JC Lupis | Marketing Charts | Fri, 07 Jul 2017 13:30:13 +0000

The number of individual loyalty program memberships in the US almost tripled in the decade spanning from 2006 (1.3 billion) through 2016 (3.8 billion), according to our review of COLLOQUY’s latest Loyalty Census report [download page] and its earlier versions. Here are 5 takeaways from the report.

1. The Rate of Membership Growth Has Slowed

The estimated 3.8 billion memberships in 2016 represented a 15% increase from 3.3 billion a couple of years earlier. That’s the slowest rate of 2-year growth in the past decade, with the previous low being 16% in 2010. Most other 2-year periods saw membership growth of double that rate, or more.

2. The Retail and Travel/Hospitality Industries Account for 7 in 10 Memberships

The largest industry players in the US loyalty program landscape are:

  • Retail: 42% share (1.6 billion members);
  • Travel & Hospitality: 29% share (1.1 billion members); and
  • Financial 17% share (664 million members).

The number of memberships in the retail sector grew from 1.3 billion in 2014, though that overall growth masked some differences within sub-sectors. For example, grocery memberships declined by 24% to 142.4 million (attributed in part to mergers and acquisition activity), while drugstore memberships increased by 4% to 279.1 million and department store memberships by 24% to 283.9 million.

Meanwhile, the number of program memberships in the travel and hospitality industry grew by 20% from 2014 to 2016, while the number of memberships in financial services loyalty programs increased by 15%.

3. 54% of Memberships Are Inactive… And That’s An Improvement

The majority of memberships are inactive, per the report. In fact, more than one-quarter (28%) of members abandon a program before having ever even redeemed a point, or mile.

Nevertheless, this ranks as an improvement over the last Loyalty Census, in which 58% of memberships were deemed inactive.

Indeed, the 46% active in 2016 is the highest rate of participation in the 2006-2016 span, sharing that with 2010 (also 46%).

In 2006, just 39.5% of memberships were active.

4. The Good Aspects

That 54% of memberships are inactive suggests that the loyalty program industry is facing some issues. (See here for research surrounding ways to improve the loyalty experience.)

But it’s not all bad. In an accompanying survey of 2,258 US loyalty program members aged 15-65, COLLOQUY found that a slight majority (51%) continue to trust loyalty programs with their information.

The biggest explicit motivator for active participation is a program being easy to use. Main drivers differ by industry, though: in retail, members want programs that are easy to understand, while in travel and hospitality, members are spurred by love for the brand or service tops the list. Restaurant loyalty participation depends more on how quickly rewards can be earned, the size of the discounts, and the range of rewards offered.

5. The Bad Aspects

As for the negative aspects of memberships, the survey results indicate that issues surrounding rewards are the main deterrents.

Indeed, by far the most commonly-cited reasons for abandoning a program are:

  • Taking too long to earn points or miles for rewards (57%); and
  • The program not providing rewards/offers the member was interested in (53%).

The quality of the communications also play a secondary part, with some complaining of too many communications (38%) or of irrelevant ones (36%).

The full study – which contains much more data and a set of recommendations – can be downloaded here.

About the Data: COLLOQUY describes its methodology in part as follows:

“A consumer survey of 4,513 people — 2,258 Americans and 2,255 Canadians — who participate in at least one loyalty program was completed between Nov. 29 and Dec. 14, 2016, to under- stand consumer sentiment and attitudes toward loyalty. All respondents were between the ages of 15 and 65, and the results were tested at the 95% confidence level. In addition, to determine drivers of active program participation, a factor analysis/correlation analysis was conducted. Individual behavioral statements were correlated to the respondents’ most active loyalty program (the program in which they participate most often).”

“Audit research was conducted in April and May of 2017 to capture loyalty membership numbers from a variety of programs using secondary sources including press releases, annual reports, loyalty program proprietary websites, research reports and third-party publications. In addition, the inventories of loyalty programs in the U.S. and Canada were validated by contacting individual program leaders directly.”

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