A better way to design loyalty programs

Abstract

Purpose – The US retail industry seems headed toward a zero‐sum game, a place where growth comes from taking customers away from competitors. This paper aims to present three steps to reduce the risk of defection of customers.Design/methodology/approach – Despite the widespread prevalence of loyalty programs in the retail industry, customer defection risk within the industry remains high. Research shows that 85 percent of the “loyal” customers are willing to shop elsewhere if properly enticed. In response, some retailers have adjusted their loyalty programs to align them better with what they believe matters most to their target customers.Findings – The paper reveals that there are three key steps to achieving an effective loyalty program.Research limitations/implications – In the summer of 2007, Accenture conducted ten independent but related surveys to assess behavioral loyalty of US retail customers in specific retail product categories (that is, retail segment markets). The ten surveys were conducted ...