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Loyalty schemes ‘critical to success’ say FDs and finance managers

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A new report from GI Insight reveals that 86% of finance directors and managers in the retail sector consider loyalty schemes critical to preventing customer defection, maintaining competitive positioning and supporting commercial health in the current recession.

The report found that, across all sectors studied, four in every five finance directors and managers in British firms believe that companies with a loyalty scheme will come out of the current economic downturn with ‘significant competitive advantage’. These findings, say the researchers, indicate that the traditional perception of finance directors as opponents of loyalty investment to be totally mistaken, especially in the current straightened economic circumstances.

“Loyalty schemes are of great value to both value retailers and premium retailers alike during a recession,” says Andy Wood, managing director at GI Insight. “Value retailers are experiencing an influx of custom from premium retailers as shoppers tighten the purse strings and seek cheaper alternatives… Premium retailers will need to use their loyalty schemes to encourage customers to stay with them and, through transactional analysis, identify whose spend is not dropping.”

“The high opinion of loyalty activity from an audience who have traditionally been most sceptical about the commercial value of loyalty schemes reveals how embedded and essential such initiatives have become in the British business psyche,” adds Wood.

The score achieved by the retail sector requires some qualification, says GI Insight, in that the overall average score masks a virtually 100% score when the grocery multiples segment is viewed stand-alone.

Medium sized companies, with 51-249 employees, are most sceptical about the value of loyalty schemes in a recession. In contrast, large firms with over 1,000 employees see loyalty schemes as critical to their success over the next year or so, with almost nine in every ten finance directors and managers subscribing to this view. The variations between company size bands are relatively slight, though, and the overall picture is a ringing endorsement for loyalty activity, say the researchers.

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