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    Retail Rewards of Growing Importance to Consumers

    Women, Gen Y display highest engagement; overall enrollment grows by 19 percent

    NEW YORK -- When the economy gets tough, the tough get rewards programs. According to Colloquy research that surveyed more than 2,100 U.S. consumers in April 2009, almost one-third (32.3 percent) reported that retail rewards programs have become "more important" in their budgeting strategies.

    Young adults between the ages of 18 and 25 (46.4 percent) and women between the ages of 26 and 59 (44.4 percent) attributed more importance to rewards programs during the recession.

    Similarly, 39.8 percent of emerging Hispanics (those over 21-years-old of Hispanic origin earning $40,000 or less annually), 33 percent of affluents (male and females earning $125,000 or more annually) and 23 percent of seniors (aged 60 or older) said the economy made rewards programs more important.

    Four in 10 (42.7 percent) consumers said the economy had "no difference" on their rewards importance, while 25 percent rated the programs as less important.

    "The good news is that consumers are clearly tell us they recognize the value that loyalty programs can deliver as they try to stretch their budgets further in this tough economy." said COLLOQUY Partner and study co-author Kelly Hlavinka. "Savvy retailers will double their efforts to enroll and activate women and young adults in their loyalty program to lock in more return visits. When consumer spending patterns improve, those same retailers will be in a much stronger position to grow revenues among the customers engaged in their loyalty programs."

    In terms of participation levels, consumers tended to favor department stores and other retail programs, averaging participation in 2.3 programs and 2.1 programs respectively. Grocery (1.7 programs), fuel (1.5 programs) and drug stores (1.3 programs) were also popular rewards categories. Participation among women was greatest in other retail (2.1 programs), grocery (2.0 programs), and department stores (2.0 programs) categories, while young adults favored department stores and other retail. Both categories' averaged participation at 2.3 programs.

    Overall retail rewards program enrollment increased 19 percent from Colloquy's previous study in 2007. Again, young adults (57.9 percent) and women (77 percent) saw significant growth, up 32 percent and 29 percent respectively from 2007. Affluents saw the greatest participation at 87.4 percent (up 10 percent). Participation among emerging Hispanics (47 percent) grew by 14 percent and senior participation (60.8 percent) grew by 12 percent.

    But will the growth in rewards programs continue once the economy is restored? According to Hlavinka, there's a risk customers will once again spread out their loyalty among various retailers, but the situation does offer some potential lessons.

    "This is where retailers can take a lesson from the pioneers in travel loyalty programs. Companies like Delta and Marriott are taking steps now to make it more attractive for customers to lock in their business with them," Hlavinka said. Delta's Skymiles new rollover benefits allow members to keep their miles from year to year, while Marriott's Elite rollover nights allows Elite status members the ability to carryover their additional nights to 2010.

    Hlavinka continued, "By adding strategically savvy benefits now, retail customers will continue to see the benefits in remaining loyal to their favorite retailers ┬Čeven when they are able to loosen their purse strings again."

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