Women and Gen Y Are Key Targets for Retail Loyalty Programs

CHALLENGE:
Research has been telling us Gen Ys tend not to be loyal consumers in comparison to older Boomer consumers. But the current economic recession has made more consumers sensitive to prices and deals. So do the typical deals offered by loyalty programs now draw more Gen Ys? New research says absolutely!

How they researched it:
An online survey was launched in April, 2009, by Colloquy, a marketing consulting and research organization, to follow up on a similar study in 2007. They collected 2,152 completed responses. The focus was on loyalty programs, such as “frequent flyer” or “frequent buyer” programs maintained by the travel industry and retail stores.

What happened?
Compared to their 2007 study, overall participation in loyalty programs have increased by 19%. Participation by women has jumped by 29% and Gen Ys are up by 32%. Nearly half of women and Gen Ys as well, report retail rewards programs are “more important” during the recession, and 27% of Gen Ys say they are actively seeking out new loyalty programs with which to stretch their budgets.

Interestingly, while loyalty program membership is up, redemption of rewards has stayed relatively constant. Consumers say they are saving (30.3%) their membership points rather than redeeming them on necessities (18.5%) or on luxuries (14.7%). Most redeem points for themselves rather than for gifts or family members.

Why Managers Should Care:
The research findings suggest that consumers, particularly women and Gen Ys, are using loyalty programs as a strategy to save. Hence, the core message for attracting new members to such program is more likely to be successful if “savings” is stressed. The savings could be for the future, and should focus on rewarding the buyer (loyalty member), not necessarily others.

The economy may be creating the predisposition of consumer response to loyalty programs, and this predisposition could be the basis of attracting new consumers and for laying the groundwork of longer term repeat purchasing.

How can you help?
Comment back on your REAL experiences. If you have a loyalty program, have you noticed more women and Gen Ys signing up? Are they redeeming points and if so, on what?

This research is based on Rick Ferguson and Kelly Hlavinka (2009), “Consumer Attitudes and Perceptions About Loyalty Programs in the Post-Recession Economy,” Loyalty One, Colloquy. A copy of the report may be downloaded after free registration at: http://www.colloquy.com/default.asp