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Loyalty Marketing - US - September 2010

SCOPE AND THEMES
What you need to know
Data sources
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Companies mentioned in this report:
EXECUTIVE SUMMARY
Industry overview
Loyalty programs are more popular than ever
They are also underutilized
The economy has a great deal to do with loyalty program popularity
Making the programs more effective
Technology is changing loyalty programs
INSIGHTS AND OPPORTUNITIES
Key points
Targeting moms
Figure 1: Percent of decisions influenced by moms, April 2010
Social networking sites
Figure 2: Number of unique users of top social networking sites, 2008-10
Mobile – the next frontier
Application-based mobile loyalty programs
Mobile couponing
Figure 3: Mobile Coupons redeemed in North America (in millions), November 2009
More sophisticated CRM data help create more effective incentives
SMEs offer opportunity
Creating partnerships
Use clues from members to improve programs
INSPIRE INSIGHTS
Trend: Screenagers
Trend: Credit Card Companies Target Customers Who Pay On Time
Trend: Smart Shopping Gets Smarter
MARKET SIZE AND FORECAST
Key points
Membership in loyalty programs continues to rise
Figure 4: Loyalty program memberships (in billions), 2000, 2006 and 2008
Figure 5: Financial services loyalty program memberships (in millions), 2000, 2006 and 2008
Figure 6: Number of loyalty memberships, by sector, 2008
Figure 7: Financial services loyalty program participating members vs. active members, June 2010
Figure 8: Loyalty Memberships, by category, 2008
But bigger doesn’t necessarily mean more effective
COMPETITIVE CONTEXT
Key points
The slow economy increases the competitive challenge
Competition is fierce—communication is key
MARKETING CHANNELS
Key points
Social networking sites offer great opportunity
Who’s using social networking sites?
Figure 9: Average age distribution across all social networking sites (U.S. only), February 2010
Different age groups use different sites
Word-of-mouth still works
Email works best
Regular mail still works, too
MARKET DRIVERS
Key points
The recession has affected spending habits
Younger groups are increasingly important
New regulations may affect debit rewards programs
INNOVATION AND INNOVATORS
Key points
American Express
British Airways
Starbucks
MasterCard
Nissan
Regions Bank
Prepaid and debit cards are offering rewards
MARKETING STRATEGIES
Key points
 OVERVIEW
Figure 10: Growth of ad spend on top social network sites, August 2008-August 2009
Figure 11: Top U.S. social networking site for advertising, by industry, ranked by display ad impressions, August 2009
Print advertising
Still popular: Opportunity to save or earn cash
Figure 12: American Express print ad, 2010
Figure 13: Commerce Bank print ad, 2010
More than just toasters
Figure 14: Bar Harbor Bank print ad, 2010
Direct mail advertising
Consumers’ choice: More rewards or rewards earned faster
Figure 15: Discover direct mail campaign, January-December 2010
Figure 16: Bank of America direct mail letter, January-February 2010
Figure 17: American Express direct Mail, December 2009-January 2010
Figure 18: Key Bank direct mail, June 2009
Figure 19: Capital One direct mail, November 2009
Online and email advertising
Maximizing advantages of social networking sites
Figure 20: Free Spirit MasterCard email, February 2010
Targeting a specific audience
Figure 21: Best Buy/MasterCard email, June 2010
Unique opportunities can also be a reward
Figure 22: American Express ticket offer, June 2010
Rewards for being a card member
Figure 23: Disney/Visa Rewards card, June 2010
Television advertising
Helping people save
Figure 24: Bank of America, “Chuck earns Cash Back With Gas”, 2009
Figure 25: Bank of America, “Elizabeth is seen as she swipes her card to earn cash back shopping”, 2009
Taking aim at customer objections
Figure 26: Chase, “Couple picks out their next vacation”, 2010
Figure 27: Capital One, “Vikings grocery shop, go to dry cleaner & use a live mouse for computer”, 2010
Differentiation through extra rewards
Figure 28: Capital One, “Vikings take their ski trip with double points”, 2010
Figure 29: Capital One, “Vikings take beach vacation: Double miles on every purchase”, 2010
THE CONSUMER
Key points
Types of loyalty programs in which consumers participate
Figure 30: Type of loyalty program participation, by gender, June 2010
Figure 31: Loyalty program participation, by age, June 2010
Figure 32: Loyalty program participation, by income, June 2010
Figure 33: Loyalty program participation, by race, June 2010
Attractive incentives
Figure 34: Incentives for using loyalty program, by gender, June 2010
Figure 35: Incentives for using loyalty program, by age, June 2010
Figure 36: Incentives for using loyalty program, by income, June 2010
Figure 37: Incentives for using loyalty program, by race, June 2010
Figure 38: Incentives for using loyalty program, by marital status and presence of children, June 2010
Important attributes of a loyalty program
Figure 39: Important attributes of a loyalty program, by gender, June 2010
Figure 40: Important attributes of a loyalty program, by age, June 2010
Primary credit card issuer
Figure 41: Primary card issuer, by age, June 2010
Figure 42: Primary card issuer, by income, June 2010
Figure 43: Primary card issuer, by region, June 2010
Most important card benefits
Figure 44: Reasons for using card most frequently, by gender, June 2010
Figure 45: Reasons for using card most frequently, by age, June 2010
Figure 46: Reasons for using card most frequently, by race/ethnicity, June 2010
Number of cards consumers have
Figure 47: Number of credit cards used in past 60 days, by gender, June 2010
Comparing credit card offers
Figure 48: Compare credit card offers, by gender, June 2010
Figure 49: Compare credit card offers, by age, June 2010
Figure 50: Whether compare credit card offers, by income, June 2010
CLUSTER ANALYSIS
Key points
Loyalists
Demographics
Characteristics
Opportunity
Immediates
Demographics
Characteristics
Opportunity
Cashies
Demographics
Characteristics
Opportunity
Cluster characteristics
Figure 51: Loyalty marketing clusters, June 2010
Figure 52: Loyalty program participation, by loyalty marketing clusters, June 2010
Figure 53: Incentives for using loyalty program, by loyalty marketing clusters, June 2010
Figure 54: Important attributes of a loyalty program, by loyalty marketing clusters, June 2010
Figure 55: Reasons for using card most frequently, by loyalty marketing clusters, June 2010
Cluster demographics
Figure 56: Loyalty marketing clusters, by gender, June 2010
Figure 57: Loyalty marketing clusters, by age group, June 2010
Figure 58: Loyalty marketing clusters, by income group, June 2010
Figure 59: Loyalty marketing clusters, by race, June 2010
Figure 60: Loyalty marketing clusters, by Hispanic origin, June 2010
Cluster methodology
KEY DRIVERS ANALYSIS
Key drivers
Discussion
Importance of Incentives
Figure 61: Incentives to use a credit card loyalty program by whether respondent has switched in the past, June 2010
Figure 62: Incentives to use a credit card loyalty program by self-reported FICO® or other credit score, June 2010
CUSTOM CONSUMER GROUPS
Key points
Type of loyalty programs in which consumers participate
Figure 63: Loyalty program participation, by gender and age, June 2010
Figure 64: Loyalty program participation, by race and income, June 2010
Figure 65: Loyalty program participation, by marital status and presence of children, June 2010
Attractive incentives
Figure 66: Incentives for using loyalty program, by race and income, June 2010
Figure 67: Incentives for using loyalty program, by gender and age, June 2010
Figure 68: Incentives for using loyalty program, by size of household, June 2010
Figure 69: Incentives for using loyalty program, by marital status and presence of children, June 2010
Primary card issuer
Figure 70: Primary card issuer, by race and income, June 2010
Most important card benefits
Figure 71: Reasons for using card most frequently, by marital status and presence of children, June 2010
Figure 72: Reasons for using card most frequently, by gender and age, June 2010
APPENDIX: TRADE ASSOCIATIONS

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