For some consumers, loyalty programs are nothing more than cumbersome cards dangling from their keychains. They sign up for future offers, yet rarely engage beyond the routine swipe or scan at the checkout. Yet, for many, such programs offer an array of enticing incentives that foster both long-term relationships and brand advocacy. However, while most companies understand that loyalty programs often play an integral role throughout the customer experience, many neglect to analyze and observe the true motivators behind memberships, retention, and engagement.
Using data from Forrester's "North American Technographics Customer Life Cycle Survey," "The Loyalty Program Participant Profile" explores consumer perceptions of loyalty programs, their involvement with said programs, and which loyalty strategies currently resonate with the average customer. The report, which examines the responses of 4,591 U.S. consumers ages 18-88, highlights that loyalty program members carry greater potential for cultivating more substantial relationships than the average customer. But, while marketers acknowledge that loyalty will always be an essential strategic priority, brands must hone their approach to building a loyalty program in accordance with customer behaviors and preferences.
The following statistics demonstrate how consumers interact and engage with loyalty programs and the drivers behind their membership:
- While 71 percent of U.S. online consumers belong to at least one loyalty program, the average customer belongs to eight loyalty programs. Of those polled, 81 percent of members redeem rewards every few months, while 24 percent feel they belong to too many programs.
- Grocery stores (68 percent) and drug stores (60 percent) typically see the greatest loyalty program response rates. However, consumers agree that they are more likely to visit restaurants (33 percent), travel on airlines (34 percent), and use credit cards (39 percent) that offer rewards.
- Loyalty program members generally join because the program saves them money (78 percent), while 64 percent of those surveyed say such programs influence where they purchase and 50 percent say loyalty programs influence what they purchase.
- Those looking to join loyalty programs frequently gauge their interest based on the availability of instant discounts (79 percent), reward certificates (67 percent), and loyalty currency, such as points and miles (64 percent). However, experiential rewards (i.e. concert tickets and cooking lessons) are gaining traction, as companies look to engage consumers beyond cash savings.
- Thirty-one percent of loyalty program members regularly recommend brands, products, and services to friends and family, as compared to 19 percent of non-members. Those who frequently participate are even more likely to recommend than casual members (37 percent).
- Members that regularly participate in loyalty programs are more likely to stand by the given brand (64 percent) and value the brand's reputation (59 percent), with many choosing such brands based upon previous ownership (56 percent), thereby emphasizing continued loyalty.
Key takeaway: Though the average loyalty program may draw customers in with the promise of promotions and special offers, companies have the opportunity to reach beyond monetary rewards and build upon the current customer relationship. Often times, the customer's feelings for the brand reaches far deeper than discounts, as many admit that they are less likely to care about price and more likely to pay extra for goods and services that offer convenience and reliability. By driving valuable consumer behaviors and attitudes, such as affinity, satisfaction, and advocacy, brands can boost purchase behavior in the process, as those who feel a strong connection with a brand are less likely to stray and more likely to recommend. Yet, regardless of the customer's current standing, loyalty offers must remain relevant, for doing so creates an increased level of customer intimacy. If brands are to truly offer incentives that both retain and engage the consumer, they must invest money and brainpower in analyzing and assessing how customers interact and what they truly seek from their brand relationships. Operational aspects are important, but such data only reveals what happens in response to various marketing messages. Companies must dive deeper if they hope keep customers coming back for more.