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Don't underestimate the power of loyalty programs

Yahoo study finds many Canadians carry at least four kinds of loyalty cards

Go figure. For retailers, shopper loyalty really does matter.

That's the conclusion of a new study by Yahoo Canada on the popularity of loyalty reward programs and their impact on consumer shopping behaviour.

"The numbers are eye popping cut across all verticals," said Claude Galipeau, Canadian country manager for Yahoo.

Yahoo conducted the survey to help provide research and best practices for loyalty marketers.

Gleaned from a recent survey of 1,000 Canadians, “Talking Loyalty” found 90% of respondents–or a whopping 22 million Canadians–have loyalty reward cards.

Forty percent have at least four loyalty cards.

Most of those cards (60%) carried no annual fees, and just over half of respondents (52%) used them to accumulate both reward points and/or travel miles.

Two-thirds of participants were also found to calculate the value of loyalty programs online.

Those findings led Yahoo researchers to conclude Canadian consumers are picky when it comes to choosing the kinds of reward cards they carry.

Another notable finding was that loyalty programs also appear to influence shopping behaviour.

A sizeable 56% of respondents said they try to shop at retailers where they have a loyalty card.

Nearly half of cardholders (47%) said loyalty programs also impact the amount of goods they purchase, and a third bought more products or services than they needed in order to accumulate points.

Consumers in the millennial generation, which is generally considered to include people born between 1982 and 2000, were also calculated to be 5 percent more likely to spend more based on loyalty card affiliation.

In addition to increased brand loyalty through rewards programs, the study also found that the Internet is a key entry point to those programs.

Though only 20 percent of respondents said they learned about programs they adhere to online, 55 percent said it was "important" for them to receive program information from the issuing brand.

For Galipeau, the bottom line is that loyalty programs are both popular and profitable.

Jeff Berry, senior director of research and development at LoyaltyOne, said the Yahoo Canada study results are in line with the numbers of his own company's biannual censuses.

"The only surprise was that they found the average Canadian has four loyalty cards," said Berry.  "Our studies show the average is nine."

Canada, he added, is a unique market in dominated by coalition models of loyalty programs.

"There's no doubt these programs attract consumer loyalty and their dollars," said Berry.  "The challenge is to provide incremental value."

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