixty-five per cent of retailers believe personalisation strategies have increased sales, with 28 per cent believing the increase was significant. Three-quarters of Australians said they would stay loyal to a business that personalises their experience, although 83 per cent of businesses cite a lack of high-quality data as a barrier to improved personalisation.

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