Marketing Loyalty Report

THE 2013 MARITZ
LOYALTY REPORTTM
US EDITION Launch Event, New York City, May 8, 2013
SUMMARY OF KEY FINDINGS & IMPLICATIONS FOR
LOYALTY MARKETERS & PROGRAM OPERATORS

1 |
Executive Summary
The environment in which today's
brands connect and build loyalty with
their customers and program Members are
markedly different than the environment that
existed even a few short years ago. In fact, it
is markedly different than it was even just a
year ago. The pace at which today’s marketing
landscape is changing is remarkable – there
is a chronic torrent of macro trends exerting
their influences on the market. Economic,
social, technological, and political factors
are affecting brand loyalty and programs,
Members’ interactions with programs, how
Members perceive programs, as well as
the role that programs play in the lives
of consumers.
For instance, in terms of economic
factors, recovery has been sluggish
but steady, and unemployment is still above
desired levels. Interest rates are anticipated
to remain low, as the Fed is still cautious about
disrupting the recovery. Meanwhile, it does
appear that consumer confidence is on the
rise, and despite an increase in real debt levels,
the household debt-service ratio, an estimate
of the share of debt payments to disposible
personal income, is at its lowest since the 80s.
These any many other macro-economic trends
affecting consumer behavior, as well as the
role programs play in the lives of consumers.
This refects the role of programs in influencing
consumer behavior and sentiment, at a time
when consumers have more reason to
buckle down on both everyday spend and
discretionary spend.
From a technology perspective,
consumers are ‘plugged in’ like never
before, and the extent to which technology
permeates our lives is unprecedented. There
is a significant amount of data being produced
and consumed by program Members, which
is in turn creating exciting new possibilities
and challenges for loyalty marketers and
program operators.
The US is a highly developed loyalty
market – considering the average
number of programs per member, the
percentage of consumers who participate
in programs, and the number of programs
operating in this market. In the US market, not
unlike in other developed economies around
the world, loyalty initiatives are an important
aspect of the marketing mix and are an
important aspect of consumers’ experiences
with brands.
We undertake The Maritz Loyalty
Report – as a means of staying
apprised of American attitudes and behaviors
regarding participation in loyalty programs.
This year, we surveyed over 6,000 consumers
and captured program-level feedback on over
30 national programs across six industry
sectors, including Retail Loyalty, Grocery
Loyalty, Credit Card Loyalty, Co-Brand Loyalty,
Travel, and Hospitality.

2 |
Five significant themes emerged
in this year’s study, as follows:
1) Consumers have an insatiable appetite
for loyalty programs. In fact, the average
consumer is a Member in 7.4 programs.
Meanwhile results suggest that 71% of
Members have room for more cards
in their proverbial loyalty card wallets.
2) Communications play an extremely
significant role in the Member’s program
experience. More than 9 out of 10 Members
want to receive communications from
their loyalty programs in which they
participate, and it is clear that satisfaction
is tightly linked to communication
relevance. In other words, Members who
feel the program communications they
receive are relevant are more satisfied
with that program. This represents
significant untapped potential for
marketers, since only 53% of consumers
describe program communications
they’re receiving as relevant. The first
marketers who solve this dilemma will
differentiate themselves and strengthen
the satifaction and the brand loyalty they
enjoy with their key customers.
3) Privacy and the use of personal
information is a concern to consumers.
24% describe privacy concerns as a barrier
to program enrollment. There is a paradox
at play here between personalization
and privacy. Increasingly, consumers are
expecting personalized communications
and experiences, yet they are also
concerned about providing personal
information, the very foundation on
which personalization is made possible.
4) Personal values and program values are
connected. We investigated the link
between personal values systems
(i.e., the internal compass that guides
human behavior, decisions and
perceptions) and Member engagement
(i.e., satisfaction, the propensity to
recommend, and propensity to re-
purchase); we discovered a tight link
between Member satisfaction and the
extent to which a Member’s values are
aligned with a program’s values, and that
only 40% of Members feel their values are
aligned with the values of the programs in
which they participate.
5) Strong performance on the secondary
drivers of satisfaction is how programs
can differentiate. We studied drivers of
Member satisfaction within loyalty
programs. We evaluated functional
drivers, as well as service-related drivers.
We found that programs earning top
marks for satisfaction among Members
performed similarly on primary drivers,
yet discerned themselves from next-best
programs on secondary drivers.
1.7
RetailPrograms
1.3
BankCreditCards
1.1
Airlines
1.0
Hotels
0.8
Co-brandCreditCards
0.5
BankDebitCards
0.5
Gas
0.5
Other
Retail Loyalty has highest program penetration.

3 |
Influence of Programs on
behavior remains strong.
100%0
57%
I modify when and
where I buy items,
to maximize the
points I receive for
purchases.
46%
I modify what brands
I buy, to maximize
the points I receive
for purchases.
Increasingly, loyalty is part
of the brand relationship.
100%0
80%
Programs are
definitely worth
the effort of
participating.
70%
Programs are a part
of my relationship
with the company.
Loyalty Programs are Driving
Desired Behaviors
Loyalty IS influencing consumer behavior.
Despite Americans being active in only 63%
of their 7.4 programs, the good news is that
Loyalty is changing consumer behavior, and
Members do generally have positive views of
loyalty programs.
57% agree with the statement, “I modify when
and where I buy, in order to maximize the
[loyalty benefits] I receive,” while 46% agree
with the statement, “I modify what brands I buy
to maximize the [loyalty benefits] I receive.”
In particular in the payment card space,
54% of consumers would not consider getting
a credit card that did not have a good loyalty
program attached to it.
80% of Members agree that programs are
worth the effort – meaning Members feel
that the things being asked of them (i.e.,
enrollment, opt-ins, presenting loyalty card
upon purchase, referrals, etc.) in exchange
for the benefits they receive as Members
are worth it. This is good news for program
operators and loyalty marketers who count
on programs to drive desired, profitable
behaviors.
70% of Members describe their participation
in a program as part of the relationship with
the brand. This reinforces the need to curb a
sometimes-cited though mis-placed traditional
approach that loyalty programs can be simply
a bolt-on initiative or adjunct to the core
brand experience. Programs that live up to
the brand promise, and enable an authentic
brand-aligned experience for its Members,
will be more effective in achieving
engagement among its Members.
Loyalty marketers count on their loyalty
initiatives to deliver results for their business.
As such, and to ensure the influence of
programs on behavior can reach as broad
a customer audience as possible, program
operators aspire to enroll as many of their
customers as possible into their loyalty
program – yet there are factors discouraging
enrollment.
Increasingly, loyalty is part
of the brand relationship.
100%0
80%
Programs are
definitely worth
the effort of
participating.
70%
Programs are a part
of my relationship
with the company.
Influence of programs on behavior
remains strong.
Increasingly, loyalty is part of
the brand relationship.

4 |
Fees and irrelevant benefits are top barriers to
program enrollment, with 68% of consumers
citing fees as the reason for not joining, and
66% citing irrelevant rewards (i.e., rewards
that are irrelevant to the Member, are not
unique, and/or are too insignificant to make
a difference). Just over half of consumers
state slow accumulation as a reason for
not enrolling.
Loyalty marketers also count on their programs
to curb customer attrition. Unfortunately,
53% of Members enrolled in loyalty programs
stopped actively participating in at least one
loyalty program in the past year. This number
is disconcerting for program operators, yet of
even greater concern is that only 7% of these
defecting customers actively defect – meaning
formally request leaving a program. Given
the high percentage of passive defection,
it is paramount that loyalty marketers
proactively identify the early warning signs
of pending attrition.
…of Members enrolled in loyalty programs
stopped participating in at least one
program in the past year.
53%
7%
…formally request to leave a program.
stopped participating in at least one
program in the past year.
53%
7%
• Loyalty programs are an extension of the brand.
stopped participating in at least
one program in the past year.

5 |
The Importance of Relevant
Communications
Program communications are an integral
component of a Member’s overall loyalty
program experience. In fact, our study reveals
that Member satisfaction is highly correlated
with the extent to which Members ﬁnd the
program communications they receive relevant.
Unfortunately, though 94% of Members say
they want to receive communications from
the programs in which they participate, only
53% describe the communications they
receive as relevant. Given the strong link
between communications relevance and
Member satisfaction, this is clearly a huge
call-to-action for loyalty marketers.
Additionally, though not surprisingly, just
over half (57%) of Members always read
the communications they receive, but only
12% say that programs send communications
too often. This suggests that Members
are not dissatisﬁed with the frequency
of messages being sent to their inboxes,
but instead open and read loyalty
communications at their discretion.
Relevance of communications is linked with satisfaction.
100%
%Satisfaction
0
Strongly
Disagree
“The communications I receive
from this program are relevant to me.”
Somewhat
Disagree
Neutral Somewhat
Agree
Strongly
Agree
20%
38%
49%
82%
93%
Yet, only 53% describe
communications as relevant.
57%
I always read the communications that
are sent to me from this program.
53%
The communications I receive from
this program are relevant to me.
12%
Program sends me communication too often.
of Members prefer to
receive communications
from their programs.94%
Relevance of communications is linked with satisfaction.

6 |
Increasingly, the traditional marketing
cliché ‘right message, right customer, right
time’ is evolving to also include ‘right context’
and ‘right channel’. Our study also investigated
Members’ preferences for communication
channels, and discovered that email channel
ranks highest among all channels assessed,
with 74% of Members stating a preference
for it. The report also revealed that 46% of
Members want to receive communications
from three or more channels. As such,
marketers and program operators must
ensure a seamless customer experience across
channels, deploy channel agnostic messaging
to render properly in any channel and on
any device, and, ﬁnally, make determining
Member-level channel preferences an ongoing
priority. Omni-channel communications will
soon be table-stakes for all programs.
Surprisingly, given the high percentage of
consumers carrying smartphones, the mobile
channel (including mobile applications, mobile
web and text messaging) is a preference among
only 37% of Members. Presumably, there is a
blurred perception among Members between
email channel preference and mobile channel
preference, given email is now often read on a
smartphone.
The mobile channel, more speciﬁcally a mobile
loyalty application, represents an opportunity
for loyalty marketers and program operators
to drive increased program enrollment among
un-enrolled customers. 73% of smartphone
users are interested in interacting with their
programs through their mobile device, and 91%
are likely to download a program’s application.
The preferences for loyalty functionality on
a mobile device include managing points,
redeeming points and receiving mobile alerts.
46%
73%
of smartphone/tablet users
are interested in interacting
with their loyalty programs
with their mobile devices.
91%
likely to download
loyalty application
…of Members would prefer to
receive communications from
three or more channels.
Smartphone users very likely
to download loyalty app.
• Communications are core to the program’s experience.
• Relevance is tightly linked to satisfaction!
• Mobile as a gateway to greater program penetration.
• Omni-channel is table-stakes.

7 |
The Privacy Paradox:
From Cool To Creepy
Marketers today, in pursuit of customer
loyalty, are faced with a paradox –
increasingly, consumers are expecting
more relevant communications and more
personalized experiences from brands, yet
are increasingly concerned with privacy and
the use of their personal information.
In fact, 29% of Members surveyed state
that one of the key barriers to enrollment
is that programs require too much personal
information; similarly, 24% of Members
surveyed cite privacy as a barrier to
enrollment.
As mentioned earlier, research revealed that
Member satisfaction is highly correlated with
the extent to which Members find the
communications they receive relevant.
Ironically, the very customer information that
marketers seek to capture in order to evolve
their efforts away from a one-size-fits-all
approach and toward a tailored and delightful
experience for customers is the very
information that customers are increasingly
concerned, even reluctant, about providing.
Our study yielded significant insight into
Member sentiment regarding the ways in
which their personal information is being
used by marketers and program operators.
Members told us the things they find “cool
and exciting”, as well as the things they find
“creepy and weird”.
Topping the list of ‘cool and exciting’ uses
of Member information is “personalized
discounts based on purchasing habits”,
preferred by 69% of Members. The second
most preferred use of Member information,
preferred by 62% of Members, is “personalized
offers based on preferences that customers
manage and update”.
29%
24%
29%
24%
Program requires too much
personal information.
Privacy concerns.

8 |
Topping the list of ‘creepy and weird’ uses of
Member information is “allowing programs
to review your Facebook friends’ status updates
to determine your eligibility for benefits”.
Top Creepy and Weird benefits based on uses of personal info.
52 65
Allowing programs to review your friends’ status updates and photos to determine
if you may be eligible for rewards or special benefits based on shared interests.
among ages 50+
44 59
Offer rewards or special benefits to those who provide the program with access to
personal information about you (such as personal income, household composition, etc.).
43 53
Provide your credit card number to a retailer via its website for credit on your statement if you spend
a certain amount (i.e., spend $200/month at retailer and receive $20 back on your credit card statement).
40 49
Allowing programs you “Like” or “Follow” to review your status updates and photos to offer rewards
or special benefits based on your profile content.
40 48
Ask you for personal information when enrolling to target promotions to your specific demographic.
Surprisingly, the percent of consumers
concerned about privacy was revealed to
be the same across all age demographics.
We expected younger consumers to be less
concerned, however what we discovered is
the level of concern about the specific ways
in which customer information is used varies
considerably across age demographics.
Consider the experience of frequent-stay
hotel guests who at time of check-in do not
have to re-state their preference for a non-
smoking room, a king-sized bed, and a room
located away from the elevators; their check-
in is expedited because their preferences
were conveniently kept on file and made
available to the front desk staff. Cool or creepy?
Consider the experience of a patient filling
a drug prescription, during which the
pharmacist is able to access and review
the patient’s prescription history and advise
the patient about a possible negative drug
interaction. Cool or creepy?
Consider the experience of a first-time
customer of an apparel retailer. The customer,
upon check-out, learns from the sales associate
that she is receiving a 10% instant discount
because a high percentage of her friends ‘like’
the retailer on Facebook. Cool or creepy?
So, how is today’s marketer able to
successfully navigate the proverbial customer
privacy minefield when the ways in which
customer information is used may be deemed
‘cool and exciting’ by one customer and at the
same time ‘creepy and weird’ by a different
customer? What information can be collected?
What information can be used? How can
customer information be used?
Top Creepy and Weird benefits based on uses of personal info.

9 |
The best person to answer this is your
customer. In the meantime:
• Ask permission, and be transparent. Being
transparent with customers about what is
being captured and how and by whom the
information is to be used − and in turn
gaining permission − will ensure that
marketers’ efforts to create personalized
experiences will be viewed as surprising and
delightful, rather than creepy and weird
• Ask again. Customer preferences change,
and what is relevant at one moment may
no longer be relevant later. Similarly, what
is considered impermissible today may
be widely adopted tomorrow. Avoid the
set-it-and-forget-it approach to customer
preferences, and take stock frequently
of what your customers want
• Honor the social contract, not just the
legal contract. Marketers should be
guided not only by the legal contracts
between brands and customers
(e.g., opt-ins, anti-spam legislation, etc.),
but equally importantly by the social
contracts into which customers have
engaged with brands. The foundation
of this is trust
• Level of concern consistent across demographics, yet what
each finds cool/concerning varies.
• Transparency and user-defined permissions key to balancing
personalization with privacy.
• Avoid set-it-and-forget-it approach to communication preferences.

The Link Between Personal Values
& Member Engagement
As part of this study, we investigated the link
between personal values systems and
Member engagement, as a means of
uncovering whether differences in personal
values systems could, in part, account for
differences in Member engagement.
As mentioned earlier, Members are enrolled
in an average of 7.4 programs, yet are active
in only 4.7. In fact, only 35% of Members are
active in all of the programs in which they are
enrolled. Something is getting in the way of
a higher level of engagement among these
unengaged Members.
Our belief is that what drives and sustains
engagement between a brand and its
customers is unique to each customer. Our
hypothesis in undertaking this portion of our
study is that these engagement differences
(i.e., as measured by the extent to which a
Member is satisfied with a brand and the
extent to which a Member is likely to make
repeat purchases, and advocate for a brand)
are due to differences in a Member’s personal
values systems (i.e., the set of principles and
ideals that individuals use to govern their
behavior, to inform their decisions, and which
shape their attitudes as they go about their
everyday lives).
It should not be surprising for loyalty marketers,
therefore, that a one-size-fits-all approach to
program design and to program benefits achieves
limited results in driving and sustaining
engagement across a diverse customer base,
comprised of individually unique customers.
The approach we undertook to uncover the
link between personal values systems and
Member engagement in this study involved
two key steps – first, we determined a
Member’s dominant personal values (i.e.,
the values which most heavily govern their
decisions and behaviors), then, secondly,
assessed their preference for a variety of
program elements, including mechanics,
benefits and rewards.
We leveraged an existing personal values
inventory, which was created by Dr. Shalom
Schwartz. He contends that personal values
which guide decisions and influence behavior
exist across two key dimensions – first, the
extent to which an individual thinks of and acts
in the best interests of self vs. others; and,
secondly, the extent to which an individual
seeks stability vs. change. Eleven values
dimensions roll up into four main values
segments: Self Transcendent, Self Enhancement,
Open to Change, and Conservation.
Values Segments*
SELF
ENHANCEMENT
OPENNESS
TO CHANGE
CONSERVATION SELF
TRANSENDENCE
*Based on the work of Dr. Shalom Schwartz
Pleasure
Stimulation
Universalism
Benevolence
Conformity
Tradition
Security
Power
Achievement
Self-Direction
10 |
Values Segments*

11 |
Our study revealed meaningful differences
in terms of Member preference for loyalty
program elements across these four values
segments. For example, Members in the Self
Transcendent segment whose dominant
personal values are universalism (i.e., seeks
social justice and tolerance for all, promotes
peace and equality) and/or benevolence
(i.e., are very giving, seek to help others,
provide general welfare and nurturing) have
higher preferences for program mechanics
such as ‘giving points to a charity’, tend not
to redeem points as soon as they are eligible
to redeem them, and tend to redeem for less
frivolous rewards.
The call-to-action for loyalty marketers is to
identify and understand the extent to which
the values profile of their specific brand
audience and Member base differs from that
of the general population. These differences
hold meaningful clues as to progam elements
that may be under- or over-represented,
and guide program designers toward more
engaging programs for their Members.
Our study also revealed an additional
unexpected and powerful insight regarding
values alignment – we discovered that the
extent to which Members describe their
personal values as aligned with the values
of the program in which they are a participant
correlates highly with Member satisfaction.
Meaning, the more closely aligned the
program’s values are to a Member’s values,
the higher the Member’s satisfaction with
the program.
Values alignment highly linked to program satisfaction.
100%
%Satisfaction
0
Strongly
Disagree
“This program’s values
are the same as mine.”
Somewhat
Disagree
Neutral Somewhat
Agree
Strongly
Agree
16%
33%
56%
86%
95%
Values alignment highly linked to program satisfaction.

12 |
Unfortunately, only 40% of Members describe
their program’s values as being aligned with
their personal values. This too is a huge
call-to-action for program operators – given
that enabling Members to fulfill on their
personal values as part of their participation
in programs may result in a more highly
engaged and satisfied Member base.
Confirming a link between personal values
and Member engagement is very exciting,
and the application of which promises to arm
today’s loyalty marketers with additional
necessary insights to design more relevant
and engaging programs.
• Next-generation programs will enable Members to fulfill on
personal values, as core component of program participation.
• Values alignment is tightly linked to Member satisfaction.
of loyalty program Members
agree that their loyalty program’s
values are “the same as mine”.40%

13 |
Drivers of Member Satisfaction
Paramount to most loyalty marketers is
Member satisfaction. Given how tightly
satisfaction relates to Member activity,
advocacy, retention and overall Member
engagement, it is with good reason that
Member satisfaction is often included as
a key performance indicator on program
performance trackers and scorecards.
Our investigation into Member satisfaction
sought to reveal answers to three important
questions. First, in general, how satisfied are
Members with each of the programs in which
they participate? Second, in each program
category, how does each program rate in
relation to its similar program type peers?
Third, and likely mostly important for loyalty
marketers, what are the key drivers of
Member satisfaction?
Overall, 65% of Members are satisfied with
the programs in which they participate.
Looking across program categories, Member
satisfaction is highest for Entertainment
programs (75%), followed by Financial Services
programs (73%), then Grocery programs
(71%). Member satisfaction is lowest for
Hospitality programs at 58%.
58%
60%
63%
71%
73%
75%
Grocery
Entertainment
Retail Programs
Hospitality/Hotel
Airlines
Financial Services
Satisfaction differs by program type
of program Members are satisfied
with their loyalty program.
65%

14 |
In this market and across all categories, top
programs rate similarly on most key drivers
of satisfaction, and the top program tends to
discern itself from next-best programs only on
one key driver. For example, in the Financial
Services category, though the five key
functional drivers of satisfaction are: meets
my needs, ease of redeeming for rewards,
quality of rewards available, total earning
potential, and number of ways to earn points,
the attribute that discerns the Chase®
Ultimate Rewards from the highest-rated
program American Express Membership
Rewards® in terms of Member satisfaction
is ease of redeeming for rewards.
In some program categories, including retail
loyalty and airline loyalty, top-rated programs
and next-highest-rated programs score
similarly on all key drivers of satisfaction.
In these competitive categories, the attribute
on which the highest-rated program discerns
itself from next-highest-rated programs is
a secondary and differentiating driver. The
implication is that in order to be competitive
in their respective program type categories,
especially in categories with many largely
undifferentiated programs, it is essential
for programs to deliver effectively on both
the key drivers of satisfaction and also the
secondary drivers of satisfaction.
• Member satisfaction is closely linked to redemption activity.
• Performance on primary drivers are table-stakes.
Programs can differentiate and win on secondary drivers.
Top-rated programs – Satisfaction
Financial Services
Chase
Carmike
Kroger
Kohl’s
IHG
Southwest Delta American Airlines
Marriott Hilton
GameStopOld Navy | GAP | Banana Republic
Safeway
Regal AMC
AMEX Citi
Entertainment
Grocery
Retail
Hospitality
Airlines

15 |
About The Author
Scott Robinson
Senior Director, Loyalty Consulting & Solutions
Scott Robinson leads
Maritz’ loyalty
consulting and solutions
discipline, and is our
thought leader for
consumer loyalty
strategy engagements.
His focus is enabling
clients with the best possible solutions for
their speciﬁc objectives and environments,
and ensuring Maritz maintains market
leadership in terms of loyalty and CRM
innovation, technique and approach. Scott
has over 10 years’ experience designing,
implementing and optimizing large-scale
CRM marketing programs.
Scott Robinson understands how to use them
as stepping stones for inspiring powerful
relationships with customers. Along with
his strong experience across a number of
industries, including consumer retail and
ﬁnancial services, Scott brings a highly
disciplined analytics approach to strategy
development for clients. Previously, Scott
launched and developed Maritz’ Consumer
Insights and Strategy Group, and spearheaded
the development of the CRM principles and
techniques, campaign management protocols
and consumer data-driven strategy
development tied to some of North America’s
most celebrated loyalty programs. Scott holds
an MBA from the Richard Ivey School of
Business at the University of Western Ontario.

16 |
About Maritz Loyalty Marketing
Maritz Loyalty Marketing is a full-service North American Loyalty Marketing agency
headquartered in Toronto. Our brand loyalty marketing and technology-enabled lifecycle
engagement solutions drive measurable business results for our clients. Leveraging over
120 years of history, experience and expertise from the Maritz family of companies, Maritz
Loyalty Marketing provides its clients with consumer loyalty solutions that consider the holistic
consumer experience at every brand touch point and through all stages of their lifecycle with
a brand. Maritz Loyalty Marketing is wholly owned by Maritz Holdings Inc., based in St. Louis,
Missouri. Maritz Holdings also operates Maritz Research, Maritz Travel, Maritz Motivation
Solutions, The Maritz Institute and more.
About The Maritz Institute
The Maritz Institute is a network of thought leaders advancing the human sciences in business.
The Maritz Institute provides a fresh perspective that puts people back into the center
of business strategy. Designed as an innovation and leadership hub, The Maritz Institute
connects a network of neuroscientists, academics and business leaders who translate a deep
understanding of people into more eﬀective business practices. For more information,
visit www.themaritzinstitute.com.
For more information contact us
at (877) 4-Maritz (877-462-7489), or visit us at
www.maritzloyaltymarketing.com
Proprietary and Conﬁdential Maritz Loyalty Marketing ©

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