New Research to Highlight Key Loyalty Program Objectives

In an effort to assess the increasingly important concept of customer loyalty, Aberdeen Research recently previewed its upcoming study, focused on re-examining and optimize cross channel loyalty offerings.

An advanced research preview of the report, titled Cross-Channel Customer Loyalty: Rewards vs. Promotions, and the Battle for ROI, indicates that there is a growing need for retailers to assess how cross channel loyalty offerings and reward plans compare with promotions, for a clearer understanding on how to increase customer recency, frequency and monetary (PFM) performance.

Best-in-Class retailers are testaments to the positive effects of proper blend of cross channel loyalty offer optimization (customer-segment based point perk or dollar rewards and multi-tier, multi-channel offers or promotions), which are necessary to achieve higher customer retention rates (profitable), as well as reduced customer attrition rates of those with the highest profitability, the report said.


Customer loyalty begins with consumer insights, offer creation, and customer experience management, the research preview said. While the shopping experience is reliant upon consistency in the cross-channel retail environment, the report said that retailers are currently ignoring the connectivity between the consumers buying behavior, cross-channel preferences, and what drives loyalty RFM performance.

Generally speaking, retailers are missing the boat on optimizing personalized offers for customers. Aberdeen’s March 2009 Cutting-Edge Customer Loyalty benchmark report found that personalized promotions across all channels are utilized by less than a quarter of all retailers. Moreover, only 22% of retailers identified cross channel shopping as ROI criteria for their loyalty programs, while 67% of retailers rate their loyalty program as “partially successful” or “not successful,” marking no discernable ROI on their loyalty investment.

The preview stresses the importance of rewards (dollars or perks) to connect retailers’ loyalty efforts with buying behavior. By placing a heavier emphasis on aligning customer needs with channel and loyalty needs, retailers can increase customer retention, re-activation and conversion, the report said.

Best Buy: Best in Class
Aberdeen points to Best Buy’s Rewards Zone loyalty program, which has scaled from eight million members to 30 million, a growth rate of nearly 400%, since its launch 24 months ago. The program was initially fee-based, but Best Buy realized that a no-fee program would enable a better relationship with its most profitable customers. The electronics retailer has leveraged data analytics as the basis for its reward program, according to the report.

Key Objectives
The upcoming research report will show that, to achieve a high degree of flexibility and customer responsiveness, retailers must focus on synergizing strategic actions and new technologies to:

• Create the right mix of loyalty elements and promotion offers

• Ensure retention tactics of existing customers

• Target lapsed customers for re-activation

• Deliver consistent loyalty program across all applicable channels

• Track loyalty satisfaction across all channels

• Develop personalized promotions for all channels and customer tiers

Aberdeen Research encourages retail technology providers, application providers, loyalty providers and consulting services focused on loyalty to partake in the research survey.

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