Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Is loyalty overrated?

MEDIA RELEASE

11 June 2007

Is loyalty overrated?

Reports that some New Zealand companies are reviewing their customer loyalty programmes to see if they’re delivering value for money comes as no surprise to one academic. Research by Waikato Management School marketing professor Harald van Heerde shows such programmes have nowhere near as much impact as previously thought.

“The difference is astonishing,” said Prof van Heerde. “Unlike previous models, our model takes into account those self-selecting consumers who join a loyalty scheme for the savings and discounts but would have shopped at the firm anyway. It’s been calculated that for every dollar spent, loyalty membership schemes enhance spending by around 30c. But our research shows that when you factor out self-selecting members, the real extra spending is only about 4c for every dollar. That’s seven times less than we’d previously thought.”

To increase the additional spend, Prof van Heerde and fellow authors Jorna Leenheer, Tammo H.A. Bijmolt and Ale Smidts recommend strategies for firms to boost loyalty scheme membership among customers who are not yet loyal to the firm. “We suggest focussing on delayed rewards (saving for gifts) rather than direct discounts, and creating a set of ‘soft’ membership benefits, such as special shopping evenings or cooking lessons for members only.”

The researchers say it’s also important to ensure that the privacy of loyalty scheme members is fully protected and to communicate this clearly

The research has earned Prof van Heerde best paper award from the International Journal of Research in Marketing, the premier European marketing journal published by the European Marketing Academy. Prof van Heerde has also been named the top researcher in Australasia and 23rd in the world in the American Marketing Association’s latest world ranking of marketing scholars.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO:

Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>

ALSO:

Split Decision - Appeal Planned: EPA Allows Taranaki Bight Seabed Mine

The Decision-making Committee, appointed by the Board of the Environmental Protection Authority to decide a marine consent application by Trans-Tasman Resources Ltd, has granted consent, subject to conditions, for the company to mine iron sands off the South Taranaki Bight. More>>

ALSO: