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LoyaltyOne - 68% of U.S. Consumers Give Loyalty Reward Program Communications Low Scores

Millennials clamor for communication via new media

TORONTO (August 13, 2009) - Far too many of those mailings, emails and Facebook messages that companies send to their loyalty reward program members miss the mark, according to consumer survey research released today by customer loyalty agency Direct Antidote, a LoyaltyOne company.

Just 32% of U.S. consumers rated reward program communications 8 or higher on a 1 to 10 scale for measuring relevancy to their personal needs - with 68% giving a score of 7 or below. The Direct Antidote research is based on 2,152 completed surveys from consumers nationwide.

Direct Antidote's study centered on loyalty rewards communications, such as annual points balance reports, special earning offers and program information. Consumers were asked to rank the relevance of the communications they receive from "not at all relevant" to "extremely relevant" on a 1 to 10 scale. Despite marketers devotion to customized messaging, Direct Antidote's results across all demographics surveyed showed decidedly average relevance scores, with Seniors reporting the lowest perceived relevance at a 5.7 mean score, and Young Adults and Hispanics tied for the highest at 6.9.

"We are in the era of enhanced customer expectations, where the empowered consumer has a strong desire for engagement. And clearly the loyalty industry is falling short on delivering the highly-personalized, relevant communications that consumers expect," said Di Cullen, president of Direct Antidote.

"The data offers an opportunity for loyalty marketers to step up on several fronts," continued Cullen. Cullen cited the following strategies to improve communication relevance:

• Create offers that appeal to the trends and values of the times, such as the green movement or recession-stoked consumer frugality;

• Leverage partnerships with other brands to share data, drive down costs and drive up the value proposition to the consumer;

• Explore alternative sources to find new ways to mine for information that is compelling to customers.

Practicing what it preaches, Direct Antidote recently launched a campaign for Canadian loyalty program operator, the AIR MILES Reward Program, in an attempt to improve relevance and consumer response rates. The firm created an unprecedented 778,000 unique versions of an account statement mailed to over three million members. Early tests yielded a more than 100% boost in response rates and a very green-friendly 40% reduction in paper waste.

In another key finding from the study, the Senior demographic reported a spike in engagement with rewards programs since the same questions were asked in 2007. Over the two-year period the amount of Seniors that reported reading special offers sent via mail increased 64%; the amount saying that they read mailed statements was up 21%; and the amount responding to member surveys increased 21%.

At the other end of the spectrum, the survey found Young Adults or Millennials outpacing all demographics in appreciation of engagement with rewards programs through new media. A somewhat expected but still notable 52% of Millennials strongly appreciate communication via cell phone or text message and 55% said the same about social networking sites. This compares with the General Population at 38% and 39%, respectively.

"The stats are indicators that the loyalty business enjoys appeal across the span of demographics. As Baby Boomers move from workforce to retirement, there is great opportunity to engage these veteran loyalty players with communications that appeal to their new lifestyle. At the polar opposite, fostering engaged, loyal customers within the Young Adult demo means approaching them on emerging channels," concluded Cullen.

Direct Antidote's research was gathered in coordination with loyalty marketing publisher COLLOQUY. The study of loyalty program perceptions examined trends in six consumer segments: General Population representing a statistically distributed sample of the U.S. overall; Affluent (heads of household with annual incomes of $125,000 or greater); Millennials or Young Adults (any respondent 18 to 25 years of age); Seniors (any respondent 60 years or older); Core Women (any female respondent age 25 to 49 with an annual income between $50,000 and $125,000); and Emerging Hispanic (any respondent age 21 or older of Hispanic origin with an annual household income of $40,000 or less). April 2009 online survey respondents are broadly representative of the U.S. population within each consumer segment. The research obtained a total of 2,152 completed survey interviews.