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Customer loyalty membership programs on the rise, study says

Despite their growth and popularity, loyalty programs don't automatically pay off for businesses, however.

April 17, 2015

In recent years, loyalty programs that reward customers for remaining faithful to the brand have grown steadily, but that growth doesn't always equal a growing bottom line, a new study suggests. Between 2008 and 2012, U.S. loyalty memberships jumped by 10 percent per year, expanding to more than 23 memberships per household, according to McKinsey & Company.

Despite their growth and popularity, loyalty programs don't automatically pay off for businesses, said customer experienc provider TeleTech in a recent announcement. Analysis by McKinsey of 55 publicly traded U.S. and European companies revealed that since 2002 organizations that either spent more on loyalty or had highly visible loyalty programs also had 10 percent lower EBITDA (earnings before interest, taxes, depreciation and amortization) than companies that didn't, according to TeleTech. A key discovery was that some of these companies were not investing in their most loyal or best customers, the company said.