Loyalty programs And reaction to current programs

Let us now take stock of the situation in Italy, the market we are interested in at the moment; we will talk about the totals, compared to the numbers inferred by the Loyalty Observatory of the University of Parma.
Sixty percent of the companies surveyed, which operate in B2C (Business To Consumer), thus going direct to consumer sales, say they have, active and available, a loyalty program.

Table of Contents

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Up to this point nothing strange, although then we know that these loyalty programs are static programs, which basically distribute the allocated resources in a scattershot fashion, which give you one or more points for every “X” amount of turnover, and which, at the end of the year, or at the end of the period, lead you to have a prize or something else, simply against the points acquired.

We then see how, 56 percent of companies say they also have a mobile APP, although they are APPs that are quite static and not dynamic … do you want to know how?

In the sense that they mainly provide information as an end in itself: where are the stores, what are the flyers, recipes, news and things that, good or bad, a consumer may know the same or can find as information … actually that APP doesn’t give anything more; therefore, it doesn’t put you in a position to make a real continuous interaction with your customer.

We then come to the companies that also operate with paper media, which is 44%, a percentage that, in this case, rises to 100% in sectors such as Food, Fresh, Electronics, Home … where operators usually use anyway, and regardless, even the paper flyer.

In any case, 90 percent of the companies surveyed, within a very large and representative panel, also communicate digitally; obviously to communicate digitally it is enough to have a website available (there is no need to have e-commerce), it means however that the predisposition, to the use of IT tools in any case is there even if, in our opinion, it is time to give a real acceleration to the processes of digital innovation.

di investimento

Let’s also see what data show users’ purchasing behavior: the most striking figure is that, as many as 40 percent, of all those who participate in loyalty programs as members, claim to be active.

Notwithstanding that we have to see what it means to “be active” with one’s retailer, it still means that, reading the data backwards, 60 percent of all users do not take any action towards the store or chain in which they go shopping or their purchases, in general, and this, for a business is as wrong as it gets, because action and continuous interaction, with one’s customers, is the most effective method of engagement!

In any case, we must, of necessity, ask ourselves how that 40 percent who claim to perform activities, even if minimal, then actions toward their distribution chain/shop where they go to make purchases interact ; we must also understand what actions are performed, what interactions allow the distributor or store to really capture attention, thus repetitiveness of purchases, rather than in-depth enlargement by their customer.

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Then there is another, very important data point, which we will see in the next table, and that is how much is invested by companies in these loyalty programs or supposedly so.

Here we discover other elements that, in our opinion, are striking and confirm how far behind the most virtuous examples we are.

We see how the largest and most consistent portion, 52.6 percent of the total companies represented and surveyed, invest from 0.1 percent to 0.9 percent of their revenues in loyalty programs, that is, very little, not to say, almost nothing.

We have to consider that in the United States and, more generally, in already very mature and experienced markets, these investments range from 2 percent, all the way up to 7 percent, where 2 percent is really the “minimum wage.”

Here we see how the largest portion of companies are positioned at the lowest, and the band right after that is positioned with investments from 1 percent to 1.5 percent, and in this case, we are talking about 26.3 percent of companies.

To sum up: nearly 80 percent of companies invest less than 1.5 percent, so less than the 2 percent we have seen to be “the minimum wage” and …. if we think about the timeframe (2019 Research) it is already relative to “yesterday,” because today we are already moving toward an average investment of 4 percent, and up to peaks of 7 percent.

So we have represented how the gap is extremely high, how there is an important part that needs to be bridged, just to get the user to come back to our store, hooking them and getting them to do so many interactions, such that they get involved, to bind them more and more to us.

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