Apr 25, 2009

Loyalty card saturation – the elephant in the room

According to a recent report by Colloquy, each U.S. household has an average of 14.1 loyalty program memberships, up from about a dozen in 2006. However, just 43.8% of those programs are active, translating into 6.2 average active memberships per household. Less than half of loyalty cards are active!

“With the current economic climate, marketers must shift focus from growing their loyalty programs’ size to growing their value,” said the report.

The loyalty industry has been complaining about market saturation for several years already, but has still not come up with a viable solution. The focus always seems to fall back on the same action plan that the report also suggests, “prove program ROI, integrate loyalty data at the enterprise level, and design value propositions that will engage customers of high current and high potential value.”

In other words, engage customers through increased mailings and, especially, juicier rewards. But there are other ways to solve the problem, you just have to look at things from a different angle.

The fundamental problem has a number, provided by Colloquy: 14.1. How can you possibly carry 14 cards in your wallet? That’s just nuts! The most you really want to carry at any one time is also a number given by Colloquy: 6.2, carried by one or two people in the household. And even that number is scary to lots of people.

Loyalty practitioners are fighting an increasingly uphill battle trying to get their card to become part of that privileged few in your wallet. And most are using the same tools - increased mailings and bigger rewards.

Instead, Taggo looks at the problem from a completely different angle: put the cards on your mobile phone so you always have them with you. I am betting my money right now that activation will instantly go up with no need for juicier rewards or more mailings.

5 comments:

White Magpie said...

Mobile banking is cool. mobile payment is another thingy altogether. think it will be time before that happens.

John Racine said...

Program saturation has been an issue in the U.S. for at least a decade. The real challenge is program usage with measurable results. How does your new company address those issues?

Aneace Haddad said...

I am doing a retailer survey right now, following on the consumer survey I did at the end of 2008. The survey isn't done yet, but I can already see that there is a widely held view that loyalty usage is low because people leave their cards at home. That is the top explanation from loyalty marketing executives, ahead of things like benefits being too small, etc. Taggo solves the problem by making sure customers have their 'cards' with them all the time, on their Taggo mobile wallets.

Rocky said...

I appreciate the labour you have put in developing this blog. Nice and informative.

White Magpie said...

No updates?