2006 marked the start of the steady increase in consumer participation in rewards and loyalty programs, a trend that continued to grow during the global economic recession. After noticing this development, merchants and retailers began investigating how they could offer more innovative rewards with the net effects of capturing greater share and winning consumers away from competitors.

Knowing that some merchants were scrambling to make their programs work while others enjoyed immense success, a Fortune 500 financial services provider engaged Channel Economics to understand how companies across industries structured their rewards and loyalty programs to appeal to consumers. With this understanding, the client could strategically position itself in the rewards and loyalty space and offer its products and services to help merchants win mind, wallet, and market share.

Channel Economics conducted interviews with executives at leading merchants and retailers around world. We had in-depth conversations with companies that were both on the leading edge of rewards and loyalty and those who were in their infancy. The effort spanned nearly every region of the world including North America, Europe, South America and Asia / Pacific.

Upon concluding these conversations, it became evident that in order to be successful in the rewards and loyalty space, a company’s rewards and loyalty program needed to not only align with and deliver on its consumer brand but activate consumer spending. The companies that achieved this end enjoyed tremendous success. Conversely, in the cases where there was misalignment or the program failed to activate consumer spending; the rewards and loyalty programs quickly became a cost center and lost momentum.

We found that many of the best programs took a significant effort for the company to execute but were simple for the consumer to join, understand and use. We also uncovered many of the operational challenges facing merchants and retailers. These challenges included: ill- defined sign-up processes, point of sale system issues, lack of integration across different card types, poor consumer information and analytics as well as other infrastructure and operational issues.

The findings helped our client identify significant opportunities to offer merchants and retailers products and services that would benefit their rewards and loyalty programs. In doing this, we helped our client stay ahead of the trends and offer the right solutions to a key segment of their business.