A New Opportunity for Loyalty Programs?

With economic woes deepening around the world, RSR has heard more and more that retailers are turning to customer data and the insights they provide to help them win the fight for a piece of what appears to be a smaller pie. However, while plenty of retailers have years and years of customer data, even those who have customer insights have been slow to act on them. RetailWire’s discussion on the topic reveals a near-unanimous voice in favor of a much more differentiated approach.

Writing in The Wall Street Journal, Professors Lars Meyer-Waarden of the University of Toulouse III-Paul Sabatier in Toulouse, France, and Christophe Benavent of the University of Paris X-Nanterre argued that customers buying on price promotion would likely revert back to their regular brands or buying habits shortly afterward. At best, only a temporary change in sales and market share results.

 

The professors also said loyalty programs often aren't attracting new customers. In researching grocery stores, they found that 88 percent of loyalty cardholders were clients of the store two years before joining the program. The rewards are often not compelling enough to attract many new customers or the proliferation of programs has made them less unique.

 

Not surprisingly, the professors argued that retailers should focus on providing customers with more "individualized rewards, based on what they value."

A discussion question was posed to readers of RetailWire.

Do you agree that many customer loyalty programs are largely unproductive due to a one-size-fits-all approach? What are the opportunities and challenges in driving rewards programs around individuals' purchasing motivations?

The two scholars identified five different purchase motivations in surveying shoppers where rewards can be better customized to meet consumer buying motivations.

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Read the five motivations and the full story