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Membership in U.S. loyalty rewards programs has reached 1.3
billion, more than four times the national population, according to
COLLOQUY research that provides the first comprehensive census-taking
of loyalty marketing since the modern loyalty era began with frequent
flyer incentives in 1981.
COLLOQUY's benchmark-setting measurement of the scope of loyalty
marketing, based on a fourth-quarter 2006 analysis of a dozen specific
business sectors, reveals that the average U.S. household belongs to
no less than 12 loyalty programs.
A loyalty program recognizes and rewards the best customers of a
business. COLLOQUY's Loyalty Census 2007 tabulates program members,
not unique individuals. COLLOQUY is a loyalty marketing publisher and
consultancy.
In a key finding, the COLLOQUY census shows that "active
participation" in loyalty programs is a blended average of 39.5
percent across all sectors analyzed, a number that COLLOQUY experts
characterized as "dismal." The definition of active participation
varies by industry, but at baseline, an active program participant is
distinguished from a one-time shopper or flyer, down to an inactive
name in a database. Of the 12 programs per average household
identified in the census, only 4.7 yield active participation.
COLLOQUY Senior Director Kelly Hlavinka addressed a major question
posed by the census results -- Does the participation data mean the
loyalty empire has reached a saturation point? "Loyalty memberships
are flying dangerously high. Fat membership roles may look good in a
press release, but active loyalty program members are the only members
who count," said Hlavinka. "Marketers must adopt highly targeted
enrollment strategies and allocate resources where they accomplish the
most good. That means enroll the right customers, drive active
participation programs, employ reward bonuses selectively and use
loyalty data throughout the organization to increase customer
insight."
COLLOQUY's landmark census results are based on information
obtained from over 1,000 loyalty program sources, including company
press releases, program web sites, shareholder annual reports,
research reports, third party publications and confidential
interviews. Business sectors covered in the census are Airlines,
Financial Services, Hotel, Restaurant, Gaming, Grocery, Retail Fuel,
Specialty Retail, Drug and Discount Stores, Department Stores,
Internet and Miscellaneous.
Some other key census findings are as follows:
-- Four business sectors, Airlines, Financial Services, Grocery
and Specialty Retail, account for 57 percent of the total
loyalty program membership
-- Airline reward-seat inventory continues to shrink and mileage
expiration periods grow ever shorter - which means that the
devaluation of mileage currency will continue
-- Financial Service loyalty programs, fueled by credit cards
with rewards as primary competitive weapons, are in a "Golden
Age" with 239 million members and 164 percent growth since
2000
-- Grocers who are fighting a perception of loyalty-program
ubiquity and sameness will adopt loyalty models that allow for
richer customer segmentation funded largely by packaged goods
manufacturers
-- Hotel loyalty programs will enjoy modest growth as consumers
purged from airline frequent flyer roles migrate to hotel
programs offering better value
-- Gaming companies' healthy profits will allow them to incubate
the best loyalty practices in coming years; as gaming leads,
the rest of the loyalty industry will follow
-- The restaurant industry is poised for a loyalty renaissance.
"If loyalty program membership growth continues unabated, we may
all end up with massive headaches," said COLLOQUY Editorial Director
Rick Ferguson. "The biggest and potentially most progressive method of
making programs more successful is the one thing that loyalty
marketers are most loathe to do: trim the fat from their membership
roles."
COLLOQUY provides a complete report on the census in a white paper
titled, "CensusTalk: Sizing Up the U.S. Loyalty Marketing Industry."
It is available free of charge at www.colloquy.com/whitepapers.
About COLLOQUY:
COLLOQUY comprises a collection of resources devoted to the global
loyalty-marketing industry. The flagship resources are COLLOQUY
Consulting, a loyalty consulting practice, COLLOQUY(R), a magazine
serving the loyalty-marketing industry since 1990, COLLOQUY.COM, the
most comprehensive loyalty web site in the world, and COLLOQUY's
Research and Education divisions. Together they provide a worldwide
audience of 28,000+ marketers with consulting, news, editorial,
educational and research services across all industries and around the
globe. COLLOQUY magazine and email subscriptions are available at no
cost to qualified persons at www.colloquy.com or by calling
513.248.9184.
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