Study Identifies Loyalty Scheme Winners in an Economic Downturn

Over the slow economy of the next twelve months supermarkets, mobile phone companies and DIY/ gardening firms are best placed to use their loyalty schemes to retain and develop customers. However, given recent interim statements from major supermarket groups, there is evidently a performance polarity between value retailers and middle-market chains, implying not only that the value end of the sector is obtaining better return from loyalty programmes, but also that the revenue slide in the mid-market would be even more severe were it not for loyalty initiatives

Our latest research examined where loyalty programmes were most likely to deliver effective customer retention and development support in the current economic crisis.

As Supermarkets are the recognised pioneers of loyalty, their first position is perhaps not surprising. However, this research study pays tribute to the work that mobile phone companies have put into their customer management strategies over the last couple of years. This finding is backed up by research earlier this year, which reported a sharp drop in mobile phone churn in the UK, again the result of successful retention activity

In contrast loyalty programmes in the fashion, restaurant and computer/ electronics industries are likely to contribute least to keeping customer and growing revenues over the coming year.

The research also found that the ability of loyalty programmes to influence customer retention and development in a recession clearly diminishes with age. However, marketers also need to bear in mind that the disposable income and wealth of the 45+age bracket is considerably higher than younger age groups. Therefore, although the influence of loyalty schemes may be somewhat lower, the proportionate effect on revenues can often be startlingly higher when dealing with the older customer

More than a year after the financial markets crisis began, economic fallout would surely have inspired the closure of at least some loyalty schemes if they were not considered valuable and contributive to the bottom line. None of any significance has closed over the period, which has actually seen net growth, with launches from organisations as diverse as Silverjet, North Lanarkshire Libraries, Builders Merchants NMBS, National Express East Coast, and Green Rewards.

Clearly, different industries are likely to obtain more positive result from their loyalty initiatives than others. However, the findings of this report should not be taken lying down. Whilst it provides a snapshot of the current status quo, and reveals clear sector differences, the imaginative professional can also take this report as a wake-up call to implement a fresh initiative to rise above their industry average and achieve true competitive differentiation through their loyalty programmes in 2009.