Marketers believe the $2 billion they spend annually on loyalty programs ensures participation by their best customers and builds the platform for higher sales. But a report by the Chief Marketing Officer Council shows there is room for improvement. Marketers are not always measuring the results of their expenditures on these programs and they aren’t always listening to what the customer is saying.

According to the report,  consumers had the following complaints about loyalty programs:

• Too much email/junk mail generated by these programs 44%
• Too many conditions/restrictions 38%
• Rewards have little or no value 37%
• Had trouble redeeming points/miles 35%
• Little or no added value because of membership 35%
• Communication not personalized 19%
• Little personalized attention 16%

The report reveals that nearly 8 out of 10 marketers say loyalty programs are so important that they will continue either level-funding or will increase the size of these programs.  Marketers also understand the need for increased personalization and at least 51% will engage in this way with consumers from now on.

Marketers use the following methods to communicate with members of loyalty programs:

• Email 84%
• Printed mailings/statements 51%
• Corporate Web site 45%
• Club sites 32%
• SMS Text messaging 24%
• Social networks 16%

Over half of consumers say membership in these programs strongly influences their buying decisions. The same percentage indicates that they would terminate membership after a poor experience with a product or service. As a result of these findings and a desire to improve consumer satisfaction, marketer focus on personalizing loyalty programs is likely to grow.

[Source: Feeling the Love from the Loyalty Clubs, CMO Council, February 2010]