Happenings in the retail space - Part 1
Tuesday, May 31, 2011
Posted by ACI Worldwide
For those of you interested in what is going on in the merchant retail space, specifically in the US, I wanted to share with you the findings of some research we ran recently, which identified that half of U.S. consumers would prefer one card for all of their retail loyalty programs. They also said that loyalty and rewards programs have become too complicated and burdensome, and they aren’t truly driving loyalty.
I find these results very interesting, because so many retailers do run loyalty programs and therefore, one would assume, customer loyalty is important to them – but they are still ‘missing a trick’ so to speak.
Three quarters of Americans (74%) are members of at least one retail loyalty and reward program, and 27% are members of four or more, according to the study. Consumers want to consolidate their myriad of loyalty and rewards programs on a single device, and they expect to be able to use their rewards regardless of whether they are shopping in the store or online. Unfortunately, at the moment, loyalty programs don’t deliver. For example we also found that:
• Nearly half (49%) of loyalty program members never or rarely take advantage of loyalty program perks when shopping online.
• More than three-quarters (78%) of Americans who are members of loyalty card programs say easy online access to their loyalty memberships would make them more likely to shop at the retail websites that honor their loyalty programs online.
• When shopping online, only half (53%) of Americans who are members of retail loyalty rewards programs visit websites of retailers where they can earn discounts and rewards, before looking elsewhere.
• The need for a consolidated loyalty device has been well-established, and half of American consumers (52%) prefer a single card that can hold all their memberships, versus a consolidated key fob or mobile application.
• One-third (32%) of Americans prefer a consolidated key chain card or key fob; 17% of Americans would like to see a mobile app that consolidates all of their retail loyalty rewards programs.
In the United Sates, collective loyalty programs in which multiple retailers share the costs of the program and a common currency or points system, have yet to gain widespread adoption, though ‘programs with a cause’ like uPromise have had some success. In other countries, particularly the U.K. and South Africa, coalition programs are very well established. With American consumers demanding consolidated loyalty and rewards programs, U.S. retailers need to move in this direction.
Americans also agree that retail loyalty and rewards programs become problematic when shopping online. So difficult, in fact, that nearly half (49%) of loyalty program members never or rarely take advantage of loyalty program perks when shopping online.
Online shopping is simple and convenient; it should be just as easy to access loyalty programs online. More than three-quarters (78%) of Americans say that easy online access to their loyalty memberships would make them more likely to shop at the retail websites that honor their loyalty programs online.
There’s a huge disconnect between retailers and consumers. When we asked Americans with loyalty card memberships which retail websites they visit first when they shop online, only half (53%) of them told us they go to online retailers where they can earn discounts and rewards. When consumers shop online and can’t use their rewards programs, they are disappointed and question the value of the program; this is a problem and an opportunity for retailers to increase sales and reduce shopping cart abandon rates.
These results highlight the need for retailers to take a proper look at their loyalty schemes, and identify where they might be going wrong.
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