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Who Has What Loyalty Cards in Their Wallet?

By Aug 09, 2006

Rewards program members were more likely to spend a greater amount of money in the past six months across 11 retail categories, including home improvement, electronics, grocery and book stores, according to a recent study conducted by Maritz Research, a market research firm.

“It is interesting to see that rewards program members are spending more,” said Tim Crank, director of product management, Maritz in a statement. “However, we need to keep in mind that the programs might not directly cause shoppers to increase their purchases. It could be that those who spend more join programs to obtain rewards for purchases they would have made even if they weren’t members.”

Whatever the reason, enrolling shoppers who are spending more is a great tool for retailers because it allows them to mine the data collected from loyalty programs to identify and create a dialogue with profitable customers, Crank said.

In its study, St. Louis, MO-based Maritz examined various demographic characteristics, including rural versus city living, marital status, income levels and gender, for significant differences to determine what types of people are carrying consumer loyalty program cards in their wallets.

The study revealed that loyalty program members are more likely to be one or more of the following: female, young, living with children under the age of 18 in the household or from the Northeast. Women (62%) are significantly more likely to belong to a store or membership loyalty program than men. However, more than half of the men surveyed (54%) say they are part of a program.

“The significant difference between the number of men and women who belong to a store or membership program isn’t shocking because most people expect moms to be the primary purchaser in the household,” Crank said. “What should be of interest for retailers is that more than half of the male population carries around plastic loyalty program cards in their wallets. Based on this finding, retailers should tell their employees not to hesitate to ask men about joining a program.”

Customer loyalty program members tend to be younger than those non-members with 71% of 25- to 34-year-olds belonging to store or membership programs. Survey respondents older than 55 comprised the highest percentage of non-program members.

“A logical assumption is that those in or approaching retirement anticipate they won’t be spending as much money as younger shoppers and might not feel that they’ll reap the benefits of loyalty programs,” Crank said. “The challenge for retailers is to recognize that customers can be valuable to them in all life stages, and that they can keep all shoppers enrolled and active in loyalty programs by offering rewards that are meaningful to them throughout their lives.”

Regardless of the fact that many stores are national chains, members of customer rewards programs tend to be clustered by region. The Northeast (70%) and West (63%) have the highest concentration of store or membership loyalty program participants. People in the South (37%) and the Midwest (42%) are significantly more likely to not belong to any type of consumer loyalty program, the study found.

“It’s important to know who is likely to join a program so that stores can adjust their merchandise offerings, layout and product adjacencies, and customer service to cater to their most loyal customers,” Crank said. “However, knowing which demographic groups are likely not to be members offers retailers an opportunity to identify and interact with other potentially valuable customers who may not be interested in being a part of a loyalty program.”

Non-members tend to have one or more of the following significantly relevant characteristics (by retail category):

* Specialty Apparel/Large Premium Specialty Stores (e.g., Nordstrom, Gap)—From the South.

* Home improvement (e.g., Home Depot, Lowes)—Single/widowed/divorced; no children under the age of 18 in the household; women.

* Electronics (e.g., Best Buy, Circuit City)—65 years old and older; no children under the age of 18 in the household; women.

* Department store or mass merchandise (e.g., Macy’s, Sears)—Older (age 35 and over); from the West, South and Midwest.

* Drug stores (e.g., Walgreens, Medicine Shoppe)—Men; from the West; living in a suburb, town or rural area.

* Discount mass merchandisers (e.g., Target, Wal-Mart)—Single/widowed/divorced; no children under the age of 18 in the household.

* Grocery stores (e.g., Kroger, Safeway)—From the Midwest.

* Toy stores (e.g., Toys R Us; FAO Schwarz)—Women.

* Office supply stores (e.g., Office Depot, Staples)—From the Midwest.

* Book stores (e.g., Barnes & Noble, Borders)—Women; with incomes less than $30,000 per year.

* Home furnishing stores (e.g., Pottery Barn, Linens ‘n Things)—Women; with children under the age of 18.

Additionally, the study found that an overwhelming majority of respondents (77%) are members of grocery store (e.g., Kroger, Safeway) loyalty programs.

The online study questioned 2,178 adult shoppers who made purchases in the six months prior to the study from at least one of the 11 retail categories listed above.

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