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Follow the Money

1. I and ROI

If you’re thinking about building a loyalty strategy or are making big investments in your current loyalty program, your top priority is getting return on that investment. But that can be a big challenge if you’re sitting in the C-Suite with a heap of strategy, technology and business decisions facing you every day.

The good news? On average, loyalty program members contribute to almost half (43%) of companies’ annual sales.

95% of companies reported that their loyalty program members spend more than their non-members annually - 60% report loyalty customers spend 2-3x more - 23% report loyalty customers are spending 4x or more

Are you getting the most from that investment?

These are the areas that operators say loyalty programs can deliver more value to your organization:

  1. (16%) Improving customer engagement through program improvements
  2. (15%) Improving customer retention focus
  3. (14%)
    Use data more effectively to drive promotional ROI /
    Better marketing of program and benefits to support brand
  4. (11%) Use programs as a tool for customer acquisition
  5. (10%) Use data more effectively for operational improvements
On average, loyalty program members contribute to almost half (43%) of companies’ annual sales.

2. How much are you in for?

Retailers worldwide face increasing pressure to show return-on- investment from their marketing spends and are looking for ways to optimize shrinking budgets in a competitive market. Given the intense pressure and scrutiny, loyalty programs are clearly at the top of the list for review.

How much are you investing in your loyalty proposition? Is it enough to keep up with the industry?

71% of companies are investing a minimum of 2%. Further broken down: 47% of companies are investing 2-3%; 24% are investing more than 3%.

Knowing that companies are spending an average of 7.3% of annual sales on marketing, based on the 2018 CMO Survey3 (with a growing proportion going to digital channels and CRM), it’s fair to assume that at least another 2% of annual sales is going to personalized marketing beyond the 2% already allocated to loyalty.

That means that most companies are spending upwards of 4% of total revenues to activate customers and leverage the data asset to create personalized offers and extensions.
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