DMA Releases 'Loyalty Programs: A Cross-Industry Analysis of Usage and Effectiveness'

August 27, 2008 — The Direct Marketing Association (DMA) today released “Loyalty Programs: A Cross-Industry Analysis of Usage and Effectiveness.” This first-ever report, which focuses solely on loyalty marketing, is designed to provide marketers with a snapshot view of loyalty marketing strategies as a whole, as well as within different industry segments.

In producing this inaugural report, DMA partnered with loyalty marketing publisher, COLLOQUY. Drawing from their own research and experience, COLLOQUY presents their reactions to DMA’s findings as well as provides extensive and insightful commentary throughout each of the six chapters of the report.

“The DMA Loyalty Marketing Survey presents a vivid snapshot of how businesses are deploying loyalty programs and strategies,” said Michelle Tiletnick, DMA research manager and author of the report. “Combining insights from this survey with COLLOQUY insights about consumer attitudes and perceptions of loyalty programs reveal significant opportunities for improvement and program performance. DMA’s survey demonstrates that loyalty programs play a particularly important role in the marketing mix and are rising in popularity among consumers”

The new 157-page report has two parts.

· Part one analyzes five industry segments: Supermarket & Grocery Stores; Hotels & Restaurants; Retail & Department Stores; Banks & Credit Cards; and Catalog Companies.

· Part two of the report explores two award winning ECHO campaigns that utilized loyalty programs: Holland America Line and MBNA Travel + Rewards WorldPoints, winners of the 2007 and 2006 DMA International ECHO Awards, respectively.

Additionally, the report revealed:

· When it comes to pricing a loyalty program, more than 7 out of 10 respondents offer free enrollment to their customers.

· 15.5 percent of respondents tier their fee structure and rewards program.

· The use of loyalty programs in the financial services sector is surging, due in part to the expanded range of “premium” or “black” reward card products designed to build loyalty among affluent consumers. These card products provide extensive experiential reward benefits and are often co-marketed with other luxury brands.

· According to retail and department store respondents, member upgrades are the rewards most likely to be redeemed, with an average rating of 6 out of a possible 7.

· 73.7 of supermarket and grocery store respondents use face-to-face interactions to invite customers into their loyalty programs, making it the most used channel.

· The majority (64.7 percent) of hotel and restaurant respondents have a proprietary loyalty program in place, meaning they reward customers with their own products/services.

· 66.7 percent of catalog respondents offer their loyalty programs for free; one quarter charge different membership fees depending on the level of the program, and less than 10 percent charge one nominal fee to customers who join.

DMA conducted this survey in June of 2008 through an email invitation sent to a target audience of DMA’s in-house list as well as a targeted audience of COLLOQUY’s subscribers. When the survey was closed, 250 responses were included for tabulation.

The report is available for download on DMA’s online bookstore. The cost is $245 for DMA members and $445 for non-members. To purchase, please click here.

About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents nearly 3,600 companies from dozens of vertical industries in the US and 50 other nations, including a majority of the Fortune 100 companies, as well as nonprofit organizations.

In 2007, marketers — commercial and nonprofit — spent $173.2 billion on direct marketing in the United States. Measured against total US sales, these advertising expenditures generated approximately $2.025 trillion in incremental sales. In 2007, direct marketing accounted for 10.2 percent of total US gross domestic product. Also in 2007, there were 1.6 million direct marketing employees in the US. Their collective sales efforts directly supported nearly 9.0 million other jobs, accounting for a total of 10.6 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

About COLLOQUY

COLLOQUY comprises a collection of publishing, education and research resources devoted to the global loyalty-marketing industry. COLLOQUY® has served the loyalty-marketing industry since 1990 with over 32,000 global subscribers to its magazine and www.colloquy.com is the most comprehensive loyalty web site in the world. COLLOQUY's research division develops consumer and B-to-B research studies and white papers including industry-specific reports, sizing studies and insights into the drivers of consumer behavior. COLLOQUY also provides educational services through workshops, webinars and speeches at events throughout the world and is the official loyalty-marketing partner of both the Direct Marketing Association and the Canadian Marketing Association. COLLOQUY also operates The COLLOQUY Network, a global consortium of practitioners certified in COLLOQUY's proprietary methodology. COLLOQUY magazine subscriptions are available at no cost to qualified persons at www.colloquy.com or by calling 513.248.9184.

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