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Strategy Briefing

Loyalty Marketing: Attracting and Retaining Customers in Difficult Times

May 2009

Price: US$2,600

About this Report

About this Report

Loyalty marketing has emerged as an integral part of the marketing strategies of retailers, travel groups and other service providers as they seek to maintain or expand their existing customer base in an ever more competitive environment. This briefing examines its place in marketing consumer goods and services in the downturn, citing innovate examples in core sectors like retail and tourism and gives an idea of what the future holds.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings
     

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Delivery format

PDF/Word
Downloadable from MyPages

Table of Contents

Table of Contents

EXECUTIVE SUMMARY

Overview

  • Summary 1 Types of Loyalty Programme

Market Drivers

  • Summary 2 Factors Affecting Loyalty Marketing 2008

Key Trends

Outlook

INTRODUCTION

Definitions

Retailer reward/frequent shopper schemes

Frequent flyer/frequent guest schemes

Credit card/store card reward programmes

Multi-partner programmes

Couponing

Loyalty programme managers

History of Loyalty Marketing

MARKET DRIVERS

Economic Factors

The worsening economy

  • Table 1 GDP Growth in Major Markets 2003-2008

Consumer reaction to recession

Retail Trends

Changing distribution patterns

Retail sales growth

  • Table 2 Global Retail Sales 2003-2008

Retailer Consolidation

  • Chart 2 Grocery Retailer Concentration in Developed Markets 2008
  • Summary 3 World’s Leading Retailers 2008

Growth formats

  • Chart 3 Global Penetration of Selected Retail Formats 2003/2008

The growing emphasis on value

Travel Trends

Customer loyalty a growing concern

  • Table 3 Airline Industry Challenges 2007

Growth in the tourism industry

  • Table 4 Global Tourism Arrivals 2003-2008

Industry Consolidation

  • Summary 4 Selected Major Travel and Tourism Companies 2008

The Growing Importance of Data Mining

Data collection becomes more sophisticated

Data for dollars

Consumer backlash

Changing Legislation

Abolition of German discount laws

Data protection laws

New banking regulations allow for co-branded cards

Increased Internet Usage

Broadband becomes universal

Internet loses US-bias

Consumer advocacy

Growth of e-commerce

  • Table 5 Internet Shopping as a % Total Retail Sales by Market 2003/2008

E-travel still on the up

Consumers take control

Growing Use of Financial Cards

Credit culture lives on

Combining loyalty with credit

China enjoys credit boom

  • Table 6 Credit and Store Cards in Circulation 2003-2008

Store cards lose popularity

  • Chart 4 Top Ten Markets for Store Cards 2008

THE LOYALTY MARKET

Measuring Success

Return on Investment

  • Table 7 USA: Frequent Shopper Programme Success Indicators 2008

Share of wallet

Consumer participation rates

Company participation rates

  • Chart 5 UK: Penetration of Loyalty Schemes 2003-2008
  • Chart 6 UK: Penetration of Loyalty Schemes by Sector 2008

Loyalty Agency Developments

In-house versus outsourced programmes

Consolidation

Spin-offs by airlines

KEY TRENDS IN THE RETAIL SECTOR

Overview

The need to encourage loyalty

Loyalty Versus Equity

Types of message

Major Loyalty Programmes

Tesco sets the example

Carrefour leads French market

Drugstores fight back

International versus local programmes

Fee versus no fee

  • Summary 5 Selected Retailer Loyalty Programmes in Major Markets 2008

Coalition Schemes

Retailer-based programmes

Lifestage/Lifestyle schemes

Travel-based coalition programmes

  • Summary 6 Selected Coalition Loyalty Programmes in Major Markets 2008

Credit Card Reward Programmes

Retailers diversify into banking

New regulations allow for co-branding in France

Store cards remain popular in the US

  • Summary 7 Selected Store and Credit Card Loyalty Programmes 2008

Growth in emerging markets

Coalition model dominates

On-line coalition programmes expand

Chinese prefer discount cards

Loyalty programmes enter Russia

  • Summary 8 Selected Major Coalition Loyalty Programmes in Emerging Markets 2008

Use of Data

Types of information collected

  • Table 8 US: Information Collected Through Frequent Shopper Programmes 2008

Segmentation and targeting

  • Table 9 US: Ways of Leveraging Collected Data 2008

Promoting private label

Tailoring rewards

  • Table 10 US: Frequent Shopper Programme Benefits 2008

Loyalty and the Environment

Technology in Loyalty Marketing

More accurate targeting

Electronic communication

Tracking in-store movements

Integration of loyalty programmes

Biometrics

Couponing

Coupons welcome in recession

Internet coupons take off

Mobile coupons offer convenience and ecological benefits

Couponing hits Facebook

KEY TRENDS IN THE TRAVEL SECTOR

Overview

Travellers become more fickle

FFP membership soars

The value of air miles

Increased collaboration with partners

Company Activity

FFPs operate largest programmes

JAL enjoys success in Japan

BA focuses on most lucrative customers

Low-cost carriers

IHG leads in frequent guest programmes

Marriott Rewards wins on longevity

More hotel groups abolish blackout dates

Accor launches A Club

On-line travel agents join the fray

  • Summary 9 Major Travel Company Loyalty Programmes 2008

Credit Card Loyalty Programmes

Banks compete with own deals

Co-branded cards big in Japan

US airlines go head to head

Miles & More goes international

Hotel groups target premium users

On-line travel agents offer more flexible options

  • Summary 10 Selected Credit Card/Travel Partnerships 2008

Reward Differentiation

Experiential rewards

Carbon offsetting

Travel currency

Segmentation

Internationalisation

Hotel groups develop global programmes

IHG adapts to local preferences

TRENDS IN OTHER SECTORS

Entertainment

Casinos

Cinemas

Fuel

FUTURE OUTLOOK

Trends to Watch

Loyalty programmes will become key focus for differentiation

Economic prospects darken

  • Chart 7 Forecast Global GDP Growth 2008-2013

Changing consumer behaviour: frugality will become the norm

Loyalty versus discounting

The future impact of technology

Coupons to enter the digital age

Capturing Generation Y

Coalition programmes to develop further

Growth of co-branded credit cards

  • Table 11 Forecast Number of Personal Credit Cards and Store Cards in Circulation 2008-2013

Globalisation

Recommendations

Challenges ahead

Optimising access

Differentiating the offer

  • Summary 11 Key Success Factors in Loyalty Marketing

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