By: Cathy Harms
The big Colloquy 2011 Loyalty Census was released last month and since then it has been quoted hundreds of times by all sorts of publications. I always look forward to the report because it provides a big picture view of the loyalty industry and particularly the consumer engagement with loyalty. If you have not read it here are the main points:
o Over 2 billion loyalty program memberships in the US (increase of 16.3% over 2008)
o Average per household memberships increased from 14 to 18 in 2010
o Yet consumers are only active (visit at least 1 time in 12 months) in 8.4 programs
o 54% of consumers are enrolled but inactive in loyalty programs
o Nearly one-third - $16 billion – of those rewards earned will go unused
The last bullet point is one I’d like to focus on. I have read several articles with different perspectives as to why so many loyalty rewards go unused. Some speculate that loyalty programs don’t create loyalty because people join every program and then decide which one to be loyal to. The lucky 8 programs that get the consumers’ attention are the ones benefitting from the loyalty strategy. If you happen to be the 12th program, you may never get that consumer to visit a second time.
What baffles me is why so many consumers that are active in loyalty programs are leaving money on the table by not redeeming the points. I am guessing the biggest issue is the ease of getting the rewards. Some programs make it almost impossible to use the points – Delta is a great example. Attempting to use miles to get a free flight is difficult and costs more points compared to using my USBank Flex Perks card.
In addition, consumers are so busy and don’t have time to think about how many points they have in each of their loyalty programs. Let’s imagine that the only way to redeem points is to go online to each retailer's site, choose an award and print out the certificate. The certificate gets lost in a purse and never gets used. Wouldn’t it be nice to have a mobile app where you could store all of your loyalty program memberships and be able to see current rewards? That would make reward redemption increase because it is easy for consumers. In the meantime, communicating with your members is key so they remember to use their points. The joy of the reward is what will keep members coming back and looking forward to the next one.