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Customer Satisfaction and Loyalty Programs - US - January 2010

Customer satisfaction and loyalty programs have become more important to retailers and service providers as they struggle to hold on to customers in a prolonged economic downturn. Indeed, membership in loyalty and reward programs, most of which promise savings in the form of special discounts or free merchandise, has increased significantly between 2007 and 2009. Yet the proliferation of programs and memberships has made it more difficult for individual loyalty programs to have the desired effect. And in the meantime consumer ratings of customer service suggest that retailers have considerable room for improvement.

This report examines customer satisfaction and loyalty programs from various angles in order to provide companies with insight and ideas for setting themselves apart in an increasingly competitive marketplace. The report includes:

  • Profiles of leading customer satisfaction and loyalty programs across a variety of channels, identifying common themes and success factors
  • A discussion of economic factors driving increased interest in loyalty and reward program
  • Trends in the different ways customers contact customer service
  • The importance of customer service across different product and service categories and retail channels
  • Bill payment preferences
  • Customer service pet peeves
  • Concerns over privacy and information sharing

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Abbreviations and terms
            • Executive Summary

              • Recession drives membership in loyalty programs
                • Loyalty means more than discounts and points
                  • Room for improvement in customer service
                    • Telecoms rank last in service, food first
                      • A generational shift under way in how customers deal with companies
                        • Contact with customer service becoming more automated, more social
                          • Streamlined customer important to households with kids
                            • Younger adults strongly prefer online bill payment
                              • Complexity of category dictates importance of customer service
                                • Impoliteness, inaccuracy least tolerable in customer service interactions
                                  • A degree of info sharing deemed acceptable, but consumers remain leery
                                  • Insights and Opportunities

                                    • Loyalty is more than points
                                      • Make customer service a strategic priority
                                        • The loyalty of a new generation
                                        • Inspire Insight

                                          • Media Evolution
                                          • Market Drivers

                                            • Recession drives membership in loyalty programs
                                              • Unemployment rate
                                                • Figure 1: U.S. national unemployment rate, January 2007-December 2009*
                                              • Real household income
                                                • Figure 2: U.S. real median household income, by race and Hispanic origin, 1967-2008
                                              • Consumer prices
                                                • Figure 3: Consumer Price Index Graph, all items, January 2007-November 2009*
                                                • Figure 4: Consumer Price Index, all items, January 2007-November 2009*
                                                • Figure 5: Consumer Price Index, food at home, January 2007-November 2009*
                                                • Figure 6: Consumer Price Index, motor fuel, January 2007-November 2009*
                                            • Year-Over-Year Customer Relations Trends

                                              • Key points
                                                • Contact with customer service reps becoming more automated
                                                  • Figure 7: Year-over-year customer relations trends—customer service rep contacts, by age, November 2009
                                                  • Figure 8: Year-over-year customer relations trends—customer service rep contacts, by household income, November 2009
                                                • Streamlined customer service especially important in households with kids
                                                  • Figure 9: Year-over-year customer relations trends—customer service rep contacts, by presence of children in the household, November 2009
                                                • DIY customer service commonplace; social media gaining from small base
                                                  • Figure 10: Year-over-year customer relations trends—online alternatives, by age, November 2009
                                                  • Figure 11: Year-over-year customer relations trends—online alternatives, by household income, November 2009
                                                  • Figure 12: Year-over-year customer relations trends—online alternatives, by presence of children in the household, November 2009
                                                  • Figure 13: Year-over-year customer relations trends—online alternatives, by race/Hispanic origin, November 2009
                                              • General Experiences with Customer Relations

                                                • Key points
                                                  • Customer service perceptions generally positive, but room for improvement
                                                    • Telecoms rank last in service, food first
                                                      • Figure 14: General experiences with customer relations, by gender, November 2009
                                                    • Younger adults more likely to report negative service experiences
                                                      • Figure 15: General experiences with customer relations, by age, November 2009
                                                      • Figure 16: General experiences with customer relations, by household income, November 2009
                                                    • Kids drive up need for customer service
                                                      • Figure 17: General experiences with customer relations, by presence of children in the household, November 2009
                                                  • Incidence of Customer Relations Vehicles

                                                    • Key points
                                                      • Loyalty cards, in various form, have become commonplace
                                                        • Figure 18: Nature of customer relations activity/involvement, by gender, November 2009
                                                        • Figure 19: Nature of customer relations activity/involvement, by age, November 2009
                                                        • Figure 20: Nature of customer relations activity/involvement, by household income, November 2009
                                                        • Figure 21: Nature of customer relations activity/involvement, by race/Hispanic origin, November 2009
                                                    • Innovation and Innovators

                                                      • Overview
                                                        • Supermarkets and drug stores
                                                          • Green Hills Market
                                                            • Kroger
                                                              • Giant Eagle
                                                                • CVS ExtraCare
                                                                  • Online retailers
                                                                    • Zappos
                                                                      • LL Bean
                                                                        • Travel
                                                                          • JetBlue Airways
                                                                            • Harrah’s
                                                                              • Department stores and apparel retailers
                                                                                • Nordstrom
                                                                                  • Wet Seal
                                                                                  • Preferred Payment Methods to Billing Departments

                                                                                    • Key points
                                                                                      • Younger adults strongly prefer online bill payment
                                                                                        • Figure 22: Preferred payment methods to billing departments, by age, November 2009
                                                                                        • Figure 23: Preferred payment methods to billing departments, by household income, November 2009
                                                                                    • Importance of Customer Service by Product Category

                                                                                      • Key points
                                                                                        • Complexity of category dictates importance of customer service
                                                                                          • Figure 24: Importance of customer service, by product category, by gender, November 2009
                                                                                          • Figure 25: Importance of customer service, by product category, by age, November 2009
                                                                                          • Figure 26: Importance of customer service, by product category, by household income, November 2009
                                                                                          • Figure 27: Importance of customer service, by product category, by presence of children in the household, November 2009
                                                                                      • Importance of Customer Service by Retail Channel

                                                                                        • Key points
                                                                                          • Desire for adequate retail customer service is high
                                                                                            • Figure 28: Importance of customer service, by retail channel, by age, November 2009
                                                                                            • Figure 29: Importance of customer service, by retail channel, by household income, November 2009
                                                                                            • Figure 30: Importance of customer service, by retail channel, by presence of children in the household, November 2009
                                                                                        • Pet Peeves

                                                                                          • Key points
                                                                                            • Impoliteness and inaccuracy least tolerable in customer service interactions
                                                                                              • Older respondents more sensitive to service issues
                                                                                                • Figure 31: Customer service pet peeves, summary of “agree” and “strongly agree” responses, by age, November 2009
                                                                                              • Higher-income consumers more tolerant, to a point
                                                                                                • Figure 32: Customer service pet peeves, summary of “agree” and “strongly agree” responses, by household income, November 2009
                                                                                                • Figure 33: Customer service pet peeves, summary of “agree” and “strongly agree” responses, by race/Hispanic origin, November 2009
                                                                                            • Attitudes towards Information Security

                                                                                              • Key point
                                                                                                • A degree of info sharing deemed acceptable, but consumers remain leery
                                                                                                  • Figure 34: Attitudes towards security of personal information, by age, November 2009
                                                                                              • Cluster Analysis

                                                                                                  • Tolerators
                                                                                                    • Irritateds
                                                                                                      • Dejecteds
                                                                                                        • Cluster characteristics
                                                                                                          • Figure 35: Customer relationships clusters, November 2009
                                                                                                          • Figure 36: Customer service pet peeves, summary of “agree” and “strongly agree” responses, “tolerable” responses, by customer relationships clusters, November 2009
                                                                                                          • Figure 37: Customer service pet peeves, summary of “agree” and “strongly agree” responses, “irritating” responses, by customer relationships clusters, November 2009
                                                                                                          • Figure 38: Customer service pet peeves, summary of “agree” and “strongly agree” responses, “unacceptable” responses, by customer relationships clusters, November 2009
                                                                                                          • Figure 39: Preferred payment methods to billing departments, by customer relationships clusters, November 2009
                                                                                                          • Figure 40: Attitudes towards security, by customer relationships clusters, November 2009
                                                                                                        • Cluster demographics
                                                                                                          • Figure 41: Customer relationships clusters, by gender, November 2009
                                                                                                          • Figure 42: Customer relationships clusters, by age, November 2009
                                                                                                          • Figure 43: Customer relationships clusters, by household income, November 2009
                                                                                                          • Figure 44: Customer relationships clusters, by race, November 2009
                                                                                                          • Figure 45: Customer relationships clusters, by Hispanic origin, November 2009
                                                                                                        • Cluster methodology
                                                                                                        • Custom Consumer Groups

                                                                                                          • Gender and presence of children
                                                                                                              • Figure 46: Year-over-year customer relations trends—customer service rep contacts, by gender and presence of children, November 2009
                                                                                                              • Figure 47: Year-over-year customer relations trends—online alternatives, by gender and presence of children, November 2009
                                                                                                              • Figure 48: Nature of customer relations activity/involvement, by gender and presence of children, November 2009
                                                                                                            • Race/Hispanic origin and age
                                                                                                                • Figure 49: Year-over-year customer relations trends—online alternatives, by race/Hispanic origin and age, November 2009
                                                                                                                • Figure 50: Nature of customer relations activity/involvement, by race/Hispanic origin and age, November 2009
                                                                                                            • Appendix: Other Useful Consumer Tables

                                                                                                              • Year-over-year customer relations trends
                                                                                                                • Figure 51: Year-over-year customer relations trends—customer service rep contacts, by gender, November 2009
                                                                                                                • Figure 52: Year-over-year customer relations trends—customer service rep contacts, by race/Hispanic origin, November 2009
                                                                                                                • Figure 53: Year-over-year customer relations trends—online alternatives, by gender, November 2009
                                                                                                              • General experiences with customer relations
                                                                                                                • Figure 54: General experiences with customer relations, by race/Hispanic origin, November 2009
                                                                                                              • Incidence of customer relations vehicles
                                                                                                                • Figure 55: Incidence of ongoing customer relations, by presence of children in the household, November 2009
                                                                                                              • Preferred payment methods to billing departments
                                                                                                                • Figure 56: Preferred payment methods to billing departments, by gender, November 2009
                                                                                                                • Figure 57: Preferred payment methods to billing departments, by presence of children in the household, November 2009
                                                                                                                • Figure 58: Preferred payment methods to billing departments, by race/Hispanic origin, November 2009
                                                                                                              • Importance of customer service by product category
                                                                                                                • Figure 59: Importance of customer service, by product category, by race/Hispanic origin, November 2009
                                                                                                              • Importance of Customer service by retail channel
                                                                                                                • Figure 60: Importance of customer service, by retail channel, by gender, November 2009
                                                                                                                • Figure 61: Importance of customer service, by retail channel, by race/Hispanic origin, November 2009
                                                                                                              • Pet Peeves
                                                                                                                • Figure 62: Customer service pet peeves, by gender, November 2009
                                                                                                                • Figure 63: Customer service pet peeves, by presence of children in the household, November 2009
                                                                                                              • Attitudes towards security
                                                                                                                • Figure 64: Attitudes towards security, by gender, November 2009
                                                                                                                • Figure 65: Attitudes towards security, by household income, November 2009
                                                                                                                • Figure 66: Attitudes towards information security, by presence of children in the household, November 2009
                                                                                                                • Figure 67: Attitudes towards information security, by race/Hispanic origin, November 2009
                                                                                                            • Appendix: Trade Associations

                                                                                                              Companies Covered

                                                                                                              • Crate & Barrel
                                                                                                              • CVS Caremark Corporation
                                                                                                              • Facebook, Inc.
                                                                                                              • First Data Corporation
                                                                                                              • Food Marketing Institute
                                                                                                              • Giant Eagle
                                                                                                              • Greenfield Online
                                                                                                              • Grocery Manufacturers Association (GMA)
                                                                                                              • J C Penney Company, Inc
                                                                                                              • L.L. Bean Inc
                                                                                                              • Macy's, Inc.
                                                                                                              • Microsoft USA
                                                                                                              • Office Depot (North America Retail)
                                                                                                              • PetSmart, Inc
                                                                                                              • Taco Bell Corp.
                                                                                                              • Tesco (US)
                                                                                                              • The Kroger Co.
                                                                                                              • Twitter, Inc.
                                                                                                              • U.S. Bureau of Labor Statistics
                                                                                                              • Walgreen Co
                                                                                                              • Walmart Stores (USA)

                                                                                                              Customer Satisfaction and Loyalty Programs - US - January 2010

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