Loyalty participation rates surge

The inclusion of mass merchandiser loyalty programs, such as Target’s REDcard, resulted in membership in U.S. loyalty programs increasing to 1.8 billion this year, a 24% increases from 2007, when membership was 1.3 billion, according to the Colloquy Loyalty Census. In addition to mass merchandisers, the group included such industry segments as car rentals and cruise lines in its 2009 numbers. Even if the three new segments are excluded, membership increased to nearly 1.7 billion. That means the average U.S. household belongs to 14.1 loyalty programs and actively participates in 6.2 of them, compared with 2007 when the household averages were 12 programs and 4.7 of them were actively used.

Here’s the rub though, the definition of active is very broad, and typically a retailer will characterize an account as active if there was at least one instance of activity during the prior 12-month period. By that standard, there were roughly 793 active memberships out of the 2009 total of 1.8 billion.

“With roughly 1 billion inactive memberships, essentially names in databases, it’s fair to say the U.S. loyalty industry has reached the middle-age bloat stage,” said Colloquy partner Kelly Hlavinka.

“Given the bursting of the credit bubble, the recession and pressure to control program costs, loyalty marketers must turn to growing program value, not the size of their membership base,” added Colloquy editorial director Rick Ferguson. “Conditions are ripe for marketers to use loyalty data across the enterprise, enhance value propositions and adopt innovative loyalty models, such as coalitions, as they seek to revive lapsed members and turn engaged members into profitable, loyal customers.”