What's wrong with loyalty marketing? Is there anything wrong?
Written by Mr Harri Saloranta, managing director of Nero Partners Oy
Loyalty marketing is having a heyday in Finland. On average consumers have 4.2 loyalty cards in their wallet, and the number is expected to go on rising. New loyalty programmes are being established and existing programmes are being fine tuned.
A new barometer was set up in autumn 2006 to monitor loyalty programmes and related marketing. Loyalty House Oy and Nero Partners Oy conduct customer surveys for the barometer three times a year. The latest results came out in August 2007. The sample included 1,052 respondents and covered the entire nation.
What consumers think about loyalty programmes
Consumers generally take a positive view of loyalty programmes. Over 60% of respondents say it is fairly important or very important for businesses to have a loyalty programme. They think loyalty programmes are useful and should be developed further.
The barometer indicates that development has indeed taken place. The following table shows the percentage of respondents who agree with various statements concerning loyalty programmes. The table gives averages for all the loyalty programmes included in the barometer. The results for individual programmes vary considerably and some programmes receive very good feedback from consumers. The best and worst results for individual programmes are given in brackets.
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Encourages me to shop and buy more
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22 %
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(56 / 8)
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Offers many kinds of benefits
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20 %
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(64 / 9)
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Principles are clear and understandable
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37 %
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(69 / 22)
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Sends customers interesting materials
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35 %
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(67 / 5)
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Keeps evolving enough to keep me interested
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9 %
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(28 / 1)
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I receive positive attention as a programme member
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27 %
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(43 / 16)
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Strengthens my loyalty
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22 %
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(55 / 11)
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Attitudes towards the use of collected informationThrough loyalty programmes businesses also collect information on customers' purchasing behaviour. Many customers are not happy about this. 50% of respondents do not like the idea of businesses collecting information on them personally or how they shop, but want to protect their privacy.
One-third of respondents said they would not mind giving more information in return for better offers that are tailored to their needs. Respondents were asked what they thought of a sample situation in which a customer buys a flat-screen TV and a week later receives an offer for a home theatre system. One in three respondents considered this good loyalty marketing, while one in five objected to what they perceived as spying.
In another sample situation, a customer receives a special discount on products that she frequently buys, according to collected data. Over 50% of respondents viewed this as a good thing, while slightly more than 10% objected strongly. It appears that customers are much more likely to approve the use of information if they get concrete benefits in return.
Using new media
Customers have strong reservations when it comes to being sent information about a loyalty programme by e-mail or particularly text message. Slightly over one-third would be interested in receiving information by e-mail, but only 10% by text message.
The use of new media in loyalty marketing is a hot topic and it will be interesting to see how consumers' attitudes change in future.
The next survey will be conducted in late 2007, and this will show whether consumers' opinions have in fact changed - and in what direction.