By James Tenser, Principal, VSN Strategies
Reward card program members tend to spend more in 11 key merchandise categories than non-members, says newly-released research. Shopper motivation, however, appears to be a bit harder to quantify.
For a study released August 1, Maritz Loyalty Marketing, St. Louis, looked at reward card behavior among 2,178 adult shoppers and analyzed their responses across several demographic characteristics, including age, gender, geography and presence of children in the household. The researchers found that rewards program members are more likely to have spent a greater amount of money in the past six months in the categories examined.
The Maritz study looked at consumer behaviors related to both retailer frequent shopper cards and bank credit cards that offer points or cash-back rewards.
"In an increasingly fragmented retail landscape, customer loyalty programs are an important tool to help retailers maximize their share of wallet among consumers," the researchers reported. Retail categories covered included: specialty apparel/large premium specialty stores; home improvement; electronics; department store or mass merchandise; drug stores; discount mass merchandisers; grocery stores; toy stores; office supply stores; and book stores.
| PROGRAM | Total | Age | |||||
| 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | 65+ | ||
| Store or Membership | 59% | 59% | 71% | 66% | 58% | 50% | 44% |
|
Private Label / Co-branded Credit Card |
27% | 35% | 39% | 27% | 23% | 21% | 19% |
| None | 34% | 32% | 21% | 28% | 37% | 44% | 46% |
The study revealed that heavier rewards 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. While females were more likely (62 percent) to belong to a store or membership loyalty program than men, more than half of the men surveyed (54 percent) say they participate in at least one retailer rewards program.
"It is interesting to see that rewards program members are spending more. However, we need to keep in mind that the programs might not directly cause shoppers to increase their purchases," said Tim Crank, director of product management, Maritz Loyalty Marketing.
Added Crank, "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."
Discussion Questions: If consumer spending and card membership are indeed correlated, as this study indicates, what can be said about which is cause and which is effect? Is the value of the data captured enough to justify maintaining card programs? Is there any true loyalty involved here anyway?