Do loyalty initiatives deliver?

Research from Arvato Loyalty Services reveals UK companies' ability to realise ROI from their loyalty initiatives by increasing customer satisfaction levels.

Research from Arvato Loyalty Services among 2,600 UK consumers has identified how much companies, by industry sector, are both investing in loyalty activity, and also seeing high customer satisfaction levels.

The report reveals that the Retail and Automotive sectors topped the bill, both coming in at around 11% above average in their ability to realise return on investment from their loyalty initiatives, while the financial services sectors, Credit Cards and General Insurers, came bottom of the table, around 35% below average.

Respondents were asked which sector they believed to offer the highest customer satisfaction and engagement levels, in comparison to six other major industries - Credit Card, Automotive, Retail, Travel and Holidays, Mobile Telecoms and General Insurance.

After the Retail and Automotive sectors came Travel and Holidays and Mobile sectors, scoring around the average for loyalty capabilities.

These findings provide the first indication of its kind of the correlation between loyalty investment and customer satisfaction levels without which loyalty cannot be built.

This correlation shows the return on investment that different industries are experiencing from their loyalty schemes, customer clubs or privilege organisations.

While the Automotive sector scored highest, the two financial services sectors, Credit Card and Insurance, performed poorly in generating successful ROI, a matter of particular concern for credit card issuers, who have the highest penetration of loyalty schemes of any FTSE top 500 sectors in the UK.

Graham Ede, Managing Director of Arvato Loyalty Services, commented: "This study shows a major divergence in the capability for return on investment that different sectors can obtain from their loyalty strategies and activity.

"What is most interesting is that less well-recognised sectors, such as Automotive, Travel/Holidays and Mobile Phone, have generated high levels of loyalty penetration, which reflects companies' commitment to the key disciplines to ensure loyalty activity.

By undertaking rigorous staff training, regular audits of the 'customer experience' and appropriate communication across all channels, companies are gradually shifting their focus toward customer development and away from prospect marketing, guaranteeing customer satisfaction levels remain high.

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