Research Identifies Best Customer Loyalty Methods
December 1 2005
A mix of reward points and special privileges is the best way to influence shoppers' behaviour, according to research from US loyalty marketing specialist Colloquy. The company's new white paper outlines the results of a research project designed to analyse the most effective loyalty marketing techniques.
The research, undertaken for a large national retailer, tested five different value propositions. More than 75 stores took part in two consecutive six-month tests, in which 60,000 of the retailers' cardholders were enrolled in one of five different loyalty programs, as follows.
- A reward program, in which customers could accrue points that could be redeemed for products. The rate of accrual was set at 2%-4%.
- A service program, which offered discounts of up to 50% on selected items, along with other 'soft benefits' including special checkout lanes and preferential parking places.
- A combination of the points accrual model of the reward test and the special privileges of the service test.
- A rebate program, which offered members a 2%-4% rebate on all purchases - available as cash or as a balance reduction on credit card accounts.
- An awareness program, which was a communication-only strategy that used incremental, targeted and personalised direct mail to reinforce existing services offered by the retailer.
The combination program (number 3) generated the highest revenue increase. The white paper analyses the financial implications of each of the test scenarios, and explores ways to establish control groups to help quantify the benefits of loyalty programs.
Colloquy provides consulting, research and education for the loyalty-marketing industry. The white paper is online at
https://www.colloquy.com/reports/WhiteIntro.asp.
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
