These numbers suggest that the loyalty industry is maturing and companies must start focusing on adding value to their programs rather than touting large member bases, COLLOQUY said.
Though the firm’s calculations indicate an overall membership growth of 24%, COLLOQUY’s Loyalty Census reveals what it calls “one of the worst-kept dirty secrets of the industry.” Of an average total of 14.1 loyalty programs that each household has signed up for, only 6.2 of them are actually used. This puts the number of active loyalty programs at 792.8 million.
The corresponding numbers in 2007 were 12 programs signed up for and 4.7 used, according to the research.
Though COLLOQUY acknowledges that the definitions of active memberships vary from company to company, the firm uses the measure of least one instance of activity – such as earning points on a purchase or redeeming for a reward – within a 12-month period as a guideline. By this definition, 792.8 million active memberships indicates that the rate of active membership is relatively flat at 43.8%, compared with 39.5% in 2007, COLLOQUY said.
“With roughly one billion inactive memberships, essentially names in databases, it” fair to say the US loyalty industry has reached the middle-age bloat stage,” said COLLOQUY partner Kelly Hlavinka.
Industry Segment Calculations
The 2009 figures have been adjusted to account for the inclusion of three industry segments that were not included in the 2007 version: Car Rentals, Cruise Lines and Mass Merchandisers. If these new industries are removed, the adjusted 2009 US census total stands at 1.673 billion.
Other industries covered in the 2009 census include Airlines, Drug Stores, Department Stores, Financial Services, Fuel Convenience, Gaming, Grocery, Hotel, Restaurant, Specialty Retail and Other.
COLLOQUY ranks loyalty program memberships ranked by industry as follows:
- Financial Services 422.0 million
- Airline 277.4 million
- Specialty Retail 191.3 million
- Hotel 161.8 million
- Grocery 153.3 million
- Mass Merchants 124.8 million
- Gaming 106.0 million
- Dept. Stores 92.8 million
- Drug Stores 73.9 million
- Fuel Convenience 51.2 million
- Restaurant: 13 million
- Car Rental and Cruises: 10.7 million
- Other Programs: 127.9 million
“Given the bursting of the credit bubble, the recession and pressure to control program costs, loyalty marketers must turn to growing program value, not the size of their membership base,” said COLLOQUY editorial director Rick Ferguson. “Conditions are ripe for marketers to use loyalty data across the enterprise, enhance value propositions and adopt innovative loyalty models such as coalitions, as they seek to revive lapsed members and turn engaged members into profitable, loyal customers.”
About the research: COLLOQUY’s census is based on information from its own archives, program web sites, sponsor-company press releases, annual report filings, third party publications and research reports. The firm tabulates loyalty program memberships, rather than unique individuals who participate in programs. A corresponding white paper entitled “The Big Sort: The 2009 COLLOQUY Loyalty Marketing Census,” (registration required) is available free of charge.
The results of thestudy will be presented in a webinar cosponsored by The Direct Marketing Association, June 25, 2009. Registration and information is available here.