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Global Outlook on Loyalty Programs and What Consumers Want

Report: Global Loyalty Programs

Global Outlook on Loyalty Programs and What Consumers Want

Most organizations understand the importance of growing and retaining existing customers and choose to implement a loyalty program. Brands want to provide great customer service so customers will continue purchasing from them. And, customer loyalty is paramount to any brands’ success — because loyal customers can grow a business faster than sales and marketing.

According to the latest Nielson, Global Loyalty Sentiment Survey, 72% of global respondents said they’d buy from a retailer with a loyalty program over one without. A retail loyalty program can be an effective way to create competitive advantage by reducing customers’ likelihood to switch stores.

  • 75% said loyalty programs make them more likely to continue doing business with a company.
  • 67% agree that they shop more frequently and spend more at retailers with loyalty programs.

Financial Incentives Drive Loyalty Program Participation – It’s not surprising that for the most respondents, financial incentives are the primary reason for participating in loyalty programs. Two-thirds of global respondents who participate in loyalty programs, somewhat or strongly agree that they join these programs only to get free products or discounts. Monetary incentives top the list of most-valued loyalty-program benefits.

  • 51% indicate product discounts are among their three most-valued loyalty-program benefits.
  • 45% say monetary rewards in the form of rebates or cash back offers.
  • 33% say free products are their most valued reward.
  • 32% love free shipping.
  • 22% enjoy frequent flyer points

What Customers want from Loyalty Programs

The study shows that Millennials rate many non-monetary benefits more highly than boomers.

  • Personalized product or service recommendations: 69% of Millennials finding appealing, compared to 45% of Boomers.
  • Points or rewards for sharing products and pages on social networks: 72% Millennials vs. 40% Boomers.
  • Integration with mobile payment system: 76% Millennials vs. 48% Boomers.

What Members of Retail Loyalty Programs Want

Retail loyalty program members value FLEXIBILITY over personalization in their programs. As indicated below, the percentage of global respondents who rate the features very or somewhat appealing.

Personalization and Flexibility in Loyalty Programs

Flexibility:

  • 81% say it’s somewhat or very appealing to be able to earn rewards regardless of whether a purchase was made in store, on a website or on a mobile device.
  • 79% enjoy the ability to choose among several types of rewards.

Personalization:

  • 77% say personalized discounts or promotional offerings are important.
  • 62% say personalized products or service recommendation are important.

Rewards and Technology Loyalty Programs

Rewards:

  • 60% tiered programs with exclusive rewards for customers in a particular level or status
  • 76% want opportunities to earn bonuses by doing some specific activity.
  • 67% want points or rewards for referrals.

Digital Harmony:

  • 67% indicate integration with mobile payment systems is appealing.
  • 62% say points or rewards for sharing products on social media is important.
  • 60% store-specific loyalty program mobile app.

The report highlights key retail loyalty program attitudes across the world, pointing out that:

  • In the Asia-Pacific region, several marketers show a strong appetite for mobile app-based programs. 69% of loyalty members say they are more likely to participate in a program if there is a mobile app.
  • In Europe, mobile apps are less commonly used by retail loyalty program members, for whom monetary perks tend to be far more preferred than non-monetary ones.
  • In the Middle East and Africa, non-monetary perks – such as recognition as a preferred customer and personalized products and experiences – are important to a sizable share of consumers.
  • In Latin America, there’s plenty of room for growth, Less than half of Latin American online respondents (44%) say they belong to one or more loyalty programs.
  • In North America, rebates or cash back is the most valued reward, free products are a close second in Canada, and product discounts take second place in the US.

In The Great Loyalty Reset Report from Merkle | 500friends revealed that most consumers concentrate their membership in up to 5 loyalty programs.

  • 80% belong to five or fewer programs.
  • 41% claim to be active in all of them.

The report showed that consumers often switch to new loyalty programs, especially if their needs aren’t being met. Indeed, more than half of the respondents had joined a loyalty program in the last year, but at some point, 50 percent had also quit a loyalty program that didn’t deliver or satisfy. One of the most common complaints was “the brand doesn’t understand me.”

Consumers Quit Loyalty Programs

Why Consumers Leave Loyalty Programs – The report revealed that loyalty programs are experiencing a “loyalty disconnect” — defined by loyalty program managers who say they have a 360-degree view of their members, however, they don’t understand their needs and fail to fail to personalize offers in their marketing and communications efforts.

Top Reasons Quit Loyalty Programs

They leave a loyalty program if the value of the rewards wanes over time or the program does not live up to promises.

  • 23% North America
  • 27% Europe/UK
  • 18% Asia

They leave a loyalty program if achieving a meaningful reward is too time-consuming, costly or too much work – an investment not worth the payoff.

  • 23% North America
  • 25% Europe/UK
  • 19% Asia

They leave a loyalty program if rewards simply are not relevant.

  • 14% North America
  • 14% Europe/UK
  • 13% Asia

The Disconnect Hurts Brands – The power of loyalty-driven connections between consumers and their favorite retailers can make or break a brand. If consumers like a loyalty program:

  • 86% shop more with a brand if they like the program.
  • 63% shop less if they abandon the program.
  • 58% spend 15% or more than a non-loyalty member
  • 30% spend 5% – 15% more.
  • 11% spend up to 5% more.

Connected Loyalty for Consumers – Retailers need to embrace “connected loyalty” — which leverages the combined forces of strategy, technology, mobility, consumers’ activities and data to understand who consumers are, follow them regardless of where they are or which channel they choose to engage, reward and recognize their behaviors and preferences in a way that makes them feel understood, remembered and valued.

Top Reasons Join Loyalty Program

Consumers Seek Meaningful Connections

Consumers join loyalty programs for a number of reasons. Globally there are 4 main reasons a consumer will join a loyalty program. (The chart above highlights the regional differences.)

  1. 29% will join a program because it offers incentives.
  2. 28% will join for relevant rewards.
  3. 10% join because they trust the positive recommendations.
  4. 9% join because of trusted online reviews.

A well-designed loyalty program can deepen customers’ activity with the brand through increased consideration, recommendation, sales and spending frequency. Globally, 76% of consumers will shop more with the brand if they are loyalty-program engaged. The chart below highlights by region how much more engaged loyalty program members shop.

Customer Loyalty Program Statistics on Spend

Key Takeaway

It’s not enough to have a loyalty program. To be successful, marketers need to focus on driving engagement with their loyalty program. Because what’s at stake is not just the program, but the customer’s overall loyalty to the brand.

Customer Loyalty: How to Earn It and Keep It

Times have changed, the economy has changed, and your competition is barking at your heels. How can you leverage a loyalty program to keep your customers out of your competitors’ reach? Here are some great resources:

Loyalty Blog

Loyalty Workshop Presentation: How to Build a Loyalty Program That Keeps Customers Coming Back

Loyalty Infographics

Customer Loyalty Consultant