fusion point research Marketing Research Reports

Marketing to Customer Loyalty Program Leaders in Retail

Understanding Their Role

Loyal customers are critical to the success of retail businesses.1 When customers are loyal, they are less sensitive to price, more willing to try additional products offered by the store, and often introduce new customers to the company. In fact, when customer retention rates increase by 5%, profits increase by as much as 25% to 75%.2 Many large retailers have developed special loyalty programs to increase customer retention. Programs such as CVS’s “ExtraCare”3, Walgreen’s “Balance Rewards”4, and Best Buy’s “My Best Buy”,5 offer shoppers discounts, loyalty points, access to exclusive offers and other incentives if they join the program. These programs help companies build long-term relationships with shoppers, which improve customer loyalty.6 Loyalty programs are still extremely popular, with 84% of consumers admitting they shop more frequently at stores with them.7 Programs can range from simple to sophisticated,8 and they have been found to increase customer satisfaction and contribute to a retailer’s overall success.9

“…more than 70% of [Sears’ and Kmart’s sales are] from ‘Shop Your Way’ members. We are applying our resources towards better understanding the wants and needs of our best members …. We believe that by building these relationships there is significant opportunity for growth through member retention” - Eddie Lampert, CEO of Sears Holdings.10

1 Berman, Barry, and Joel R. Evans. Retail Management: A Strategic Approach 12th Ed. Edited by Pearson Education, Inc., Prentice Hall., 2013.

2 Mei-Lien, Li, Robert D. Green, Farideh A. Farazmand, and Erika Grodzki. “CUSTOMER LOYALTY: INFLUENCES ON THREE TYPES OF RETAIL STORES’ SHOPPERS.” International Journal of Management & Marketing Research (IJMMR) 5, no. 1 (2012): 1 – 19. EBSCOhost(69616935).

3 See: www.cvs.com/extracare/landing.jsp?t=Howitworks

4 See: www.walgreens.com/balancerewards/balance-rewards.j...

5 See: www.bestbuy.com/site/global-promotions/my-best-buy...

6 Epstein, Tom. “Leveraging Loyalty Programs to Retain Customers and Drive Sales.” Franchising World 44, no. 7 (2012): 50 – 51. EBSCOhost(77843385).

7 “Loyalty Programs Need to Evolve.” MMR 30, no. 20 (2013): 16. EBSCOhost(93306944).

8 Bishop, David. “Aligning Loyalty Programs.” Convenience Store Decisions 25, no. 5 (2014): 57 – 58. EBSCOhost(96093620).

9 Alexander, Antoinette. “The Present and Future of Customer Loyalty.” Drug Store News 34, no. 6 (2012): 8 – 10. EBSCOhost(76116560).

10 “Sears Holdings’ Fourth Quarter and Full Year 2014 Results. Pre-Recorded Conference Call Transcript.” February 26, 2015. Available at: http://searsholdings.com/invest/docs/shc_q4_2014_e...



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Retailers utilize customer loyalty programs to motivate shoppers to frequent their stores.