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Loyalty Programs on Rise

Sep 1, 2009

Participation in loyalty or rewards programs has increased 19 percent since 2007, according to a recent study by Colloquy, a Cincinnati based research firm. The increase is taking place across all demographic segments, but is higher for some. Participation by Millennials, that is people between the ages of 18 and 25, has spiked 32 percent since last measured in 2007. It has risen 29 percent among women in the same time period.

The study suggests that consumers are leaning on loyalty programs to stretch household budgets further by earning rewards for their purchases. Among all kinds of companies, the retail category demonstrated the highest positive impact in reward program attitudes. "In spite of the dire economic news of the past 18 months, consumers remain as engaged, if not more, with loyalty and rewards programs," said Colloquy's editorial director, Rick Ferguson. "In fact, U.S. consumers clearly see value in program participation, and continue to leverage their activity as an antidote to hard times," he said. "They seek added value and are using rewards to stretch dollars."

The study of loyalty perceptions, titled, "After the Meltdown," examined trends in six consumer segments: General Population, which represents a statistically distributed sample of the U.S. overall; Affluent heads of household with annual incomes of $125,000 or greater; Millennials; Seniors, who are respondents age 60 or older; Core Women, which includes any female respondent age 25 to 49 with an annual income of $50,000 to $125,000; and Emerging Hispanic, which is a respondent age 21 or older of Hispanic origin, with an annual household income of $40,000 or less.

More than half (58 percent) of Millennials recalled participation in loyalty programs in the latest study. This is a 32 percent increase from two years ago. The data reveals more intriguing information about this group and their perceptions about loyalty programs, including:

- Nearly half of responding Millennials rate retail rewards programs as, "more important," during the recession.

- More than a quarter of Millennials are actively seeking to enroll in new programs to help expand their budgets.

- Somewhat expected, but still significant, Millennials are far more likely to enjoy engaging with programs through new media channels than the general population. More than 55 percent appreciate communicating through social networking sites, compared with 39 percent for the general population. Nearly as many Millennials, 52 percent, enjoy communication via cell phone or text message, versus 38 percent for general population.

"Millennials represent a golden opportunity in a time of economic darkness for loyalty marketers," said Kelly Hlavinka, a Colloquy partner and coauthor of the white paper. "This demographic is receptive to the wish list of loyalty initiatives: eager to join programs, eager to build relationships with their favorite brands, and eager to engage with new media channels."

A full copy of, "After the Meltdown: Consumer Attitudes and Perceptions About Loyalty Programs in the Post-Recession Economy," is available in a free download at www.colloquy.com/whitepapers.

Topic: Business Strategies

Related Articles: marketing 

Article ID: 1171

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