As performance marketers have known for decades, loyalty marketing, the act of increasing customer value by focusing efforts on your existing customers, can be a powerful driver of company growth. Research conducted by Bain & Co has shown that retailers with a loyalty programme are 88% more profitable, on average, than competitors without one.
However there is also evidence to suggest that, whilst loyalty marketing represents a massive opportunity, few companies are actually realising it. Forrester research shows that nearly two thirds of loyalty progammes for retailers are ineffective, and Aberdeen Group research shows that 74% of retailers report ‘partial to no tangible improvements’ from their loyalty programmes.
So what does this tell us? Is time up for loyalty marketing? Should marketers be focusing their attentions on other types of marketing? The answer is far from it – it seems that companies aren’t making the most of the potential because of poor execution.