Study: Top retailers find success with loyalty programs

BOSTON New research from Aberdeen Group reveals that 90% of best-in-class retailers indicate at least "some level of success to very successful results" from their programs, compared with an average of less than a third of average and laggard retailers.

Aberdeen reported that 47% of laggard retailers and 35% of industry average retailers indicate "no change in performance" from their loyalty program. This indicates a null return on investment on customer loyalty program dollars spent towards loyalty process, IT tools, and service.

"Best-in-Class retailers are currently 1.8 times more likely than laggards to develop and implement a strategy to improve personalized promotions that are created by using customer wallet share and customer purchase behavior analysis," says Sahir Anand, research director and chief author of the report. "These dollar value or points-based promotions are directly tied to customer loyalty programs such as rewards, merchant-funded loyalty programs, and referral-based discounts."

Furthermore, according to Aberdeen data, 53% of all retailers surveyed indicated that customers can join their loyalty program on the retail Web site. While ecommerce is steadily growing, the bulk of retailers' revenue and traffic comes from the store environment. The data indicate that 52% of retailers surveyed indicated that they have the capability to capture CRM data at the point-of-service or the point-of-sale (POS) register. However, only 37% of retailers reported that customers can join their loyalty program via retail POS, where the process is handled by the store associates.

"This gap between the POS capabilities the retailers possess and POS processes that enable loyalty program implementation show that retailers are not taking advantage of the technology afforded to them," states Anand.