NBC’s TODAY show cohost Natalie Morales discusses the success and benefits of retail loyalty programs… from the customers’ perspective.
Citing Wall Street Journal research, Morales states that three out of four Americans belong to a retail loyalty program, like DSW Rewards, CVS/pharmacy ExtraCare or Kroger Rewards. To guests Elizabeth Holmes (Wall Street Journal) and Carmen Wong Ulrich (personal finance expert and author of “The Real Cost of Living”), Morales poses the question, “Does your loyalty pay off?”
Holmes explains that in exchange for discounts and coupons, rewards members allow the retailer to track who they are, when they shop and what they buy. Retailers in turn use this information for better targeted marketing and personalized incentives, trying to get customers to come back and buy more.
Keeping loyal customers coming back “saves retailers tons of money,” says Ulrich.
Holmes agrees, explaining that the top 15% of a retailer’s customers can make up as much as half of that retailer’s sales. “The value of a loyal customer is huge,” giving the retailer incentive to, in turn, incentivize these loyal customers with discounts and coupons. “I think the more personalized the offer, the more likely you are to use it, and then the more likely they are to keep you as a customer.”
“And they’re big discounts for the consumers,” Morales states, answering her own question. “I mean, it’s worth it… Keep collecting. Use them.”
What is your favorite customer rewards program?
Why does it work for you?
What characteristics of successful rewards programs could you implement in your own business?