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Loyalty Marketing: Attracting and Retaining Customers in Difficult Times

May 2009

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.

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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

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 Chart 1 Largest Retail Markets 2008 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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