Shoppers Want More from Loyalty Programs

By John Karolefski

Half of consumers are deterred from joining loyalty programs, according to a newly released study that has important implications for CPG marketers as well as retailers. 

The report from Kobie Marketing reveals that consumers value convenience and flexibility in loyalty programs, and the opportunity to earn and redeem points drives their decision to join.

“Overall, today’s consumers have come to expect more personalized, convenient, and immersive experiences,” said Howard Schneider, VP of Loyalty Strategy at Kobie Marketing. “Delivering a standout experience is what makes a strong program -- not price and rewards alone. Gaining a deeper understanding of consumer shopping habits, and designing your program accordingly, is key to delivering the experiences that will keep them coming back for more.”

Among the highlights of the report:

  • 86 percent of consumers reported that they primarily join programs to collect and redeem points for rewards.

  • 36 percent said they join programs specifically to redeem points for discounts and prizes.

  • 26 percent of consumers reported that brands ask for too much information or the enrollment process takes too long.

  • 22 percent reported they won't join if it takes too long to earn and redeem points.

  • 22 percent said they would be most willing to join a loyalty swipe card.
But while points and discounts most influence the decision to join a program, the report found that price is a driving force in the context of customer retention. In fact, more than a third (35 percent) of consumers ranked price as the most significant factor in whether they would return to a brand or shop elsewhere.

In an interview with CPGmatters following the release of the report, Schneider of Kobie Marketing said loyalty programs remain popular across generations; but marketers must be careful to refine their loyalty strategies based on their customers’ behaviors, preferences and demographics.

In addition, James Tenser, principal of VSN Strategies, said one of the lessons we learn from demographics is that attitudes and behaviors may be somewhat enduring, but each age cohort has its own norms.

“That’s a fancy way of saying what worked for Baby Boomers won’t necessarily work the same way for GenX, Millennials or GenZ,” he said. “Retailers and product marketers must study each new age segment beginning with a blank slate, dropping all assumptions, and design programs that are attuned to the needs of diverse consumers. When it comes to loyalty, past performance is no guarantee of future results. Onboarding must be as friction-free as possible, or short-attention-span consumers will simply click away.”

Both analysts noted key differences across generational preference for loyalty programs. According to Schneider, loyalty marketers need to adapt to the nuances and variation of their target audiences whether it’s program design and accessibility, the cadence and channels preference or the use of technology.

“Along with life stage and gender,” he said, “generational cohorts can serve as a helpful guidepost for discerning different customer expectations to design a robust and successful program. For example, GenZers and Millennials are more likely to join points-based mobile app programs than the Baby Boomer and Silent Generation are. While we found different preferences across generations, we also found that consumers are aligned in their preference for ease-of-use in program design and convenience. Marketers should focus on refining each component of their program to ensure that they not only have a user-friendly interface but that they offer rewards and discounts to consumers at the right time and at the right pace.”

Tenser has heard many opinions about this and seen research that suggests younger shoppers value personalization more than deals. He said the Kobie Marketing study indicates the GenZ cohort may be more protective of personal information as well, which suggests they will only commit to programs with clear, attainable, relevant benefits and low intrusiveness.

“For younger consumers and probably most mobile-first technology users, the small screen demands a personally curated view of assortments and offers: ‘Show me what I care about and leave the rest.’ AI is a key enabler of this personalized approach,” he said.

Tenser believes that many shoppers consider in-store Wi-Fi connectivity to be utterly essential because they want to access apps and online information if or when they choose.

“For retailers, this can be key to delivering on the personalization promise – especially the long-tail assortment,” he said. “The boundaries of the physical store are dissolving to merge with the digital realm, which means connected consumers are less conscious of the distinction.”

                                                                        Mid-August 2018
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