The benefits of frequent shopper clubs - Guest Column - market research results - Brief Article - Column - Statistical Data Included

DSN Retailing Today, March 25, 2002 by Carolyn Setlow

Regardless of the economy, Roper research shows that Americans consistently seek the best price for their money. Frequent shopper clubs are an increasingly popular way for consumers to feel they are getting a good deal, and for retailers to build store loyalty, creating a win-win situation for all concerned.

Consumer awareness of retail frequent shopper programs has soared since we last asked about them in 1994 (62% versus 29% in 1994 and 21% in 1989). Those who think the programs are a good idea also have increased (62% versus 53% in 1994 and 49% in 1989). The percentage that actually participates has jumped from 2% in 1989 to 10% in 1994 to 28% in 2000, representing both a substantial increase and a significant opportunity for future growth.

Lower-income Americans are less aware of frequent shopper programs. Slightly more than half of those consumers making under $30,000 know of them, but awareness increases to almost three-quarters for those making $75,000 or more. And yet, lower-income Americans are as receptive to the idea as other income groups, suggesting they represent an untapped market. Women are generally more aware than men of frequent shopper clubs (65% versus 59%) and more women than men think they are a good idea (65% versus 58%). Our research also reveals a greater "awareness" than "participation" across all income groups, suggesting opportunities to expand these programs for the right incentives.

Retailers wishing to enroll a broad cross-section of consumers should consider creative marketing ideas, including signage (in-store, billboards, on buses, etc.), headlines in circulars, on register receipts, flyers with purchases, in-store announcements, queries from cashiers, buttons on sales associates and inclusion in print and electronic advertising.

When structuring a frequent shoppers club, retailers should keep in mind what consumers see as the chief benefit: Getting a deal. For almost two-thirds of the public (65%), receiving "a percentage discount on all purchases" is the feature that would "most likely" encourage them to participate (up 19 points from 1994).

Enticements, cited second, involve either cash savings or freebies: 34% would be attracted by "advance notice of upcoming sales;" 31% would look for either "special coupons for new products" or "coupons or discounts on products and services from other vendors;" almost 1-out-of-3 (29%) is attracted by "cash-back offers;" and almost a quarter (24%) wants a "free gift with purchase."

In all top categories, a four- to eight-point difference exists between men and women, with women being more enthusiastic about the attractions of shopper clubs.

On the other hand, relatively few overall are attracted by invitations to special events or parties (10%), preferred parking (10%), personal shopping assistance (9%) or a magazine for members (9%). Interestingly, in the midst of a baby boomlet, free baby-sitting ranked last at 6%. Even in the group of parents with children aged 7 or younger, only 15% consider babysitting a major draw.

Just as important as the attractions are the turnoffs. In a time when headlines often are devoted to privacy issues, it should come as no surprise that the top two consumer negatives have to do with this topic. More than a third of the public (34%) is concerned about the possibility that "companies might sell your purchase records to other companies." Almost as many (33%) dislike the fact that "it gives private information about you to companies." Based on this input, retailers need to assure consumers their privacy will be respected. Even so, an overwhelming 4-out-of-5 consumers feel the positives outweigh the negatives, with only 20% indicating the benefits were too small considering the effort involved.

As Roper research bears out, membership has its privileges, and consumers are definitely interested in taking part in them.