The desire to develop lifetime customer value is the main factor influencing businesses’ loyalty programme decision, new research reveals.
A study by the Aberdeen Group found that 58 per cent of firms said the top business pressure they face is developing lifetime customer value, which they defined as the present value of future cash flows and long-term customer relationships.
Cost and benefit issues are also of primary concern to retail marketers. Repeat visits (61 per cent), incremental sales (58 per cent) and overall satisfaction (57 per cent) were found to be the most important factors that justify expenditure on loyalty schemes.
The findings also reveal that 93 per cent of businesses offer loyalty programmes as standard to web, store or catalogue customers. Such programmes typically take the form of rewards, point perks, coalition marketing and frequent buyer offers.
Aberdeen found however, that lifetime customer value is being compromised by loyalty programmes that target short-term demand.
“Loyalty campaigns are executed without due consideration to ideal customer segments, tools, coordinated cross-channel marketing needs and long-term customer relationships,” commented lead author Sahir Anand, senior analyst at the Aberdeen Group.