New York City – Carlson Marketing Group(R) (CMG), a world leader in Relationship Marketing, today announced at a news conference the findings of its latest Loyalty Monitor research study. In addition, the attendees were given a glimpse at new technology currently under development, which predicts the probability of consumer participation in loyalty programs. This technology has been created exclusively for CMG by Total Research Corporation-Minneapolis, the independent research company responsible for conducting the Loyalty Monitor study.

The news conference was lead by Jim Ryan, president and CEO of Carlson Marketing Group, Dick Dunn, vice president of business development for CMG's Loyalty division, and Scarlett Ferguson, vice president and managing research director for Total Research.

"With over 60 years in business, CMG is the most experienced provider of Relationship Marketing solutions of any company in our competitive set," said Ryan. "Our track record is due in large part to the priority we place on measurable marketing to determine what consumers, employees and channel partners are saying they want from the programs we create.

The global marketplace continues to change so rapidly that we can no longer produce marketing solutions based on experience alone. Our research provides us with the foundation we need to create – with some certainty – impactful marketing programs that will deliver the return on investment our clients expect. Add to this our measurement and analysis capabilities, and we believe CMG is offering the most comprehensive, marketing solutions available today, " Ryan added.

During the presentation of the Loyalty Monitor's key findings, Dick Dunn commented on the impact Relationship Marketing programs are having on consumer loyalty to brands, as well as increased consumer spending.

"Our research has solidified what we see happening in the world today, " said Dunn. "That is, brands can no longer depend on price and product alone to differentiate themselves. Organizations that are industry leaders understand their competitive edge lies in their ability to build relationships with their best customers – and reward them for their loyalty. Given this, we are seeing a transition from historical product-focused marketing initiatives to more customer-focused approaches – and it is paying off with profitable results," added Dunn.

LOYALTY MONITOR RESEARCH KEY FINDINGSEffects on Behavior

Among the key findings announced, one of the most profound is that consumers spend a significantly greater amount with a company that offers a loyalty program. Overall, survey participants estimate their spending to be as much as 46% higher. Members of airline and credit card programs are most likely to give more business to the company since joining its loyalty program – credit card programs see the greatest increase in use.

Survey participants also said that discontinuing a loyalty program would cause them to spend less with a company. Overall, six out of 10 people said they would spend less with a company, with decreases in spending ranging from about 13% (telecommunications and retail) to a high of 56% (credit cards).

The survey also determined that participants expand their purchases into new product lines offered by a company because of their involvement in loyalty programs. In fact, 29% of participants in telecommunications programs have signed up for additional services since joining; 53% say they are less likely to switch providers because of the program.

In addition, about 80% of those surveyed said they spread their purchases around more before joining their favorite program. However, since joining, about 75% report they are much more likely to buy from just that company or shop around less than before. This behavior is most evident in the credit card industry, as 75% surveyed said they only use a particular card since joining the program.

Most Compelling Program Features and Rewards

Survey participants said rewards are the most compelling feature of a loyalty program, and along with awareness, have the greatest impact on participation. Consumers surveyed also reported that they actively participate in an average of 3.2 loyalty programs. Gender and income influence people's participation tendencies and preferences. As household income increases, people tend to participate in more loyalty programs. Men tend to participate in more programs than women do, and people earning more than $75,000 show increased participation.

Key findings concerning program features include:

  • The ability to earn travel and merchandise greatly enhances the appeal and participation rate of programs.
  • Soft benefits, such as special services or amenities, generally have less impact on participation compared to more tangible benefits, such as merchandise, travel or savings.
  • When presented options to pay a fee to receive a benefit, consumers reacted very negatively.
  • The small changes in payback tested did not significantly influence participation. However, if the amount needed to earn a reward is too high or seems to encourage too much spending, people react negatively and participation declines.

Concerning specific rewards, participants in telecommunications and retail programs said they were motivated to join because of special rates and savings; while airline and credit card program members were motivated by frequent flyer miles or free airline tickets. Retail program players said they were more likely than others to be attracted to their favorite program because it was perceived to be easy and convenient in which to participate.

Preferred Loyalty Program Communications

When asked how program members learned about their favorite loyalty program, the more traditional communication vehicles are still most effective in promoting a loyalty program. However, use of the Internet continues to rise in popularity.

With the exception of retail program members, respondents said that statements and special offers are the communications they read most closely. Newsletters, on the other hand, are usually scanned for offers or deals. Ironically, few people actually take full advantage of the special offers. In fact, the majority of people say they use special offers only some of the time, or rarely. Retail program participants, however, will likely read newsletters thoroughly looking for special offers. And, they are more likely than others to take advantage of special offers.

LOYALTY PROGRAM SIMULATOR BACKGROUND

Also at the news conference, Scarlett Ferguson demonstrated the new interactive simulator.

"CMG's main objective in commissioning Total Research was to understand consumer knowledge, opinions and desires of loyalty programs," said Ferguson. "As part of this study, we used an exercise in which participants ranked various loyalty program options from best to least favorite. Based on those responses, our newly developed simulator allows us to predict participation levels a program could achieve given specific awareness levels of the program, the level of optimism that people will actually behave as they have said, and the specific options included in the program," Ferguson added.

The loyalty program simulator is an interactive tool developed exclusively for CMG by Total Research – nothing else like it exists in the industry today. The simulator allows the user to predict how consumer participation levels increase or decrease based on the reward options offered in a loyalty program.

For example, a combination of options for a program is selected (i.e. for the airline industry, redeem 25,000 miles, receive $250 in merchandise; receive a personal call when flights are delayed; and earn a 10% bonus for canceled flights) and the simulator indicates the percentage of people likely to participate in this program based on the elements selected. When the program elements are changed, the simulator tells the user by what percent rate participation will increase or decrease.

Additional features are still under development for the simulator – in particular, how the fluctuation in participation rates can directly impact revenues and profits.

CARLSON MARKETING GROUP BACKGROUND

Carlson Marketing Group (CMG) is a relationship marketing company with international capabilities that span 21 countries. The company helps global Fortune 1000 clients improve their sales and profits by designing marketing strategies which create and strengthen relationships with the audiences CMG clients depend on for their success: employees, channel partners and consumers. To achieve measurable results, CMG uses five proven disciplines which include Direct Marketing, Event & Sports Marketing, Loyalty Marketing, Performance Improvement and Sales Promotion.

Carlson Marketing Group is one of the major operating groups of Carlson Companies, Inc. Other Carlson Companies groups include Carlson Hospitality Worldwide, which operates more than 1,125 hotels, resorts, restaurants and cruise ships worldwide; Carlson Leisure Group, responsible for leisure travel ventures around the globe; and Carlson Wagonlit Travel (co-owned with Accor Group of Paris) a world leader in business travel management. Systemwide revenues for Carlson Companies, Inc. reached more than $22 billion in 1998 under Carlson brands. Corporate headquarters are located in Minneapolis, Minn.

TOTAL RESEARCH CORPORATION BACKGROUND

Total Research Corporation has full-service research capabilities including in-depth consultation, project design, analysis, presentations, data collection and processing, as well as providing business-oriented recommendations. The company, which offers a wide range of information-gathering techniques such as telephone, mail and Internet surveys; focus group discussions; and personal interviews, is successfully applying advanced research methodologies domestically and in countries throughout the world. Total Research is based in Princeton, N.J., with offices in Minneapolis, Chicago, Detroit, Poughkeepsie, Fla., Tampa, Fla., London and Buenos Aires.