HOW TO KEEP YOUR CUSTOMERS ENGAGED WHEN LOYALTY STANDARDS ARE HIGH
The Need for Greater Loyalty Engagement
Customer loyalty is a challenge for merchants to gain and maintain in today’s competitive retail environment.
Factors like the pandemic, supply chain struggles and inflation have flipped consumer loyalty on its head, forcing many merchants to go back to the drawing board to build loyalty and provide top-of-the-line experiences to loyalty members.
With premium loyalty becoming more common across brands, consumers’ expectations for membership remain high. The percentage of consumers who don’t want to wait to accumulate points in loyalty programs and think loyalty programs should provide immediate benefits to maintain their loyalty held steady year over year at 78% in 2022. And the percentage of premium loyalty members who expected immediate benefits also remained firm at 38%.
To assess the consumer landscape of brand loyalty, Clarus Commerce surveyed 2,500 consumers about their feelings on premium loyalty programs and paying for enhanced benefits, as well as their shopping habits and interactions with brands.
Findings show that while enrollment in all types of loyalty programs remains high, premium loyalty is becoming more in demand among consumers.
But we also found that there are valuable opportunities for merchants to engage loyalty members within programs themselves, which can help drive revenue and customer engagement.
Premium vs. Traditional Loyalty Programs
Premium loyalty programs offer immediate benefits that can be used at any time in exchange for a membership fee. Examples include Amazon Prime, Walmart+ and CVS CarePass.
Traditional loyalty programs offer free enrollment, but usually require members to make purchases over time for rewards that come later (e.g., by accumulating points).
KEY FINDINGS
• 72% of consumers belong to a premium loyalty program.
• 83% of consumers said they were likely to invest in a brand’s premium loyalty program if they already belong to that brand’s traditional loyalty program.
• 77% of consumers that don’t belong to any premium loyalty programs would join one if their favorite brand offered one and the benefits that were valuable to them.
• 91% of premium loyalty members said they’re likely to choose a brand over a competitor offering a lower price if they’re satisfied with the special benefits offered by the brand’s premium loyalty program.
• 78% of consumers would pay for a premium loyalty program.
• 71% of premium loyalty members shop with brands whose programs they participate in at least once a week.
CONSUMERS ARE WILLING TO PAY FOR THE LOYALTY BENEFITS THEY EXPECT
For the third year in a row, a majority of consumers acknowledged their loyalty is more difficult for a brand to maintain than ever before. Around two-thirds (68%) of consumers agreed with that sentiment in 2022, holding steady from 2021 results.
Furthermore, 78% of consumers said they are willing to pay for a premium loyalty program. When consumers were asked what amount they’d be willing to pay for a loyalty program with their favorite brand, less than $50 per year remained the most popular answer in 2022 (46%). The percentage of consumers who chose that option increased 8% year over year, up from 38% in 2021. Additionally, nearly a quarter of respondents (22%) said they would be willing to pay at least $51-$100 for a loyalty program with their favorite brand.
Nearly three-quarters of consumers now belong to premium loyalty programs. And those program members want more — 78% said they plan on joining additional premium loyalty programs in the next 12 months based on their experience with these programs. Younger generations (Gen Z through Gen X) especially indicated a high likelihood to join additional programs.
These numbers indicate that these programs’ value has reached a new standard — they’re no longer a “nice to have” for brands, they’re a “need to have” for effective customer engagement.
BRANDS WITHOUT PREMIUM LOYALTY PROGRAMS ARE MISSING A MAJOR OPPORTUNITY
77% of non-premium loyalty members indicated a willingness to join a premium loyalty program if their favorite brands offered them and the benefits were valuable to them.
This willingness to join coupled with the fact that 31% of consumers say their favorite brands don’t offer premium loyalty programs tells us one thing — valuable opportunities await. In addition to deeper customer engagement, premium loyalty programs can pay great dividends for sales and additional customer acquisition.
TRADITIONAL LOYALTY PROGRAMS SEE THE HIGHEST MEMBERSHIP RATE IN 3 YEARS
But there’s an opportunity to increase engagement. In addition to premium loyalty programs, it appears that brands are missing out on opportunities to engage traditional loyalty program members more. Seventy-eight percent (78%) of respondents said they belong to traditional loyalty programs, the highest rate since 2019 and a 7% increase from last year.
However, while traditional loyalty program membership has increased, usage rates have remained unchanged. A little more than two-thirds of 2022 respondents (69%) belong to 1-4 programs, similar to 2021 (68%). The bottom line: Customers are willing to join traditional loyalty programs, but getting them to engage more is an increasing challenge.
CUSTOMER LOYALTY ACCELERATOR
The Customer Loyalty Accelerator (CLA) app for Shopify and Clover platforms helps small and medium sized merchants compete with retail Goliaths in building digital relationships . A groundbreaking loyalty program, CLA uses the power of spending-based instant store credits to reward return customer visits – and higher spending –generating more revenue for your store. CLA also includes premium-style benefits without a membership fee –a Referral Promotion feature to broaden your customer base. In addition, Clover merchants can integrate a Gift Card program right within your loyalty program for even greater reach. Coming soon is Inventory Advantage ©, allowing merchants to maximize revenue from their inventory through customer loyalty rewards.