Analysis & Commentary:

TRADE OFF BETWEEN PERSONAL DATA AND BETTER SERVICE

Research shows US consumers understand and accept the rewards of disclosing personal information to retailers. Eight in ten consumers think that retailers that track and analyze what their customers buy are more likely to be in touch with what their customers really want.

Commissioned by Quadstone, a leading provider of analytics for customer loyalty solutions, the research also shows that three in five consumers do not mind sharing information about what they buy with a retailer in return for a good quality reward program. Other key findings show that every other consumer holds at least one reward card, that over half of all consumers prefer stores and websites that offer rewards over those that do not and a solid majority (85%) see saving money as the biggest benefit of holding a reward card.

Over the last few years as competition has whittled away at retailers margins, reward schemes and other initiatives aimed at increasing revenues through improved customer relationships have proliferated. The research suggests that consumers now recognize that retailers have the capacity to collect and analyze data and have an expectation that not only should retailers benefit from this but, in return for access to this data consumers should also gain through reduced prices and other rewards.

Almost half of those surveyed that don't hold a reward card say that the main reason they don't have one is that they don't perceive the benefit or know enough about the programs. Only 12% of non-cardholders state their main reason is concern about how their personal information will be used.

"The survey results are a great endorsement for loyalty and frequent shopper programs," comments Mark Smith, Quadstone's president. "The results also support the case for responsible use of customer information showing that users understand that their behavior is being tracked and they are happy to co-operate if they feel they are getting commensurate rewards."

The results echo a Quadstone-commissioned study undertaken in the UK earlier in the year, although there are some subtle differences that reflect the different style of programs prevalent in the US and UK.

"Reward programs have developed in an attempt to get a better understanding of customers and increase their loyalty to individual retailers. This research plainly demonstrates that consumers are comfortable with these programs and understand that they can benefit from participating. Retailers looking for competitive advantage should ensure that they are making full use of the customer data that they collect and, with the help of predictive marketing techniques, delivering the personalized benefits that cardholders have come to expect," concludes Smith.

SWR Worldwide conducted the research in the US and results are based on a nationwide survey of 1022 consumers aged 18 and older. On September 30, 2001 at 1pm ET Quadstone will be hosting a webinar to discuss the full results of the research. Registrations for the webinar can be made online at www.quadstone.com/webinars or by phone at 800-821-8031.

About Quadstone

Quadstone helps companies maximize customer value and generate increased financial returns by understanding, predicting and influencing customer behavior in and across all channels. Quadstone offers software and services for specific industries, touchpoints and applications. These solutions improve the efficiency and effectiveness with which marketing users can address issues of customer retention, ROI, risk and response.

Quadstone's international clients include market leaders in the financial services, retail/e-tail, telecommunications and marketing services sectors and include CVS, GUS, Fingerhut, Barclays and Vodafone amongst others. Founded in Edinburgh, Scotland in 1995, Quadstone now also has offices in London, England and Boston, Massachusetts. For more information visit www.quadstone.com.

Contact Fiona Neil, Quadstone, 617-753-7393, fiona.neil@quadstone.com.