Tuesday, October 6, 2009

The Growth of Loyalty Membership Programs

Posted by Princess Eva Angelica at 12:51 PM

The other day, I received a question from one of the readers of this blog about the number of members in loyalty programs. I was able to access some excellent data and wanted to share it with you.

For background, membership loyalty programs are marketing initiatives to retain and reward customers. They can be offered by major retailers or financial service companies or by your local barber shop. The goal of these programs is to move customers from a transactional relationship to a continuity relationship. Loyalty memberships are cousins to association memberships, sharing many of the same strategies, tactics and analytics.

The source of this data is drawn from The 2009 Colloquy Loyalty Marketing Census.

“For those interested in the bottom line, this report reveals that, from 2006 to 2008, U.S. loyalty program memberships increased from 1.341 billion to 1.807 billion—an adjusted growth rate of nearly 25 percent since our last Census. This number translates into 14.1 loyalty program memberships per U.S. household.”[1]

However, since most loyalty memberships do not require a regular renewal, there is a big difference between the actual number of members and those who are actively engaged with the brand. “The percentage of overall active memberships in the U.S.—those memberships that demonstrate some type of engagement within a 12-month period—remains flat at 43.8 percent, with a blended average of 6.2 active memberships per household.”[2]

The census also provided counts for US membership loyalty programs by sectors. The top five are:

  • Financial Services – 422.0 million

  • Airline – 277.4 million

  • Specialty Retail – 191.3 million

  • Hotel – 161.9 million

  • Grocery – 153.2 million[3]

When I teach about membership marketing, I focus on the five key touch points in the membership lifecycle. Each has its own challenges and opportunities. For many classic membership associations, recruitment is the number one challenge.
Based on this report, the challenge for building loyalty memberships is not so much recruiting new members, but in engaging them and getting them to take advantage of the membership. Using the report’s definition for engagement -- no interaction over the past year -- over 56 percent of the names in a loyalty member database are not active.

If you would like to download a copy of the report, here is the link for registration and download.

[1] Rick Ferguson and Kelly Hlavinka, The 2009 Colloquy Loyalty Marketing Census, Loyalty One, page 1.
[2] Ibid.
[3] Ibid. page 5.

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