US loyalty schemes enter a new phase.

Publication: Europe Intelligence Wire

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COPYRIGHT 2004 Financial Times Ltd.

(From Bank Marketing International)

Loyalty programmes have been one of bank marketing's greatest hits, producing warm feelings on both sides of the banking relationship, but now seemingly every retail establishment in the US offers loyalty points towards something. What's a bank to do? If you can't beat them, join them, writes Charles Davis Challenging though they may be to execute, effective loyalty programmes can have a significant impact on the bottom line. A recent study by consultancy Bain & Company shows that improving customer retention by as little as 5 percent can yield an increase in customer net-present value of 35 percent to 90 percent. With so much value at stake, banks simply cannot afford to let loyalty programmes grow stale.

The latest wrinkle in loyalty programmes is the loyalty coalition: loyalty schemes that combine a variety of brands under a single affinity relationship. Banks love loyalty coalitions because they allow...

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