Transpromo use is on the up but some sectors lag behind

Thursday 12 February 2009

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Transpromo is gaining ground in some areas, according to a study from direct communications company GI Direct. Of the UK's top 100 loyalty schemes, 14% now print targeted transpromo adverts in the white space of loyalty statements. The study ranked the loyalty schemes by the scheme-owner's turnover, and statements were studied to find out whether white space was being used for personalised cross-selling or third-party advertising.

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The largest user of transpromo analysed was Nectar, which oversees 17 of the loyalty programmes studied (however, Nectar was only counted once in the study, to come up with the statistic of 14% of schemes adopting transpromo). Since 2003, quarterly points updates have combined details of a user’s points balance with coupons targeted according to purchasing habits. Nectar is able to avoid conflicts of transpromo print (for example, a statement telling a customer he owed money while asking him to spend more) by only offering rewards. Out of the 9m direct mail pieces that Nectar sends each quarter, about 7m containe unique combina-tions of data. Other schemes that adopted the transpromo approach had a similar level of segmentation relative to the size of their customer base.
 
The loyalty sector does not suffer from the strict boundaries of regulatory compliance that exist in the finance sector, or the concerns of industries like energy, mobile phone, ISP, mail order, where small problems in billing runs can have a significant effect on cashflow.

Stronger sectors
According to the study, the music and entertainment, mobile phone and electronics, and retail industries had the strongest transpromo initiatives in place, as repeat customers and successful points-based loyalty schemes meant companies could easily insert targeted advertising onto loyalty statements. The least advanced  loyalty scheme providers were credit card issuers, hotels and the catering trade, and travel companies, although some travel agency companies did use transpromo techniques widely in their ticket and resort information booklets.

Patrick Headley, sales and marketing director of GI Direct, said: “As pressure mounts on marketers to achieve improved return-on-marketing investment in 2009, harnessing transpromo for cross sales or to subsidise scheme costs through third-party revenue, is turning into a commercial imperative.”

Organisations such as American Express have previously used transpromo, but primarily in a black and white. The advent of low-cost, high-speed, high-quality colour print technology has made more widespread growth of transpromo possible.

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