Members of Customer Loyalty Programs Generate Significantly More Revenue for Retailers Than Do Non-Members, Accenture Researc...
June 16 2016 - 8:57AM
Business Wire
Retail loyalty is big business – and retailers
are more focused on expanding their programs’ customer base than
program ROI
Members of retailers’ customer loyalty programs generate between
12 percent and 18 percent more revenue for retailers than
do customers who are not members of the loyalty programs, according
to new research from Accenture Interactive.
This key finding was based on a survey of retailers across
specialty, big-box, department, drug and convenience stores in the
United States. The Accenture research sought to identify key trends
and challenges of retailers’ loyalty programs.
“Today’s customer loyalty programs are an increasingly
expensive, complex and expansive business that extend beyond the
marketing team into the entire organization,” said Farrell Hudzik,
managing director of Accenture Interactive’s Global Loyalty and
Rewards practice. “Given that loyalty program members generate
significant incremental revenue compared with non-members, retail
loyalty program leaders must anticipate future growth trends and
capture the opportunity to differentiate in an increasingly
fragmented marketplace.”
Retailers more focused on boosting membership base than
ROI
Beyond the incremental increase in revenue, the research
identified another, and perhaps more surprising, finding: fewer
than one in five retailers focuses on ROI as a key metric of the
success of their loyalty program. Specifically, when asked to
identify success metrics for their program, only 19 percent of
the retailers surveyed cited ROI.
The key areas that retailers focus most on in terms of their
loyalty programs are program growth and revenue production metrics
– such as membership growth rates (cited by 45 percent of
respondents), share of transactions by members (42 percent)
and number of transactions per year (36 percent) – as well
member value metrics, such as retention rate (40 percent) and
customer long-term value (37 percent). Fewer are focused on
engagement metrics such as number of reward redemptions (cited by
32 percent of respondents), campaign response rates
(27 percent) and customers engaged socially
(16 percent).
“Given the maturity and sophistication of loyalty programs
today, it’s surprising how little scrutiny retailers place on
program ROI rather than just growing membership,” Hudzik said.
Challenges to loyalty growth: technology, competition,
financial, talent
According to Accenture’s research, the biggest challenges
retailers face regarding their loyalty programs relate to
technology, strategy, financial management and people/talent. When
asked to identify their biggest challenges, respondents most often
cited:
- Keeping up with the underlying
technology (mobile and digital capabilities) or investing enough in
technology (40 percent);
- Keeping up with competing loyalty
programs (33 percent);
- Managing the liability and financial
complexity of the program (33 percent); and
- Having enough people and the right kind
of talent required for today’s loyalty programs
(30 percent).
Retailers think their loyalty programs are differentiated;
customers don’t
While retailers believe that their loyalty/rewards programs are
differentiated from those of their competitors, customers don’t.
For instance, more than two-thirds (71 percent) of retailers
surveyed said that their program was “differentiated” or
“significantly differentiated” from those of their competitors.
However, other research has found that roughly one-third of each
retailer’s loyalty members cross-shop at another key competitor
within the same channel1, and nearly half (44 percent) of
consumers believe that it would be easy to replace a retailer’s
loyalty program with a competitor’s program2.
C-suite support critical, but could be stronger
Nearly all respondents (97 percent) in Accenture’s research said
that their loyalty programs receive C-suite support. However, fewer
than half (43 percent) said they received “strong” C-suite
support, with slightly more than half (54 percent) saying
their programs receive “moderate” C-suite support.
“As with nearly every other industry, digital technology is
transforming how retailers are interacting with their customers,
suppliers and other partners,” Hudzik said. “The success of any
good loyalty program hinges on the ability to identify and
understand one’s customers and then provide them with a seamless
experience through multiple touchpoints. For a retailer to set
itself apart with a compelling and accessible loyalty/rewards
program, its marketing department must have the total commitment of
the C-suite to ensure that it gets the resources necessary to
develop leading-edge analytics, digital and other technological
capabilities.”
Methodology
As part of a larger study on customer loyalty across a wide
range of industries, Accenture interviewed 106 retail industry
loyalty professionals across specialty retail stores,
big-box/department stores, and drug/convenience stores to
understand their current sentiment and future outlook on their
loyalty programs. Respondents held primary accountability for the
loyalty program or efforts within the organization, with common
titles being VP of Loyalty, VP of Customer Relationship Management,
and VP of Customer Experience. The research was conducted online in
March 2016.
About Accenture
Accenture (NYSE:ACN) is a leading global professional services
company, providing a broad range of services and solutions in
strategy, consulting, digital, technology and operations. Combining
unmatched experience and specialized skills across more than 40
industries and all business functions—underpinned by the world’s
largest delivery network—Accenture works at the intersection of
business and technology to help clients improve their performance
and create sustainable value for their stakeholders. With
approximately 373,000 people serving clients in more than 120
countries, Accenture drives innovation to improve the way the world
works and lives. Visit us at www.accenture.com.
Accenture Interactive, part of Accenture Digital, helps the
world’s leading brands drive superior marketing performance across
the full multichannel customer experience. Accenture Interactive
offers integrated, industrialized and industry-driven digital
transformation and marketing solutions. It was recently named by Ad
Age as the world’s largest and fastest-growing digital agency. To
learn more follow us @Accenture Social and
visit www.accenture.com/interactive.
Copyright © 2016 Accenture. All rights reserved. Accenture, its
logo, and High Performance Delivered are trademarks of
Accenture.
1 Loyalty and Licentiousness in Today’s Shopper Landscape, by
Kantar Retail 2 Bond Brand Loyalty 2015 Loyalty Report
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AccentureCaroline Douglas, + 353 876 800
074caroline.douglas@accenture.comorKelly Coffed, + 1
404-219-3100kelly.coffed@accenture.com
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