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Download ReportLoyalty Programs Dole Out Rewards but Fail to Fully Connect with Consumers Says New CMO Council Study
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CMO Council releases
first benchmark of the Customer Experience Board:
Competitive crunch and convergence in communications marketplace is fueling increased customer churn, and testing customer loyalty.
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For over 100 years, loyalty programs have attempted to secure consumer wallet-share by providing incentives for repeat business and rewards for retained relationships. Since the 1800s when Trading Stamps were awarded to customers who paid cash in lieu of credit, loyalty and rewards programs have been positioned as central to retention strategies and fundamental to acquiring, profiling and handling preferred, high-value customers with benefits, perks and privileges (the gaming industry epitomizes this).

According to research, over three-quarters of the consumer population hold some form of loyalty or rewards card, while 25 percent of the shopping population belongs to two or three programs. Some program operators have found ways to establish these rewards and alternate currency programs as an opportunity to open up new Routes to Revenue™. For instance, it is estimated that American Airlines—which pioneered the frequent flyer program over 28 years ago—brings in over $1 billion annually thanks to its Advantage program that monetizes program partnerships.

However, while there is clear success and return from these investments, many companies are launching loyalty and reward programs to simply stick with the pack, rather than building an active channel or community for furthering customer interactions and delivering more relevant offers or information. And while companies continue to spend well over $1.3 billion on these programs, few have tapped into the full revenue potential of these communities or have clear strategies for optimizing revenue potential or furthering Individualized Relationship Marketing practices with more personal, relevant and contextual communication.

Getting a Business Lift from Loyalty, a new authority leadership program from the Chief Marketing Officer (CMO) Council—sponsored by Ricoh/IBM InfoPrint Solutions in association other partners—will evaluate the degree to which loyalty and rewards investments and programs are contributing to business performance in today's recessionary environment. Industry sectors being examined include retail, airline, hospitality, car rental, foodservice, grocery, financial services, insurance, communications, fitness/health, auto services, business services and leisure.

The research initiative will assess the yield among loyalty programs, the best practices employed by loyalty leaders, and the most common problems besetting loyalty laggards who are not realizing the true value and potential of their programs. It will examine the operation and innovation in loyalty club programs, the value and utilization of customer data to drive response rates and revenue, and the mobilization of loyalty club members as active agents and advocates for acquiring new or repeat business. Scores and rankings from the latest Satmetrix benchmarking of cross-industry Net Promoter Scores will be incorporated, adding relevance by correlating loyalty levels with advocacy rates and inclinations.

As part of Getting a Business Lift from Loyalty, the CMO Council is currently building a 'surround sound' committee of experts and corporate thought leaders to "Gauge the Love in Your Loyalty Club". Among the topics being addressed are:

  • How well are marketers leveraging the relationship links and loyalty levels of their customers?
  • To what degree are they mining and utilizing loyalty member data to better target and individualize messaging?
  • Are the most loyal customers also the most profitable customers?
  • Are modes and levels of engagement and communications altered based on higher levels of program participation?
  • What are the measures and metrics for tracking loyalty program investments?
  • How is brand loyalty and affinity being mobilized to drive advocacy and word-of-mouth?
  • How are marketers tracking and optimizing customer lifetime value?
  • What techniques and strategies are they using to up-sell, cross-sell and further monetize loyalty club members?
  • Do loyalty club feedback mechanisms increase the relevancy of products, services and programs?
  • How many loyalty programs are also becoming vibrant, interactive communities and channels of co-innovation?

If you are interested in joining the leadership committee for the program or contributing content, please contact Getting a Business Lift from Loyalty program director Victor Lau »

We also invite you to share your views with us in our online survey »